In Russia, the liquidation process of a credit institution is regulated by the Federal Law “On Banks and Banking Activities”, the Federal Law “On the Central Bank of the Russian Federation”. It can last several years. The bottom line is this: a temporary administration is introduced into the bank. If it cannot independently stabilize the organization’s activities or find sponsors, the Bank of Russia will liquidate the institution, having previously revoked its license.
Background
Bank liquidation and license revocation may occur for the following reasons:
- the beginning of operations is delayed for more than a year from the date of receipt of the permit;
- reorganization;
- the invalidity of the data on the basis of which the license was issued was established;
- information in the statements is not true;
- operations without permission;
- failure to comply with the requirements of the Federal Law governing the activities of credit organizations;
- unsatisfactory financial position of the bank.
In the event of a single violation of the Federal Law, an order is sent first to terminate certain activities by a specific organization. The same information goes to the Banking Supervision Department. If the consequences of violations are not eliminated within the specified period, then tougher measures are applied to the institution - a temporary administration is introduced. Even during the period of its operation, the bank may continue to perform operations:
- Settle accounts receivable
- receive a return on previously issued loans, advance payments, amounts for repayment of the Central Bank;
- receive funds from previously performed operations and transactions;
- return erroneously credited money;
- conduct operations on executive documents, etc.
Commission
If the credit preemptive has gone bankrupt, then the bank is liquidated through bankruptcy proceedings, the administrator is appointed by the arbitration court. Organizations that can attract deposits from individuals and legal entities go through this process at the Agency for Social Insurance of Deposits (DIA). The Bank of Russia analyzes operations for their compliance with regulations and legal acts. If a decision is made on liquidation, a special commission is created within 30 days after the license is revoked, which regulates this process. Reserves from the Bank of Russia are transferred to the correspondent account 10 days after its opening. They are used to cover debts to investors.
The commission carries out such procedures:
- notifies depositors through the media that a commercial bank is being liquidated (the announcement also indicates the address of the commission, account details, deadline for submitting claims);
- compiles a register of creditors;
- carries out operations for the preservation of property;
- exacts DZ;
- sells mortgaged property;
- assesses property;
- analyzes the provided penalties;
- puts the property up for auction in case of lack of funds from the bank;
- compiles reports, interim balance sheet.
The liquidation of the bank is considered completed after the data are recorded in the book of registration and publication in the Bulletin of the BR. The institution may again issue a license if the bankruptcy case is suspended by repayment of obligations within 6 months from the date of revocation of the license. To obtain a new permit, you must have assets at a minimum cost of 180 million rubles.
Statistics
The liquidation of banks in 2014 showed that this sector is the most problematic in the country's economy. Even today, out of the fifty largest institutions, problems in the next 5 years may occur in 8%. During the period from 2011 to 2014, one in four small banks, 70 regional and 30 medium ones, lost their licenses. Several large organizations came under reorganization. Last year alone, 50 institutions fell under the healing process.
Over the past 10 years, the liquidation of banks and their restoration cost the DIA 1.18 trillion rubles, of which one third was aimed at paying deposits, and the rest - at reorganization. And this is not counting payments to depositors of institutions that did not fall into CERs. Today, the DIA is engaged in the withdrawal of another 190 institutions from the market.
Cost recovery
The liquidation of banks through the recovery of assets allows you to return a quarter of the amount spent. Although 10 years ago this figure was 5%, today's 22% can hardly be called high. Statistics for 2014-2015 will not appear soon. But even according to available data, it can be said that the numbers will not change too much. The real size of assets of banks without a license is 63.3 billion rubles, liabilities - 100 billion more. That is, lenders can expect to return no more than 38% of the claims.
Remediation is expensive
About 37% of the assets are sanitized by the state. This is a very high indicator, especially when you consider that the procedure occurs by lending to institutions on very favorable terms: 10 years at 0.51% per annum. That is, even the repayment of a loan can be attributed to the cost of rehabilitation. Therefore, the Central Bank does not always make decisions about improving the institution. Bank liquidation is often cheaper.
The situation in Ukraine
The situation is not better for the neighbors. In 2014 alone, the NBU withdrew a license from 49 organizations. The worst result (10.1 billion loss) was shown by VAB Bank (Ukraine), the liquidation of which has already begun. Two state institutions - Ukrexim and Oschadbank - also received losses in the amount of 9.8 billion and 8.6 billion UAH. respectively. In addition to the difficult economic and political situation in the country, a significant role in this matter was played by the devaluation of the national currency, the growth of loan defaults, and the outflow of deposits.