On revocation of banking licence from UralCapitalBank and appointment of provisional administration

By Order No. OD-372, dated 15.02.2018, effective 15.02.2018, the Bank of Russia revoked the banking licence of the Ufa-based credit institution Limited Liability Company Commercial Bank Ural Capital, or UralCapitalBank (Registration No. 2519), further referred to as the credit institution. According to its financial statements, as of 01.02.2018, the credit institution ranked 225^th by assets in the Russian banking system.

Problems in the credit institution’s operations owe its origin to the use of a risky business model focused on extending loans to companies related to the credit institution’s management, which resulted in multiple low-quality assets building up on its balance sheet. The due diligence check of credit risk established a substantial loss of capital and entailed the need for action to prevent the credit institution’s insolvency (bankruptcy); there arose a real threat to its creditors’ and depositors’ interests.

The Bank of Russia repeatedly applied supervisory measures against the credit institution, including three impositions of restrictions on household deposit taking.

The credit institution’s management and owners failed to take effective measures to normalise its activities. Under the circumstances the Bank of Russia took the decision to withdraw UralCapitalBank from the banking services market.

The Bank of Russia takes this extreme measure — revocation of the banking licence — because of the credit institution’s failure to comply with federal banking laws and Bank of Russia regulations, due to repeated application within a year of measures envisaged by the Federal Law ‘On the Central Bank of the Russian Federation (Bank of Russia)’, considering a real threat to the creditors’ and depositors’ interests.

By its Order No. OD-373, dated 15.02.2018, the Bank of Russia appointed a provisional administration to UralCapitalBank 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.

UralCapitalBank 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.

The reference to the Press Service is mandatory if you intend to use this material.