Bank City is another Russian commercial bank whose Central Bank revoked its license. The collapse of a financial organization occurred in 2015. Some depositors are still waiting for a refund from the Deposit Insurance Agency. According to reviews, “Bank City” became an example of another financial fraud with money laundering abroad, and banking was just a cover for the organization’s leadership.
Bank History
Bank City, which became known to most Russians only after a scandalous bankruptcy, previously had the modest name of Vorkuta Bank, since it was founded in the city of the same name in 1994. Gradually, the assets of the financial organization began to increase, and the company entered the all-Russian lending market.
In 2004, Vorkuta Bank became a member of the deposit insurance system. The name was changed to the well-known brand "Bank City" in 2007. After 4 years, the parent branch moved to the capital. In 2012, the Bank City group included a branch from Tatarstan AIB Mortgage-Invest. Until 2015, there were no major changes in the structure of the bank.
The bank's owners, father and son Kvasnyuki, previously headed other credit organizations (CB Alta-Bank, CB Vostokbusinessbank, OJSC Our Bank, AKB General and Stroykredit-Kazan).
First financial difficulties
Until October 2015, there were no prerequisites for the future bankruptcy of Bank City. And although the lender was not an influential figure in the Russian economic market, in terms of assets, the bank was in the TOP-200 of Russia (190th place in the rating of 2015).
Neither the bank's customers, nor financial analysts could even suggest that in 2015 the bank would go bankrupt. The procedure lasted less than a month: a quick period, which is typical for companies with medium assets (up to 100 billion rubles).
In October 2015, customers who came to pay bills at Bank City offices unexpectedly were refused. The inability to make transactions was explained by bank employees as temporary technical problems. Even in large banks, such as Sberbank and VTB 24, intermittent failures occur, so customers did not attach much importance to what is happening.
Liquidity loss
But when the refusal to accept payments lasted 3 days, many depositors began to fear for their money in the accounts of Bank City. Customers began to close deposits on a massive scale. This led to a sharp reduction in the assets of Bank City, which consisted of 95% of the assets of individuals. In reviews of deposits of Bank City (Vorkuta), information began to emerge about the possible financial problems of the lender.
A week later, on November 9, it became known that the Central Bank drew attention to the lack of liquidity of the bank and began monitoring the state of the lender. This means that if problems persist, Bank City was threatened with license revocation and bankruptcy.
Negative trends and attention of the Central Bank
In their reviews of Bank City deposits, clients wrote that from November 10 to 20 they were not able to withdraw funds from their accounts. The bank suspended all operations indefinitely. Information about serious financial problems of the bank began to appear on the network.
Economists noted that at the beginning of 2015, the Central Bank made a comment to the bank’s management about the risky credit policy. Later it became known that the company did not reserve funds for cases of loan losses.
Hope for recovery
Rumors about the problems of Bank City in the media and the Internet only exacerbated the situation. The bank's reputation was on the verge, and TOP management had to take decisive measures to restore the financial well-being of the lender.
The bank's management in an interview with reporters reported that an increase in assets of 700 million rubles is expected soon. Such investments can support the financial situation of the lender and return hope for the restoration of liquidity.
The deal was scheduled for November 16, 2015. Reserves in such a volume (700 million rubles) were able to return the liquidity of Bank City to a level close to the minimum value.
Customers who did not manage to receive funds on deposits hoped that with the investment of capital from investors, the situation in the bank would stabilize. Those who made deposits of less than 1.4 million rubles, could not worry about their money. Since Bank Gorod has been part of the deposit insurance system since 2004, amounts up to 1.4 million rubles were paid to customers in 100% of the amount.
Bank bankruptcy and license revocation
But the financial assistance promised by the bank’s management was not received. As a result, November 16 was the date when Bank City became bankrupt. On November 16, 2015, the Bank of City license was revoked by the Central Bank of Russia.
According to economic experts, not only a sharp loss of liquidity served as an impetus for taking extreme measures in relation to Bank City. The situation of a financial organization originally from Vorkuta became interested in the Moscow prosecutor's office.
An analysis of the bank’s assets during the crisis led to unexpected results. According to estimates by experts from the Deposit Insurance Agency, more than 10 billion rubles were missing on the balance sheet of Bank City. During the analysis, numerous transfers abroad in especially large sizes were found.
Lender Financial Violations
Reported violations in the form of transfers of millions of rubles abroad were not commented on by the bank's management. In November 2015, the Central Bank decided to appoint an interim leadership. The duties of the new leadership included the Bank City City recovery policy.
But the real directors refused to provide loan documents worth over 11 billion rubles. This confirmed the concerns of the Central Bank regarding the policy of illicit capital turnover.
According to the results of economic activity, a criminal case was instituted. The Moscow Arbitration Court sentenced the former leaders of Bank Gorod to reimburse more than 10.5 billion rubles that had been illegally concealed from the financial commission.
Investor Problems
Most of those who are interested in the situation of Bank City are former investors. They hope to return the savings that are insured for up to 1.4 million rubles per customer.
When asked by reporters: “Do you think Bank City is the end?”, Customer reviews differ. Despite financial problems, more than 3% of respondents are sure that some of the branches of the organization can still restore work. But the majority (89%) of customers are inclined to believe that the lender has finally left the Russian banking sector.
The main problems of depositors are related to the receipt of cash back, which they invested in Bank Gorod deposits. According to customer reviews, “Bank City” aroused trust among the population, despite the lack of a vibrant brand and advertising. Favorable conditions for individual entrepreneurs and individuals, comfortable offices and competent staff are the advantages of Bank City, which he was famous for before the license was withdrawn.
Compensation to customers of Bank City
After the bankruptcy, the customers of Bank City began to actively apply for insurance compensation payments. The Deposit Insurance Agency has appointed 2 agent banks to receive payments by former customers of Bank City. Clients from Tatarstan can apply to the branches of Rosselkhozbank, the rest of the depositors must write a request for a refund at the branches of VTB 24.
The list of additional offices of agent banks is presented on the website of the Deposit Insurance Agency in the section on Bank City. According to competent and professional reviews of “Bank City” from those who have already received a refund, payments by depositors are made within 6 months from the date of submitting a package of documents to agent offices.
Reviews of defrauded investors
Clients who were forced to return their cash through the Deposit Insurance Agency spoke extremely negatively about the work of the lender. Most of the dissatisfaction among citizens was caused by the fact of hiding the real financial situation in the bank during the period of delayed payments.
The reviews on Bank City (Vorkuta) show how wasteful financial activities can cause serious problems for the bank and management. According to experts, the bank is obliged to depositors to pay damages in the amount of almost 10 billion rubles. Another 55 million rubles is in arrears to individual entrepreneurs and corporate clients, as Bank City provided retail outlets, acquiring, opening and maintaining accounts of legal entities.
Positive feedback about the bank is left only by those investors who managed to withdraw cash from the accounts before its bankruptcy. Information in such comments dates back to 2015 and earlier.
Customers write in reviews about the "Bank City" is not always only negative. Before bankruptcy, he fully met their requirements and met the business standards declared in Russia. The current situation is associated with the activities of management, which decided to conduct dubious business, hiding behind the banking sector.
Many economists agree with this view, arguing that Bank City has been able to hold out on the Russian market for more than 20 years. It was formed during a serious, protracted economic crisis. The company overcame several difficult periods and crashed only by reducing the interest of management in the activities of the bank as such.
Cash withdrawal from agent banks: reviews
Resigned to the fact that Bank City became bankrupt, customers actively began to "storm" the offices of agent banks in order to get their money back. But in some cases, they were faced with the inability to complete the operation.
The largest number of failures occurred in cases when customers incorrectly chose the office in which they needed to write a statement. Despite these banks (Rosselkhozbank and VTB 24), it is not possible to receive a refund at all territorial branches in the city.
The Deposit Insurance Agency provided an opportunity to return funds to former investors in 12 regions of the country. A list of regions is on the agency’s website.
If customers have problems with receiving cash, they can file a claim on the website of the Deposit Insurance Agency. Based on the results of studying failures, the commission can take strict measures against branches and employees who unreasonably refused to pay insurance compensation to customers of a bankrupt bank.
As practice shows, categorical unreasonable refusals in agent banks do not occur. According to reviews of Bank City, temporary difficulties arise for customers due to an incomplete set of documents or a malfunction in the bank's software.
The opinion of employees about work in Bank City
Bank employees always find out about the financial situation earlier. And "Bank City" was no exception. At the request of management in November 2015, the acceptance of payments was suspended, but bank employees did not have the right to report the true reason for the failure. At that time, all specialists were aware that the bank was experiencing serious financial problems, which were the reason for the branches to stop working.
In the reviews of employees about the "Bank City" you can now read the working conditions proposed by the employer. Salaries were average by the standards of the banking sector. The company’s offices were equipped with the necessary equipment and stationery.
The working day of the managers of Bank City was normalized. Due to the presence of a social package, leave and sick leave were paid according to the requirements of the Labor Code of the Russian Federation. In reviews of Bank City JSC, employees wrote that the programs for working with clients were of average quality, but this did not cause inconvenience in the work process.
Employee reviews on bankruptcy of a financial institution
Employees were among the first to learn about the impending crisis of the company. They were instructed not to accept payments and not to disclose information about the current financial situation. This led to the dissatisfaction of depositors who asked the bank managers 2-3 weeks before his bankruptcy about the safety of invested funds. According to reviews, employees were not entitled to speak of Bank Gorod as a future bankrupt until the official decision of the Central Bank of Russia was adopted.
But after tough measures were taken regarding the creditor’s license, the employees ’opinion of the company deteriorated. Since the leadership could not affect their work due to the bankruptcy of the bank, employees boldly spoke out in their reviews of Bank City from Vorkuta. They pointed to violations in the issuance of loans, registration of mortgage contracts.
The managers wrote that they suspected the illegal withdrawal of the bank’s assets abroad, but did not have access to information. After the bankruptcy, employee reviews helped prosecutors identify fraud in some transactions at Bank City. The financial crime investigation is ongoing.