UPDATE 5: Cbank: Liabilities of Russia’s 27th bank put on freeze for 3 mths

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MOSCOW, Jul 10 (PRIME) -- The central bank has introduced a 3-month moratorium on creditors’ demands of Jugra Bank, Russia’s 27th largest by assets, and appointed the Deposit Insurance Agency (DIA) as interim administration for six months, the regulator said in a statement on Monday.

“The authority of the shareholders connected with their participation in the capital as well as the authority of management of PJSS Bank Jugra is suspended for the period of the temporary administration’s activity,” the statement said.

Central Bank Deputy Chairman Vasily Pozdyshev said the regulator believes that Bank Jugra, whose assets stand at 323.9 billion rubles, has been providing misleading reports for several months and suspects the bank of asset withdrawal and manipulations with deposits.

“The introduction of the interim administration is aimed at revealing the real financial situation of the credit organization – valuation of its assets and liabilities to make a further decision on its fate. Why did we consider it necessary to do this? Because over the last few months we have signs that reports provided to us by the bank are not trustworthy,” he said.

“We also have signs of possible asset stripping and possible manipulations with deposits.”

The central bank has estimated manipulations with the bank’s deposits at almost 2 billion rubles, Pozdyshev said.

“After the bank was given a restriction on attracting depositors’ funds, the bank started making individual investors shareholders, giving them one share in order to circumvent the restriction,” he said. “The scale of this restriction is not big, they are almost 2 billion rubles, less than 2 billion rubles. We considered this a serious enough call, and this was one of the reasons to introduce the interim administration.”

The central bank also believes that the major part of the bank’s loan portfolio was used to finance business of the bank’s owner, Alexei Khotin.

Anna Orlenko, director of the banking oversight department at the central bank, told reporters that the regulator has issued 10 rulings to Jugra Bank to form additional reserves over the past year, and also made 7 more recommendations to form additional reserves. “These are tens of billions of rubles, these sums are large,” she said.

The bank may have formed additional reserves after liquidating reserves against other loans. “The bank dispersed reserves on other loans simultaneously with forming reserves against loans which we ordered to do, and it technically avoided capital loss this way,” she said, adding that the reserves were too significant and forced the regulator to introduce the interim administration.

Alexei Nefyodov, president of Bank Jugra, denied accusations in illegal asset stripping.

“I would like to deny the illegal withdrawal of assets from the bank, all funds that we attracted we invested in companies of different industries in Russia. Speaking of financial reports of the bank that we’ve submitted to the regulator, they corresponded to the norms of Russian and international financial reporting. All ratios and capital requirements are fulfilled, the bank has necessary liquidity,” he said.

Over the past several months, shareholders of Bank Jugra managed to find money quickly to replenish reserves on recommendations of the central bank, and Khotin will continue to support the bank until financial recovery is over. “We are not losing faith and making all efforts to settle issues with the central bank very soon,” Nefyodov said.

Pozdyshev also said that deposits with Bank Jugra were estimated at 180 billion rubles as of June 1, including almost 170 billion rubles insured at the DIA, adding the regulator could boost financing of the DIA to pay to the depositors.

The DIA said that it will start paying deposits no later than from July 24 and will choose banks-agents to that end no later than on July 17.

The bank’s offices will work from 10 am to 12 am only to provide consultations, it said on its web site.

Pozdyshev also said that the regulator has applied to law enforcement agencies in connection with operations of Bank Jugra.

(60.3792 rubles – U.S. $1)

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