OREANDA-NEWS. By its Order No. OD-2389, dated 27 July 2016, the Bank of Russia revoked the banking licence of the Moscow-based credit institution Commercial Bank BFG-Credit, limited liability company, or CB BFG-Credit LLC (Registration No. 3068) from 27 July 2016.

The Bank of Russia took such an extreme measure — revocation of the banking licence — because of the credit institution’s failure to comply with federal banking laws and Bank of Russia regulations, equity capital adequacy ratios below two per cent, decrease in bank equity capital below the minimum value of the authorised capital established as of the date of the state registration of the credit institution, due to repeated application within a year of measures envisaged by the Federal Law ‘On the Central Bank of the Russian Federation (Bank of Russia)’.

With its poor asset quality CB BFG-Credit LLC did not adequately assess the risks assumed. Proper credit risk assessment and fair presentation of asset value in the credit institution’s financial statements resulted in a full loss of its equity capital. The management and owners of the bank did not take effective measures to normalise its activities.

It was found impossible to implement the financial rehabilitation procedure for CB BFG-Credit LLC assisted by the state corporation Deposit Insurance Agency and its creditors on reasonable economic terms due to a significant gap between assets and liabilities. Under these circumstances, the Bank of Russia performed its duty on the revocation of the banking licence of the credit institution in accordance with Article 20 of the Federal Law ‘On Banks and Banking Activities’.

CB BFG-Credit LLC is a member of the deposit insurance system. The insured event shall be deemed to have occurred from the date of moratorium to meet the creditors’ claims on the CB BFG-Credit LLC (27 April 2016), which date is also used to calculate the insurance indemnity to be paid with respect to the bank’s liabilities in a foreign currency.

The revocation of the banking licence prior to the expiry of the moratorium to meet the creditors’ claims shall not override legal implications of its enforcement, including the obligation of the state corporation Deposit Insurance Agency to pay insurance indemnity for the deposits.

The Agency continues to pay the insurance indemnity of the deposits (accounts) at the CB BFG-Credit LLC on the ground provided by Clause 2, Part 1 of Article 8 of the Federal Law

‘On Insurance of Household Deposits with Russian Banks’ — the introduction by the Bank of Russia of a moratorium for a bank to meet the creditors’ claims until the termination of the bankruptcy proceedings.

According to the financial statements, as of 1 July 2016, CB BFG-Credit LLC ranked 99th by assets in the Russian banking system.