By its Order No. OD-1082, dated 14 July 2020, the Bank of Russia revoked the banking licence from the Kyzyl-based Joint-stock Company The People’s Bank of Tuva (Reg. No. 1309; hereinafter, Bank NBT). The credit institution ranked 416th by assets in the Russian banking system.1 The Bank of Russia made 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 Bank NBT:
- Breached the required current liquidity ratio and effected customer payments with delays.
- Violated federal banking laws and Bank of Russia regulations, including by understating the amount of required loss provisions to be formed and by overstating the value of its assets, due to which the regulator repeatedly applied supervisory measures against it over the last 12 months.
The Bank had a small loan portfolio where bad debt made 40%. A considerable portion (over 80%) of Bank NBT’s assets was real estate, including property not used in its core activity. Bank NBT was loss-making for more than five years, which evidenced that the credit institution had an inefficient business model.
As a result of Bank NBT’s operations, grounds arose for implementing measures aimed at preventing its bankruptcy, which created a real threat to the interests of its creditors and depositors.
The Bank of Russia appointed a provisional administration3 to Bank NBT for the period until the appointment of a receiver4 or a liquidator.5 In accordance with federal laws, the powers of the credit institution’s executive bodies were suspended.
Information for depositors: Bank NBT is a participant in the deposit insurance system; therefore depositors 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 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 (8 800 200-08-05) and on its website (https://www.asv.org.ru/) in the Deposit Insurance / Insurance Events section.
1 According to the financial statements as of 1 July 2020.
2 The Bank of Russia made this decision due to the credit institution’s failure to comply with federal banking laws and Bank of Russia regulations, and given the repeated application within a year of the measures envisaged by the Federal Law ‘On the Central Bank of the Russian Federation (Bank of Russia)’, taking into account the existence of a real threat to the interests of Bank NBT’s creditors and depositors.
3 In accordance with Bank of Russia Order No. OD-1083, dated 14 July 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 Depositors mean individuals, including those engaged in entrepreneurial activity (individual entrepreneurs), and legal entities classified as small businesses in accordance with the Federal Law ‘On the Development of Small and Medium-sized Enterprises in the Russian Federation’.