Banking licence of RTS BANK revoked and provisional administration appointed
By Order No. OD-512, dated 14 March 2019, the Bank of Russia revoked the banking licence of the Togliatti-based credit institution Joint-stock Company Bank for Development of Technologies and Savings or JSC RTS BANK (Registration No. 3401, the Samara Region) from 14 March 2019. According to its financial statements, as of 1 March 2019, the credit institution ranked 332nd by assets in the Russian banking system.
RTS BANK’s business model was that of a captive bank. Its principal activity was corporate lending aimed at financing a number of construction projects. The emerged difficulties hampering the implementation of these projects caused accumulation of a considerable amount of non-performing assets on the credit institution’s balance sheet. The bank has consistently underestimated credit risk assumed, the Bank of Russia has repeatedly requested that it create additional loan loss provisions. The due diligence check of credit risk at the regulator’s request established a substantial (approx. 40%) decrease in the bank’s capital and entailed the need for insolvency (bankruptcy) prevention measures, which created a real threat to its creditors’ and depositors’ interests.
Furthermore, in order to conceal the bank’s real financial standing and artificially maintain the capital to formally comply with the required ratios, RTS BANK performed opaque transactions.
The Bank of Russia repeatedly (4 times over the last 12 months) applied supervisory measures against RTS BANK, including impositions of restrictions on household deposit taking.
The RTS BANK’s operations showed signs of misconduct by its executives who sought to withdraw liquid assets to the detriment of creditors’ and depositors’ interests. The Bank of Russia will submit information about the bank’s transactions suggesting a criminal offence to law enforcement agencies.
Under these circumstances, the Bank of Russia took the decision to revoke RTS BANK’s banking licence.
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.
By its Order No. OD-513, dated 14 March 2019, the Bank of Russia appointed a provisional administration to RTS BANK 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.
RTS BANK is a member of the deposit insurance system. The revocation of the banking licence is an insured event as stipulated by the Federal Law ‘On the Insurance of Deposits with Russian Banks’ in respect of a bank’s liabilities to individuals, including entrepreneurs, and legal entities which the Federal Law ‘On the Development of Small and Medium-sized Businesses in the Russian Federation’ recognised as small businesses. Due to the emergence of the insured event, the law provides for the payment of indemnities to the bank’s depositors 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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