By its June 24 order the Bank of Russia cancelled banking licenses held by Bank Industrial (Moscow) and International Trade Bank (Moscow), the PR department of the Central Bank of the Russian Federation said in a statement.
The licenses were declared invalid as these banks failed to comply with federal laws regulating banking activities and CBR statutory acts, violated many times during the year requirements of the Federal law “On Counteracting Legalization (Laundering) of Proceeds from Crime and the Financing of Terrorist Acts” and also taking into account numerous applications of supervisory measures to these banks.
Bank Industrial failed to forward on time reports to the Federal Financial Monitoring Service on operations subject to mandatory supervision. Furthermore, the bank formed no adequate reserves for possible loan losses. Throughout 2008 and H109 the bank’s resident clients executed on a regular basis and in large amounts transactions to wire funds to non-residents under various queer goods deals. The funds were wired by the bank’s resident clients to foreign companies largely located in offshore areas (the British Virgin Islands, Belize), the UK, New Zealand that hold bank accounts in Latvia, Cyprus, Estonia and Turkey.
As International Trade Bank pursued a high-risk lending policy, it fully lost its equity capital. At the same time, the lending institution did not observe mandatory ratios and provided the Bank of Russia with materially misstated financials concealing reasons for measures to be taken to prevent its insolvency (bankruptcy).
In line with the CBR order temporary administrations were determined for these lenders until a bankruptcy manager or a liquidator is appointed. The powers and authority of the banks’ executive bodies were suspended in accordance with federal laws.
Bank Industrial and International Trade Bank are members of the national deposit insurance system. The cancellation of a banking license is an accident insured envisaged by the Federal law “On Insuring Private Deposits Held at Banks in the Russian Federation”.
