The Bank of Russia revoked a license held by European Trust Bank (Registration No. 2968), the regulator’s press service reported.
As the Bank of Russia specified, the lender was stripped of its license due to its failure to comply with the federal laws regulating banking activities and also CBR’s statutory acts.
Due to the loss of liquidity the lender failed to timely fulfill its obligations to creditors or deposit holders. The bank pursued a high-risk lending policy and formed no provisions against loan losses or other assets that are appropriate to the accepted risks. In addition, the lending institution provided the Bank of Russia with materially misstated reports concealing facts that the bank failed to fulfill requirements of its creditors or deposit holders, and also the loss of capital. At the same time, the bank did not fulfill requirements of the supervisory body’s orders.
The lending institution was involved in suspicious cash and non-cash transactions which exceeded Rub 7 bln in January — September 2013.
European Trust Bank is a member of the national deposit insurance system.
A day ago the court levied an attachment on European Trust Bank’s correspondent account at the Bank of Russia under a lawsuit filed by the bank’s retail client. The bank’s employee told Vedomosti that the lender’s correspondent account at CBR was frozen, while other correspondent accounts are still operational. A representative of the bank’s corporate client, which also sued European Trust Bank, confirmed this information.
As of January 1, 2014 turnover on the bank’s correspondent account equaled around Rub 10 bln, but balances are a mere Rub 7.8 mln, the bank’s report showed. Freezing a correspondent account at CBR is a very violent measure, a head of treasury of a bank pointed out, and this means that all the bank’s ruble settlements could be suspended as they are usually made through the Bank of Russia. On top of this, if a bank’s CBR correspondent account is encumbered, it no longer pays using other correspondent accounts, and European Trust Bank has not paid for a long time now, an executive of a bank, which is a counterparty of European Trust Bank, said in an interview with Vedomosti.
As lawyers specify, usually the court levies an attachment for a certain amount. But if the amount is too big for a bank, then the bank’s correspondent account is de facto blocked as all funds that the bank will wire will be debited to the claimant’s account, a head of treasury at a bank which cooperates with European Trust Bank specified in an interview with the paper.
