On the revocation of banking licence and appointment of provisional administration
By Order No. OD-698, dated 17 April 2014, the Bank of Russia revoked the banking licence of the Ufa-based credit institution AF Bank, an open joint-stock company (OJSC AF Bank) (Registration No. 991), from 17 April 2014.
The Bank of Russia took such an extreme measure — revocation of the banking licence — because of OJSC AF Bank’s failure to comply with federal banking laws and Bank of Russia regulations. The capital adequacy ratio of this credit institution is below 2%, while its equity capital has dropped down below the minimum authorised capital established by the Bank of Russia as of the date of the state registration of the credit institution. Moreover, OJSC AF Bank is unable to satisfy creditors’ claims on its pecuniary liabilities. While making this decision the Bank of Russia also took into account the repeated application over the past year of supervisory measures envisaged by the Federal Law ‘On the Central Bank of the Russian Federation (Bank of Russia)’. In compliance with Article 20 of the Federal Law ‘On Banks and Banking Activities’, the Bank of Russia has performed its duty to revoke the banking licence of OJSC AF Bank.
OJSC AF Bank implemented high-risk lending policy connected with the placement of funds into low-quality assets. Following the fulfillment of the supervisor’s requirements to make loss provisions commensurate with the risks assumed, the credit institution lost its equity capital in full. Moreover, due to the loss of liquidity the bank failed to meet its obligations to creditors and depositors on time. The management and owners of the credit institution failed to take measures on its financial rehabilitation. It was deemed impossible to financially rehabilitate OJSC AF Bank involving the state corporation Deposit Insurance Agency on sound economic terms.
In pursuance of Bank of Russia Order No. OD-699, dated 17 April 2014, a provisional administration has been appointed to OJSC AF Bank for a term until the appointment of a receiver in accordance with the Federal Law ‘On the Insolvency (Bankruptcy) of Credit Institutions’ or a liquidator in accordance with Article 23.1 of the Federal Law ‘On Banks and Banking Activities’. In compliance with federal laws the powers of the credit institution’s executive bodies have been suspended.
OJSC AF Bank is a participant in the deposit insurance system. The revocation of the banking licence is recognised as an insured event stipulated by Federal Law No.
As of 1 April 2014, OJSC AF Bank ranked 336th in the Russian banking system in terms of assets.
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17.04.2014 00.00.00