Banking licence of JSC NVKbank revoked
By its Order No. OD-111, dated 24 January 2020, the Bank of Russia revoked the banking licence of Joint-stock Company Nizhnevolzhskiy commercheskiy bank, or JSC NVKbank (Registration No. 931, Saratov, hereinafter, NVKbank). The credit institution ranked179th by assets in the Russian banking system.1
The Bank of Russia took this decision in accordance with Clause 6, Part 1, Article 20 of the Federal Law ‘On Banks and Banking Activities’,2 based on the facts that NVKbank:
- understated the amount of loan loss provisions on a regular basis, thereby concealing its actual financial standing. Credit risks assumed by the credit institution and reflected in its financial statements at the Bank of Russia’s request revealed a substantial (over 80%) decrease in the credit institution’s capital, which is a real threat to the creditors’ and depositors’ interests;
- violated federal banking laws and Bank of Russia regulations, due to which the regulator repeatedly applied measures against it over the past 12 months, which included restrictions on household deposit-taking.
Over 65% of the loan portfolio of NVKbank represented bad loans. This activity was primarily financed by household deposits (about 90% of funds raised by the bank). The Bank of Russia repeatedly requested NVKbank to create additional loss provisions. Compliance with the above requests revealed sufficient grounds in the bank’s activities calling for action to prevent its insolvency (bankruptcy).
NVKbank elaborated a financial stability recovery plan; however, the supervisory body established that the main measures of the plan were not feasible.
The Bank of Russia appointed a provisional administration3 to NVKbank for the period until the appointment of a receiver4 or a liquidator.5 In accordance with federal laws, the powers of the credit institution’s executive bodies were suspended.
Information for depositors: NVKbank is a participant in the deposit insurance system; therefore, depositors6 will be compensated for their deposits in the amount of 100% of the balance of funds but no more than a total of 1.4 million rubles per depositor (including interest accrued).
Deposits are to be repaid by the State Corporation Deposit Insurance Agency (hereinafter, the Agency). For details of the repayment procedure, depositors may call the Agency’s 24/7 hotline
1 According to the financial statements as of 1 January 2020.
2 The Bank of Russia took this decision 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.
3 In accordance with Bank of Russia Order No. OD-112, dated 24 January 2020.
4 In accordance with Articles 127 and 189.68 of the Federal Law ‘On Insolvency (Bankruptcy)’.
5 In accordance with Article 23.1 of the Federal Law ‘On Banks and Banking Activities’.
6 Depositors mean individuals, including those who are engaged in entrepreneurial activity (individual entrepreneurs), and legal entities that are considered small businesses in accordance with the Federal Law ‘On the Development of Small and Medium-sized Enterprises in the Russian Federation’.
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