Regions

Central bank of Russia shuts down Investbank, two more in criminal activity crackdown

December 13
5:02 AM 2013

On Friday, the central bank of Russia said it had revoked the licenses of thee more banks in light of its efforts to curb shady financial activities. The announcement came just a day after President Vladimir Putin promised to launch the measures he proposed a year ago to prevent the outflow of capital.

One of the banks that will be closing is Investbank, which is number 79th bank in Russia in terms of assets. Investbank and two other banks were said to have links in dubious operations and increasing problems in payments, the Russian central bank said.

The closure of the three banks came at the heels of the shutdown of mid-sized Moscow bank Master Bank weeks ago. The revoking of Master Bank's license was noted to be an indication on how serious Governor Elvira Nabiullina is with regard to halting rampant money laundering and fraud in Russia. Nabiullina's predecessor attributed the illegal capital outflows amounting to $50 billion last year to dodgy banks.

On Thursday in his annual speech, Putin acknowledge that there has been no action to implement the measure he introduced a year ago that could stem the flight of capital, which has in effect reduced investment and the coffers of the Kremlin.

According to a Reuters report, the closures had put the counter-party risks among some 900 Russian banks on the spotlight, which added a negative sentiment on financial markets. The Russian currency rouble dipped to four-year lows following the recent bank closures.

Since Nabiullina sat as governor of the Russian central bank in June, a total of 30 banks had been stripped off of their operating licenses. The other two banks that had been stripped off their licenses aside from Investbank are Smolenksy and Project Finance Bank, which had payment issues with their creditors and depositors, according to the Russian central bank in separate statements.

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