The Bank of Russia decided to rescue Moscovskiy Oblastnoy Bank, Investment Republican Bank and Finance Business Bank “as the interest of their creditors and deposit holders is endangered”, the regulator’s press service reported on Wednesday. The regulator noted that this decision was taken upon recommendation of the State Depositary Insurance Agency (DIA) given economic feasibility. Measures to prevent bankruptcy will be carried out by DIA in cooperation with SMP Bank.
According to the rehabilitation plan, the Central Bank of Russia will fund measures to rehabilitate the lending institutions after SMP Bank buys their shares. DIA will issue a loan of Rub 96.8 bln to SMP Bank for a 10-year term. “The execution of the plan and funding will begin after the new owners gain full control (around 97% of the shares) over three banks and the withdrawal of capital by the previous majority shareholders," the Bank of Russia said in a press release.
The regulator emphasized that the banks will continue to operate as usual and the implementation of the approved plan will make it possible to restore their financial standing and ensure uninterruptible settlements with clients.
The regulator pointed out in the press release that Mosoblbank’s reporting was found to be materially misstated. Based on CBR’s information, in order to avoid restrictions imposed on the attraction of retail deposits the lending institution concealed them on a large-scale basis. “The money was debited from individuals’ accounts without their knowledge to the accounts of companies which make up Russian Financial Corporation and the funds were taken off the balance," the regulator reported. In addition, three banks will be rehabilitated simultaneously as there are general beneficiary owners.
The media previously wired that the Bank of Russia revealed a scheme used to take Rub 60 bln of household funds off Mosoblbank’s balance sheet. Later news came in that the lending institution, Inresbank and Finance Business Bank would be soon rehabilitated with the involvement of SMP Bank.
In line with Mosoblbank’s official financial statement as of May 1, its assets grew 9% to Rub 71 bln. “Liabilities increased on the back of quite a large amount bought by corporate clients (nearly Rub 10 bln). The assets jumped following a sharp increase in the rights of claim in the credit portfolio. Retail deposits rose modestly in April (+0.25%) to around Rub 19.5 bln," Sabina Khasanova, an analyst at the news & research service at Banki.ru, said.
As of May 1, 2014 the bank’s profit came to Rub 2.4 bln and 1Q profit reached Rub 1.8 bln, or 3.5x more than in the same period of 2013.
According to Sabina Khasanova, the bank saw № 1, № 2 and № 4 fall modestly in April. The bank’s capital adequacy ratio (№ 1) stands at 22.1% (26.2% a month ago), the instant liquidity ratio (№ 2) equals 21.8% (30.26% a month prior), the current liquidity ratio (№ 3) is equal to 90.8% (62.72% in the previous month) and the long-term liquidity ratio (№ 4) is 73.43% (70.41% a month ago).
