UPDATE: Cbank revokes licenses from small Moscow, St Pete banks

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MOSCOW, Jul 24 (PRIME) -- Russia’s central bank has revoked banking licenses from Moscow-based Public Bank, ranked 297th by assets as of July 1, and St. Petersburg-based Neva Construction and Investment Bank, or NCI Bank, ranked 349th by assets, the regulator said on Friday.

Both banks numerously violated federal laws regulating banking activities and the central bank’s legal acts, including on money laundering and terrorism financing.

Public Bank also systematically underestimated the amount of reserves for possible losses on loan debt. The bank focused on providing banking guarantees, whose volume exceeded the size of its shareholders’ equity by several times. It was also involved in non-transparent transactions with non-resident payment agents on the transfer of funds of personal clients.

NCI Bank failed to provide timely and trustworthy reports to the regulator and was involved in transactions connected with “shadow” sale of cash proceeds by trade enterprises to third parties.

A significant share of the bank’s corporate loan portfolio accounted for legal entities associated with its main owner. At the same time, more than 70% of the loan portfolio was made up of low-quality loans.

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

Payments to the banks’ depositors will start no later than on August 7, the Deposit Insurance Agency (DIA) said.

(70.9630 rubles – U.S. $1)

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