The Bank of Russia reported on Friday that it cancelled banking licenses held by two lending institutions: Ulyanovsk-based PV-Bank and Moscow-based Bank Universaltrust.
The PR Department of the Bank of Russia noted that the decision to apply the measure of last resort was taken due to PV-Bank’s failure to meet monetary claims of creditors and fulfill its obligation to make payments. “The lending institution pursued a high-risk credit policy and failed to compile adequate reserves against possible loan losses, which slashed its equity capital and gave reasons for measures to be taken to prevent insolvency (bankruptcy). Due to the loss of liquidity PV-Bank failed to timely fulfill its obligations to creditors and households. The bank’s management and owners took no measures to eliminate violations. Under the circumstances the Bank of Russia was required to revoke the lending institution’s banking license.
Bank Universaltrust, according to the regulator, “did not fully fulfill the Bank of Russia’s requirements based on laws and statutory acts for the reliable assessment of its assets and the formation of adequate reserves against possible loan losses, which were imposed upon analysis of the operations conducted after the lending institution’s charter capital upsizing. Meanwhile, the bank provided the supervisory authority with unreliable financial statements concealing the reasons, for which the banking license could be revoked. The bank’s management and owners took no efficient measures to restore the bank’s financial standing, the regulator emphasized in a press release.
Temporary administration teams will commence work at both lending institutions, and the powers and authority of their governing bodies were suspended.
The Deposit Insurance Agency (DIA) has already announced an insured event with regard to PV-Bank, a member of the national deposit insurance system. “The bank’s every deposit holder has the right to receive insurance indemnity as soon as possible," said the press release.
Insurance indemnity is subject to payment as 100% of the amount of all deposits held at the bank that do not exceed Rub 700,000. An amount not compensated by insurance indemnity will be repaid in the course of the bank’s liquidation in the group of senior lenders.
Payments will begin no later than April 27, 2012. Until the specified date DIA will publish in the local media and will also post an official announcement on its web site for the bank’s deposit holders indicating the place, time, form and the manner of accepting applications seeking insurance indemnity. All deposit holders to be established under the register will later be given notice of this via official letters to be posted.
DIA intends to use agent banks to promptly accept applications of households and make payments as soon as possible. In accordance with a decision taken by DIA’s management board, the agent banks will be selected on a competitive basis no later than April 19. Applications seeking insurance indemnity may be filed by deposit holders during the whole period of the bank’s liquidation that, on average, equals two years.
DIA requests PV-Bank deposit holders to be calm and not to worry about their savings, and also assured that the payments will begin during the specified timeframe.
PV-Bank is a mid-sized regional bank with quite a diversified network of offices, the largest lender in the Ulyunovsk region. The bank was established on the basis of a regional directorate of the Zhilsotsbank of the USSR in 1990. In the 1990s the bank was a subsidiary of Vneshtorgbank, and currently equal stakes (15.95%) in the lending institution are held by Gennady Meshcheryakov, Mikhail Surkov, Igor Kruglyakov, Shamil Idrisov, Mikhail Mostovoy and Andrey Sevagin. PV-Bank’s key business focus is lending and cash settlement services rendered to businesses, corporate and retail deposits.
Bank Universaltrust is a small Moscow-based bank, with an 800+ ranking in terms of assets.
