Banking licence of International Commercial Bank (JSC) revoked
By its Order No. OD-1846, dated 13 November 2020, the Bank of Russia revoked a banking licence from the Moscow-based International Commercial Bank (JSC) (Registration No. 2524, hereinafter, ICB). The credit institution ranked 299th by assets in the Russian banking system.1
The Bank of Russia took this decision in accordance with Cl. 6 of Part 1 of Art. 20 of the Federal Law ‘On Banks and Banking Activities’,2 based on the facts that ICB:
- violated federal banking laws and Bank of Russia regulations, and also understated the amount of loan loss provisions to be created, due to which the regulator repeatedly applied measures against it over the past 12 months, which included restrictions on household deposit-taking;
The loan portfolio of ICB comprised more than 70% of low-quality loans, which had been repeatedly restructured in order to mask the actual level of overdue debt.
ICB understated the amount of provisions to be set up and overstated the value of assets in order to improve its financial indicators and conceal its actual financial standing. The Bank of Russia repeatedly sent the credit institution orders to make a proper assessment of risks assumed. Compliance with the supervisor’s requests led to grounds for taking measures to prevent the credit institution’s insolvency (bankruptcy), which created a real threat to the interests of its creditors and depositors.
The Bank of Russia also cancelled ICB’s professional securities market participant licence.
The Bank of Russia appointed a provisional administration3 to ICB 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: ICB is a participant in the deposit insurance system; therefore, depositors will be compensated6 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), except for the cases stipulated by Chapter 2.1 of the Federal Law ‘On the Insurance of Deposits with Russian Banks’.
Deposits are to be 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
1 According to the financial statements as of 1 November 2020.
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-1847, dated 13 November 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 Depositor means a citizen of the Russian Federation, foreign citizen or person without citizenship, including those who are engaged in entrepreneurial activity, or legal entity specified in Article 5.1 of the Federal Law ‘On the Insurance of Deposits with Russian Banks’, which concluded with a bank a bank deposit/account agreement, or any of the above mentioned persons in whose favour the deposit was made and (or) who is the holder of a savings certificate, or an owner of a special account (special deposit) designed to form and use the fund of capital repairs of common property in an apartment house opened in accordance with the requirements of the Housing Code of the Russian Federation.
The reference to the Press Service is mandatory if you intend to use this material.
13.11.2020 00.00.00