On revocation of banking licence from credit institution PJSC MJSB Tempbank and appointment of provisional administration
By its Order No. OD-2805, dated 2 October 2017, the Bank of Russia revoked a banking licence from the Moscow-based credit institution Public Joint-stock Company Moscow Joint-stock Bank Tempbank (Registration No. 55), further referred to as the credit institution. According to the financial statements, as of 1 September 2017, the credit institution ranked 174th by assets in the Russian banking system.
The credit institution’s business model was focused on serving the interests of its owners. Lending to borrowers directly or indirectly related to the ultimate beneficiaries of the credit institution and not engaged in any real business operations resulted in the considerable amount of non-performing assets in the credit institution’s balance sheet. With its assets of poor quality, the credit institution failed to adequately assess the risks assumed. The Deposit Insurance Agency State Corporation, entrusted in accordance with a Bank of Russia order with the duties of a provisional administration to manage the credit institution, conducted an assessment of the bank’s financial position. 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 Bank of Russia repeatedly applied supervisory measures to the credit institution, including impositions of restrictions and total ban on household deposit taking.
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 with the funds of the Agency and the credit institution’s creditors in view of extremely low asset quality, a significant 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 as regards banking licence revocation in accordance with Article 20 of the Federal Law ‘On Banks and Banking Activities’.
The Bank of Russia took this extreme 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, the 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 functions of the provisional administration to manage PJSC MJSB Tempbank, entrusted with the Deposit Insurance Agency State Corporation in accordance with Bank of Russia Order No. ОD-870, dated 5 April 2017, are terminated pursuant to Bank of Russia Order No. ОD-2806, dated 2 October 2017.
By its Order No. OD-2807, dated 2 October 2017, the Bank of Russia has appointed a provisional administration to PJSC MJSB Tempbank for the period until the appointment of a receiver pursuant to the Federal Law ‘On the 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.
PJSC MJSB Tempbank 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 PJSC MJSB Tempbank (5 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 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 Public Joint-stock Company Bank Jugra in accordance with Clause 2 Part 1 Article 8 of Federal Law No.
Information on the authorised agent banks to pay an insurance indemnity can be found on the official website of the state corporation Deposit Insurance Agency (www.asv.org.ru).
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