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Russian regulator revokes 3 more licenses in banking sector restructuring

July 07, 2014, 13:54 UTC+3 MOSCOW

The licenses were revoked from the St. Petersburg-based Finvest and Eurosib banks and the Moscow-based IstKom-Finance

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 Russian Central Bank

Russian Central Bank

© ITAR-TASS/Sergei Bobylev

MOSCOW, July 07. /ITAR-TASS/. The Russian Central Bank has revoked three more banking licenses in a continued effort to restructure the country’s financial system, the regulator said on Monday.

The licenses were revoked from the St. Petersburg-based Finvest and Eurosib banks and the Moscow-based IstKom-Finance over their highly risky policies and failure to comply with banking legislation and Bank of Russia regulations, the regulator said in a statement.

Compensation payments to clients of Fininvest, Eurosib and IstKom-Finance, which are participants in the deposit insurance syst4em, will start from July 21.

Fininvest held the 179th place in the Russian banking system while Eurosib ranked 652nd and IstKom-Finance 727th.

Improving the Russian banking system

The Russian Central Bank has taken active efforts in the past two years to restructure the domestic financial system and make it stable and resilient to market shocks. The regulator has paid special attention to financial institutions that are not large in size and conduct risky operations and violate capital adequacy and transparency requirements.

Since 2013, the Central Bank of Russia has revoked licenses from about 50 credit institutions that operated in Moscow and the Moscow Region, the North Caucasus and the Siberian Federal District.

The number of banking institutions in Russia has decreased from 1,059 as of the beginning of 2014 to about 950 now.

The Russian Central Bank has also drawn up a list of systemically important banks.

Russian President Vladimir Putin earlier said in response to a journalists’ question that license revocations were intended to improve the country’s financial system and free it from financial institutions that could not fulfill their obligations to depositors and work efficiently and posed a risk to the entire banking system.

CBR Head Elvira Nabiullina said that the effort to clean the banking sector of inefficient operators is not a temporary campaign and will continue, and that the country’s top bank does not have a blacklist of banking institutions.

“Over the past year, about 50 banks have quit the market. These were either banks of unsatisfactory financial standing or banks strongly involved in criminal money market servicing,” Nabiullina said.

The process when inefficient operators quit the market makes the banking system healthy and raises people’s confidence in the country’s financial system, she added.

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