Central Bank pulls UM-Bank, Moskva bank licenses
MOSCOW. Nov 14 (Interfax) - The Central Bank of Russia (CBR) has revoked the banking licenses held by Moscow-based UM-Bank LLC and Regional Joint-stock Commercial Bank Moskva, effective November 14, the regulator said in press releases.
Both banks are members of the deposit insurance system. Both have gone into temporary administration pending the appointment of a receiver or liquidator.
UM-Bank LLC was Russia's 298th largest bank by assets at the end of Q3 2018, according to the Interfax-100 ranking prepared by the Interfax Center for Economic Analysis. It held 1.9 billion rubles in retail deposits. The Central Bank ranked it 293rd by assets on November 1.
Regional Joint-stock Commercial Bank Moskva was Russia's 430th largest bank by assets at the end of Q3 2018, according to the Interfax-100 ranking. It held 337 million rubles in retail deposits. The Central Bank ranked it 431st by assets on November 1.
The CBR said regarding UM-Bank that "funds attracted from households accounted for more than half of liabilities on the bank's balance sheet; the credit institution invested them in low-quality assets - dubious and bad debts accounted for about 70% of the loan portfolio. As the credit institution consistently underestimated credit risk assumed, the Bank of Russia repeatedly requested that it create additional loss provisions. Besides, in order to conceal the bank's real financial position and to formally comply with prudential requirements, UM-Bank LLC has performed opaque transactions during the current year to artificially maintain the equity capital."
"The Bank of Russia repeatedly - five times over the last 12 months- applied supervisory measures against UM-Bank LLC, including two impositions of restrictions on household deposit taking. At the same time, the credit institution violated asset sale restrictions imposed by the Bank of Russia to protect the interests of its creditors and depositors," it said.
"The operations of UM-Bank showed signs of misconduct by the management who conducted transactions aimed at withdrawal of liquid assets to the detriment of creditors' and depositors' interests. The Bank of Russia will submit information about the bank's transactions bearing signs of a criminal offence to law enforcement agencies," it said.
Under these circumstances, the Bank of Russia took the decision to revoke the banking license of UM-Bank LLC.
Regional Joint-stock Commercial Bank Moskva's operations were "on multiple instances found to be non-compliant with Bank of Russia regulations on countering the legalization (laundering) of criminally obtained incomes and the financing of terrorism (AML/CFT) with regard to the completeness and reliability of information provided to the authorized body about operations subject to mandatory control," the regulator said.
"The second quarter of the year saw a manyfold rise in the volume of the credit institution-conducted questionable transit operations, of which roughly half were transactions related to retail companies' shadow sales of cash receipts to third parties. The Bank of Russia's interactions with the credit institution aimed at improving its anti-money laundering processes failed to result in appropriate corrections to its business model. Moreover, several facts constituted evidence for the credit institution's deliberate involvement in the conduct of suspicious transactions, with its executives and shareholders having no intention to take effective action towards stopping such operations," it said.
The Bank of Russia repeatedly - three times over the last 12 months- applied supervisory measures against Moskva, including supervisory action for non-compliance with AML/CFT regulations.