Banking licence of LLC RAM Bank revoked
By its Order No. OD-1743, dated 26 July 2019, the Bank of Russia revoked a banking licence from the Moscow-based Limited Liability Company RAM Bank, or LLC RAM Bank (Registration No. 3480, hereinafter, RAM Bank). The credit institution ranked 296th by assets in the Russian banking system1.
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 RAM Bank:
- understated the amount of loan loss provisions to conceal its actual financial standing. Credit risks assumed by RAM Bank and reflected in its financial statements at the Bank of Russia’s request revealed a substantial (over 20%) decrease in the credit institution’s capital, which is a real threat to the creditors’ and depositors’ interests;
- concluded ‘scheme’ transactions which allowed it to formally comply with the established capital requirements and required ratios;
- violated federal banking laws and Bank of Russia regulations, making the regulator repeatedly apply supervisory measures over the past 12 months, including the impositions of restrictions on household deposit taking.
RAM Bank’s credit portfolio was characterised by an extremely low diversification and comprised large-sized loans issued to a limited number of companies engaged in grain trading. The balance sheet of RAM Bank contained considerable amounts of low-quality receivables and non-core assets in the form of grain which had been earlier recorded as collateral. The inspection revealed low quality of the most part of loans issued by RAM Bank. The credit institution received an order to make a proper assessment of risks assumed and to reflect its real financial standing in the financial statements. The statements submitted by RAM Bank confirmed the grounds for taking bankruptcy prevention measures.
The Bank of Russia also cancelled RАМ Bank’s professional securities market participant licence.
The Bank of Russia appointed a provisional administration3 to RАМ Bank for the period until the appointment of a receiver4 or a liquidator5. In accordance with federal laws, the powers of the credit institution’s executive bodies were suspended.
Information for depositors: RАМ Bank 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 repaid by the State Corporation Deposit Insurance Agency (hereinafter, the Agency). Depositors may obtain detailed information regarding the repayment procedure 24/7 at the Agency’s hotline
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1 According to the financial statements as of 1 July 2019.
2 The Bank of Russia takes this extreme measure 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-1744, dated 26 July 2019.
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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