UPDATE 3: Russian cbank ends license of El Bank, bank appeals to Putin

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MOSCOW, May 5 (PRIME) -- The central bank has cancelled the banking license of El Bank, ranked Russia's 295th by assets, the authority said in a statement on Thursday, but the bank objected saying that the restrictions are unlawful and that it wrote an open letter to President Vladimir Putin, asking him to control the issue personally.

The central bank has also revoked the license of Mostransbank, ranked 538th because it has invested in low-quality assets and did not create adequate reserves against losses.

The central bank said that El Bank, headquartered in the Volga river city of Togliatti, was unable to fulfill creditor demands and did not comply with the federal laws regulating banking activities.

According to the central bank, the assets of Moscow-based Mostransbank were of unsatisfactory quality and did not generate enough cash flow, which triggered circumstances requiring bankruptcy prevention measures.

The banks are members of the deposit insurance system, which means that each depositor may receive up to 1.4 million rubles in compensation.

The Deposit Insurance Agency said that deposit repayments to clients of El Bank and Mostransbank will begin no later than on May 19. Banks which will act as the repayment agents will be chosen no later than on May 12.

(66.1718 rubles – U.S. $1)

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