Press Service

The Central Bank of the Russian Federation (Bank of Russia)

Press Service

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Banking licence of Uraltransbank revoked and provisional administration appointed

By Order No. OD-2785, dated 25 October 2018, the Bank of Russia revoked the banking licence of the Yekaterinburg-based credit institution Public Joint-stock Company Ural Transport Bank, or PJSC Uraltransbank (Registration No. 812) from 25 October 2018.

PJSC Uraltransbank applied a universal business model related to lending to legal entities and private individuals using household funds as a main source of funding. The bank regularly underestimated credit risk assumed. The due diligence check of credit risk at the supervisor’s request held in 2017 revealed a substantial loss of bank capital, non-compliance with the required ratios, and as a result, grounds for taking measures to prevent the credit institution’s insolvency (bankruptcy).

In view of the above, PJSC Uraltransbank developed a financial recovery plan which was considered and approved by the Bank of Russia Banking Supervision Committee in September 2017. However, PJSC Uraltransbank failed to implement the key provisions of the plan to stabilise the situation, including the involvement of a potential investor and reaching the key performance indicators.

Further lowering of the quality of assets of PJSC Uraltransbank caused the credit institution to make additional loss provisions which resulted in a full loss of its equity capital. Therefore, the supervisor recognised the financial recovery plan of PJSC Uraltransbank as invalid.

Under these circumstances, the Bank of Russia performed its duty on the revocation of the banking licence from PJSC Uraltransbank in accordance with Article 20 of the Federal Law ‘On Banks and Banking Activities’.

The Bank of Russia repeatedly (3 times over the last 12 months) applied supervisory measures against PJSC Uraltransbank, including two impositions of restrictions on household deposit taking.

The Bank of Russia took such an 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, decrease in the bank’s 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)’.

By its Order No. OD-2786, dated 25.10.2018, the Bank of Russia appointed a provisional administration to PJSC Uraltransbank 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.

PJSC Uraltransbank 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.

According to the financial statements, as of 1 October 2018, the credit institution ranked 196th by assets in the Russian banking system.

25 October 2018

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