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Russia’s Central Bank revokes license from Smolensky Bank

December 13, 2013, 11:10 UTC+3 (Adds details) ¶ MOSCOW

The bank’s owners and managers did not undertake measures to improve the activities and to restore the financial standing

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© ITAR-TASS/Sergei Bobylev

MOSCOW, December 13. /ITAR-TASS/. Russia’s Central Bank has revoked a license from the Smolensky bank from December 13.

The regulator explains the decision claiming the Smolensky bank did not comply with the federal legislation or the Central Bank’s norms, and provided incorrect reports.

With a lack of liquidity, the bank could not fulfil in time its obligations for creditors or clients. At the same time, the bank was involved in deals, aimed at extraction of assets. The Smolensky bank did not comply with the requirements on adequate reserves for cases of possible losses. The credit organisation in the reports to the regulator did not reveal the realistic financial position, a complete loss of own means /capital/ and failures to satisfy demands from creditors.

The bank’s owners and managers did not undertake measures to improve the activities and to restore the financial standing. Due to the low quality of the credit organisation’s assets, attraction of the state corporation Agency for Insurance of Deposits under reasonable conditions is not possible.

The Central Bank appointed to the Smolensky bank temporary administration until the appointment of a receiver or liquidator. The authorities of the credit organisation’s executive bodies are terminated in compliance with the federal laws.

The Smolensky bank is a participant in the system of insuring deposits. A revoking of the license for banking operations is an insurance event, as per the federal law.

The Smolensky bank used processing of the Master-Bank, which license had been revoked earlier. The bank’s clients had rushed to remove their deposits, and the bank’s operations system failed.

On December 2, management of the Smolensky bank asked the Central Bank for support. In a letter to the Central Bank’s Chair Elvira Nabiullina the bank asked for a stabilizing loan of eight billion rubles or for other measures to allow the bank observe its obligations. Later on, the bank’s clients also sent a letter to the Central Bank. They asked the regulator to prevent the bankruptcy, to offer financial support and not to revoke the license.

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