KOMMERSANT. At Wednesday’s meeting the Banking Supervision Committee of the Bank of Russia adopted a decision to revoke the banking license held by Mezhprombank Plus, Kommersant business daily wrote on Thursday quoting sources familiar with the regulator’s decision. There are several reasons for this action: the bank’s negative capital after allowances against possible loan losses, the failure to fulfill obligations to customers and others.
As the paper wrote, Mezhprombank Plus is a subsidiary of International Industrial Bank (its license was cancelled on October 5), is part of the financial division of United Industrial Corporation controlled by Republic of Tyva senator Sergei Pugachev. The lending institution is a member of the national deposit insurance system. In line with the report on the compliance with mandatory ratios (Form 135), posted on CBR’s web site, Mezhprombank Plus did not violate the ratios in August. As of September 1, 2010 the amount of the bank’s inter-bank loans totaled Rub 2.9 bln of the bank’s aggregate assets (Rub 4.4 bln). These credits were mainly received by the parent bank and after the parent bank’s license was revoked the subsidiary should have formed 100% allowances against these credit facilities.
Mezhprombank Plus declined to give official comments on Wednesday. A United Industrial Corporation source specified that delays related to the payment of retail deposits at Mezhprombank Plus, which began in early October, are still in place. “Based on data available on Tuesday, the bank’s private deposits totaled around Rub 1.3 bln," a Kommersant source said adding the bank has been returning deposits, but delays with payments continue. Due to the cancellation of the license held by the parent bank that provided processing support to the subsidiary bank’s cards, operations under Mezhprombank Plus’s payroll projects have really been frozen.
If attempts were made to somewhat back Mezhprombank — after the restructuring of its debts to the Bank of Russia and Eurobond holders talks were conducted to raise a loan from VTB Bank — apparently the parent bank had neither resources nor power left to take care of its subsidiary, experts think. “The trust in the bank was undermined and customers have been withdrawing funds en masse,“ Promsvyazbank analyst Dmitry Monastyrshin noted adding the bank has no high-quality assets to fight for, i.e. in reality the shareholder has nothing to save. Furthermore, capital is needed to save the bank when its customers are ready to take their money back, which Sergei Pugachev cannot raise, the expert added. “After the parent bank had its license cancelled the subsidiary bank’s activity was really paralyzed, as most of funds were placed at Mezhprombank, which cannot return them now,” Monastyrshin went on to say adding that the subsidiary bank cannot return money to deposit holders and cannot attract fresh funds. Under the circumstances the license revocation was predetermined, he said.
