Banking licence of KOR Bank revoked and provisional administration appointed

By its Order No. OD-2586, dated 05.10.2018, the Bank of Russia revoked the banking licence from the Volgograd-based credit institution Joint-stock Company Joint-stock Commercial Bank KOR or JSC JSCB KOR (Registration No. 2148) from 5 October 2018. According to its financial statements, as of 1 September 2018, the credit institution ranked 390^th by assets in the Russian banking system.

The business model of JSC JSCB KOR was largely designed to serve the interests of its shareholders and affiliated persons. Outstanding loans to companies explicitly or implicitly related to the ultimate beneficiaries of this credit institution accounted for about 50% of the credit portfolio.

The operations of JSC JSCB KOR were found to be non-compliant with the law and Bank of Russia regulations on countering the legalisation (laundering) of criminally obtained incomes and the financing of terrorism with regard to the completeness and reliability of information provided to the authorised body about operations subject to obligatory control. Moreover, the volume of suspicious transit operations conducted by the bank soared in the second quarter of 2018.

Under these circumstances, the Bank of Russia took the decision to revoke the banking licence from JSC JSCB KOR.

The Bank of Russia took such a decision due to the repeated violations within a year of the requirements stipulated by Article 7 (excluding Clause 3 of Article 7) of Federal Law ‘On Countering the Legalisation (Laundering) of Criminally Obtained Incomes and the Financing of Terrorism’ as well as Bank of Russia regulations issued in accordance with the said law.

Following banking licence revocation, JSC JSCB KOR’s professional securities market participant licence was cancelled.

By its Order No. OD-2587, dated 05.10.2018, the Bank of Russia has appointed a provisional administration to JSC JSCB KOR 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 were suspended.

JSC JSCB KOR is a member of the deposit insurance system. The revocation of the banking licence is an insured event as stipulated by Federal Law No. 177-FZ ‘On the Insurance of Household Deposits with Russian Banks’ in respect of the bank’s retail deposit obligations, as defined by law. The said Federal Law provides for the payment of indemnities to the bank’s depositors, including individual entrepreneurs, in the amount of 100% of the balance of funds but no more than a total of 1.4 million rubles per depositor.

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