UPDATE: Central bank says revokes license from 2 small banks

(Adds details in headline, paragraphs 1, 4–5)

MOSCOW, Oct 19 (PRIME) -- The Russian central bank has recalled the license from Irkutsk-based VostSibtranscombank, ranked 305th by assets as of October 1, and Moscow-based Rial-Credit, ranked 417th, the authority said in a statement on Friday.

VostSibtranscombank had an insignificant amount of shareholder equity and did not have sources to cover losses stemming from a low quality of the loan portfolio. The bank has been scheming and held nontransparent deals to support capital and meet the prudential norms.

Formation of reserves on request by the central bank led to a loss of 98% of capital and reduction of capital adequacy to critical levels.

Rial-Credit was focused on commission income from currency exchange operations and remittances. The loan portfolio accounted to no more than 17% of the asset structure and 50% of it was represented by soured loans.

The central bank imposed supervisory measures on the bank three times over the last 12 months, as Rial-Credit violated legislation and rules of the central bank.

VostSibtranscombank is a participant of the deposit insurance system, which means that each depositor is entitled for an up to 1.4 million ruble compensation.

(65.7238 rubles – U.S. $1)

End