On revocation of banking licence from credit institution JSCB Spurt and appointment of provisional administration
By its Order No. OD-2071, dated 21 July 2017 with effect from 21 July 2017, the Bank of Russia revoked a banking licence from the Moscow-based credit institution Joint-stock Commercial Bank Spurt Joint-stock Company (hereinafter — the credit institution, Reg. No. 2207, the City of Kazan). According to the financial statements, as of 1 July 2017, the credit institution ranked 183th by assets in the Russian banking system.
With its assets being of poor quality, the credit institutions failed to adequately assess the risks assumed. The Deposit Insurance Agency State Corporation, acting as provisional administration for the credit institution, conducted an assessment of the credit institution’s financial standing. Following this assessment, the fair presentation of asset value in the credit institution’s financial statements showed a full loss of its equity capital. The situation as it stands is a result of low diversified assets of the credit institution, with a substantial part of its loan portfolio dedicated to fund a major investment project of companies controlled by the bank’s beneficiary, with their current financial standing found to be critical.
The Bank of Russia took supervisory action against the credit institution on more than one occasion. However, the credit institution’s management and owners failed to take effective measures to normalise its activities.
According to the Deposit Insurance Agency State Corporation findings, it is not feasible to apply a financial resolution procedure involving the Agency and the credit institution’s creditors, in view of extremely low asset quality, the amount of disbalance between the value of assets and liabilities and the credit institution’s inability to meet its creditors’ claim at any time thereafter.
Under these circumstances, the Bank of Russia performed its duty on the revocation of the banking licence of the credit institution in accordance with Article 20 of the Federal Law ‘On Banks and Banking Activities’.
The Bank of Russia took this measure because of the credit institution’s failure to comply with federal banking laws and Bank of Russia regulations, equity capital adequacy ratios below two per cent, decrease in bank equity capital below the minimum value of the authorised capital established as of the date of the state registration of the credit institution, and given the repeated application within a year of measures envisaged by the Federal Law ‘On the Central Bank of the Russian Federation (Bank of Russia)’.
Following banking licence revocation, the operations of the provisional administration to manage the credit institution (the Deposit Insurance Agency State Corporation acting in this capacity in accordance with Bank of Russia Order No. OD-1136, dated 28 April 2017) were ceased in accordance with Bank of Russia Order No. OD-2072, dated 21 July 2017.
By its Order No. OD-2073, dated 21 July 2017, the Bank of Russia appointed a provisional administration for the period until the appointment of a receiver pursuant to the Federal Law ‘On Insolvency (Bankruptcy)’ or a liquidator under Article 23.1 of the Federal Law ‘On Banks and Banking Activities’. In accordance with federal laws, the powers of the credit institution’s executive bodies have been suspended.
Joint-stock Commercial Bank Spurt is a member of the deposit insurance system. An insured event shall be deemed as occurring starting from the date the moratorium on meeting the creditor claims of the credit institution (28 April 2017), which shall also be the date used for calculation of insurance indemnity for the bank’s liabilities in foreign currency.
The revocation of the banking licence, put in force before the moratorium on meeting creditor claims expires, shall not cancel the legal implications it involves including the obligation of the Deposit Insurance Agency State Corporation to pay out insurance indemnity.
The Agency will continue to pay out insurance indemnity for deposits (deposit accounts) with Joint-stock Commercial Bank Spurt in accordance with Clause 2 Part 1 Article 8 of Federal Law No.
Information on agent banks authorised to pay an insurance indemnity can be found on the official website of the Deposit Insurance Agency State Corporation (www.asv.org.ru).
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21.07.2017 00.00.00