MIL OSI – Source: Central Bank of the Russian Federation in English – Press Release/Statement
Headline: On revocation of banking licence from credit institution OBRAZOVANIE and appointment of provisional administration (4/21/2017)
By its Order No. OD-1055, dated 21 April 2017, the Bank of Russia revoked the banking licence from the Moscow-based credit institution JOINT-STOCK COMMERCIAL INNOVATION BANK OBRAZOVANIE (joint-stock company) JSCIB OBRAZOVANIE (JSC) (Registration No. 1521) from 21 April 2017. According to the financial statements, as of 1 April 2017, the credit institution ranked 118th by assets in the Russian banking system.
The problems faced by JSCIB OBRAZOVANIE (JSC) have resulted from its extremely risky business model and the low quality of most of its assets caused by providing loans to shell companies. Supervision over the bank’s activities identified instances of unfair actions performed by its management and owners in the form of asset diversion to the detriment of creditors and depositors, and also in the form of their “technical” transformation in order to avoid the compliance with the supervisory requirement to create loss provisions commensurate with risks assumed. Besides, JSCIB OBRAZOVANIE (JSC) provided to the Bank of Russia unreliable financial statements which failed to reflect the actual loss of the equity capital. In view of the above, it may be assumed that the activities of the credit institution’s management bear the evidence of deliberate bankruptcy.
In order to mask the acute liquidity strain the bank artificially restricted its customers’ right to use monetary funds. JSCIB OBRAZOVANIE (JSC) has actually become unable to perform its obligations to creditors in full.
The regulator has repeatedly applied supervisory measures to the credit institution, including restrictions and prohibition on household deposit taking.
The management and owners of JSCIB OBRAZOVANIE (JSC) have not taken effective measures to bring its activities back to normal. Under these circumstances, the Bank of Russia performed its duty on the revocation of the banking licence of the credit institution in accordance with Article 20 of the Federal Law ‘On Banks and Banking Activities’.
The Bank of Russia took this decision due the credit institution’s failure to comply with federal banking laws and Bank of Russia regulations, repeated violations within one year of the requirements specified by Article 7 (except for Clause 3 of Article 7) of the Federal Law ‘On Countering the Legalisation (Laundering) of Criminally Obtained Incomes and the Financing of Terrorism’, and the requirements of Bank of Russia regulations issued in compliance with the indicated Federal Law, because of established instances of material unreliability of financial statements, inability to meet monetary obligations to creditors, and also taking into account repeated applications within one year of measures envisaged by the Federal Law ‘On the Central Bank of the Russian Federation (Bank of Russia)’.
After the credit institution’s statements were found considerably unreliable, in compliance with Part 1.2 of Article 140 of the Criminal Procedure Code of the Russian Federation and Article 75.1 of the Federal Law ‘On the Central Bank of the Russian Federation (Bank of Russia)’ the Bank of Russia will submit the related materials to the Investigative Committee of the Russian Federation for it to decide on the opening of a criminal case for an offence under Article 172.1 of the Criminal Code of the Russian Federation.
By its Order No. OD-1056, dated 21 April 2017, the Bank of Russia has appointed a provisional administration to JSCIB OBRAZOVANIE (JSC) 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 are suspended.
JSCIB OBRAZOVANIE (JSC) 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 one depositor.