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Russian central bank cancels licenses of 2 small local lenders

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Russian central bank cancels licenses of 2 small local lenders

The Central Bank of the Russian Federation revoked the licenses of JSCB Kranbank CJSC and Public Joint-Stock Co. Nevsky Narodny Bank and appointed provisional administrators for them until a receiver or a liquidator is appointed.

The regulator said Kranbank did not comply with Russia's anti-money laundering and terrorism financing legislation and also failed to set aside sufficient provisions for losses from loans. The lender also made large payments under its lease agreements, which indicated an attempt to siphon off assets.

"The nonmarket conditions of these transactions forced the credit institution to make advance payments, which considerably exceeded the cost of leased real estate," the central bank said in the Dec. 13 statement, adding that it has notified law enforcement agencies about the transactions in question.

Following the revocation of its license, Kranbank will no longer act as an investor in the financial recovery procedure launched for JSC Commercial Bank Solidarnost in 2015. JSC Zarubezhenergoproekt, which oversaw Bank Solidarnost's recovery with Kranbank, will now act as the sole investor in the recovery scheme.

Meanwhile, the license of Nevsky Narodny Bank was revoked after its capital dropped below the required level following the theft of 3 billion rubles worth of securities and cash by unidentified persons. Local enforcement agencies are currently investigating the theft, the central bank said.

Both lenders are members of Russia's deposit insurance system and their customers will receive compensation of up to 1.4 million rubles each for deposits held at the financial institutions, the central bank noted.

As of Dec. 13, US$1 was equivalent to 62.92 Russian rubles.