Bank of Russia revoked banking license of two more banks this year

By Staff Writer

Feb 08, 2016 07:18 AM EST

Two more Russians banks have been revoked its banking license as the country is entering into slow economic phase. According to the latest statement released by the Bank of Russia, the two banks are Interkommerzbank and Alta Bank.

Based on the report by the Russian News Agency, the banks' license was revoked because the institutions failed to meet the new stricter guideline enforced by the Russian government. The news agency confirmed that Interkommerzbank capital is currently below the authorized capital minimum which is 2 percent.

The banks have been identified by the Bank of Russia to have been improperly handing their investment risk. Besides that, the banks have also been identified by the authority to have been involved in a questionable transaction operation which will be investigated further by the authority.

Interkommerz is currently Russia's 67th bank by assets and 34th in place with the most retail deposit according to the data reported by CNBC. However, the position does not mean anything as currently the government is slowly consolidating the banking sector to strengthen the country's economic power.

The move has been criticized as unfair by many critics because it does not allow any small banks to operate as reported by The New York Times. However, the Central Bank denied it and said that the move is crucial in creating great long-term stability.

This is proof as the Central Bank has previously revoked the banking license for Vneshprombank which is rank among the top 50 bank with the biggest assets in Russia. According to the data compiled, the bank operates a total of 70 billion rubles or $915 million in retail deposits.

Vneshprombank also holds few elite Russian politician as their clients but that did not stop the Central Bank. According to the report, the bank has been actively involved in money-laundering activities that make the bank illegal to operate. However, with the assistance from Deposit Insurance Agency, the bank's client able to get some of its deposit back.

For last year alone, Central Bank revoked 4 banking license that ranked in the top 100 list in assets size. The four banks are NOTA-Bank, Rossiyskiy Kredit Bank, Probusinessbank, and Sudostroitelny Bank.

Despite the revoked license, both Interkommerzbank and Alta Bank clients are given a chance to recover back their assets up to 1.4 million rubles ($18,207) before the banks are closed. Currently, there are still 798 credit institutions with a banking license operating in Russia and with the recent crackdown by the Central Banks, more banks' licenses are expected to be revoked.

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