The Bank of Russia has cancelled effective August 5, 2016 a banking license held by Saint Petersburg-based Constans-Bank. The relevant press release was posted by the regulator.
As the press release noted, the decision to take the last-resort measure was adopted because the lending institution failed to comply with federal banking laws, and also the Bank of Russia's statutory acts, capital adequacy ratios fell below 2%, and equity declined beneath the minimum charter capital as set on the date of the bank's state registration. The Bank of Russia also took into consideration the numerous application during the year of the measures provided for in the Federal Law "On the Central Bank of the Russian Federation (Bank of Russia)".
The Bank of Russia is said to have found out a big shortage of cash in hand at Constans-Bank. "Upon formation of loan loss provisions against virtually missing assets the lending institution fully lost its equity (capital). Furthermore, the bank was involved in suspicious transit operations," the press release runs.
The lending institution's executives and owners took no efficient measures to normalize its activities, the regulator emphasized.
A temporary administration team was appointed at Constans-Bank until the appointment of a bankruptcy manager or a receiver. The powers and authority of the lending institution's executive bodies were suspended in line with the federal laws.
Constans-Bank is a member of the deposit insurance system, and the revocation of a license is an insured event that stipulates the payment of insurance indemnity to deposit holders, including to individual entrepreneurs, of 100% of cash balances held, but no more than Rub 1.4 mln in the aggregate per deposit holder, the Bank of Russia noted.
The news broke on Wednesday that Constans-Bank ceased to serve customers at all its offices. The lending institution said on its website that "in line with the Bank of Russia's order as of August 3, 2016 the bank has imposed restrictions on corporate and retail operations". A Banki.ru source familiar with the situation at Constans-Bank specified that the Bank of Russia had cut the lending institution off the Banking Electronic Speedy Payment (BESP) system since August 3, 2016.
