The Central Bank in Russia effectively closed down two of the country's banks as part of its latest efforts to secure the sprawling banking sector.
Canadian Business reports that Russia's Central Bank has revoke the licenses of Interkommerzbank and Alta Bank.
The Central Bank announced on Monday that it has cancelled the license of Interkommerzbank due to substantial disproportion between assets and liabilities of the country's 67th largest bank. It also withdrew the license of Alta Bank, the country's 186th largest bank on the basis that it was incapable of meeting creditors' claims.
The Russian News Agency discussed the decision of the Central Bank pointing to the failure of Interkommerzbank to fulfill with the federal laws and the regulations of the Central Bank. The bank's capital adequacy norms were below 2%, size of the bank's own funds (capital) decreased below the authorized capital minimum.
The Central Bank also said that the bank did not sufficiently assess the credit risks that could identify a total loss of the bank's capital. At the same time, the bank has been involved in conducting questionable transit operations. Aside from that, financial recovery of Interkommerts bank even with the assistance of the Deposit Insurance Agency (DIA) on practical economic conditions was impossible, the news source added.
Interkommerzbank as of January 1, 2016, occupied 67th place in the Russian banking system.
The TASS mentioned that the Russian Central Bank has revoked 93 licenses for banking operations. The largest banks in terms of assets with revoked licenses are in 2013 - Master Bank, Investbank, Smolensky Bank and Pushkino bank; in 2014 - First Republic Bank, Narodniy credit; in 2015 - NOTA-Bank, Rossiyskiy Kredit Bank, Probusinessbank and Sudostroitelny Bank.
The New York Times held the closures are measure of the Central Bank's operation to consolidate the banking sector, currently characterized by a large number of small banks.
Interkommerzbank and Alta Bank clients will be able to recover up to 1.4 million rubles ($18,207) of their assets, NYT said.
The revocation and closures of smaller banks began with the appointment of Elvira Nabiullin as the Central Bank's head in June 2013.
