What does it mean to revoke a bank's license? View from four sides

Why can a bank's license be revoked?

The Central Bank of the Russian Federation revokes a license from a banking organization in several cases:

• the value of all equity adequacy standards becomes below two percent;
• if the amount of own funds is below the minimum value of the authorized capital established on the date of state registration;
• if the bank is unable to satisfy the claims of creditors for monetary obligations or fulfill the obligation to make mandatory payments within 14 days from the date of their satisfaction or execution. In this case, the total requirements must be at least 100,000 rubles;
• monthly reporting was submitted with a delay of more than 15 days, etc.

All grounds for revocation of a license are specified in Article 20 of the Federal Law “On Banks and Banking Activities”. A message about a bank that has lost its license can be found in the Bulletin of the Bank of Russia or on the official website of the Central Bank. The massive purge of financial institutions began back in 2013. Thus, the state wants to eliminate unreliable and problematic banks and protect their clients.

What does it mean to revoke a bank's license? View from four sides

After Elvira Nabiullina came to the post of head of the Bank of Russia, more than 280 banks have already lost their licenses. Among the most common reasons for the liquidation of dubious credit institutions are risky lending policies, money laundering, violation of obligations to creditors and depositors, provision of false reports and insufficient capital.

Let’s try to figure out what consequences come after the revocation of a credit institution’s banking license for the bank itself, its depositors, bondholders and borrowers.

For the bank

After the license is revoked, the bank must be liquidated, and if there is insufficient property to pay all creditors, it must be declared bankrupt.

A clear signal for doubts about the reliability of the bank is too high interest rates on deposits or a downgrade of the rating by international rating agencies.

You should be especially alarmed by difficulties with obtaining cash, the Central Bank’s ban on accepting deposits, delays in payments, closure of offices, as well as if the media reports problems with the law of the organization’s leaders, or other negative information has appeared.

If a bank has issued bonds that are traded on the stock exchange, then any doubts of investors may be reflected in an increase in their profitability.

In accordance with the Law “On Banks and Banking Activities”, from the moment of revocation of a credit organization’s license:

— The deadline for fulfilling the obligations of the credit institution is considered to have arrived;

— The execution of enforcement documents is suspended on the basis of court decisions on property penalties that entered into legal force before the date of revocation of the license;

— The accrual of interest, as well as penalties and other financial sanctions on the obligations of the credit institution, including under bank deposit agreements and (or) bank account agreements, ceases;

— It is prohibited to conclude transactions, including the fulfillment of obligations under transactions of the credit organization, except for the current obligations of the credit organization defined by this article, until the day the arbitration court decision comes into force on declaring a credit organization insolvent (bankrupt) or on liquidating a credit organization.

For the investor

If the amount of deposits and accounts in a bank whose license has been revoked does not exceed 1.4 million rubles, then there is nothing to worry about. After a simple procedure, the depositor can return his funds through the Deposit Insurance Agency, including interest.

Deposits and accounts of individuals in a bank participating in the Deposit Insurance System are insured “automatically” from the moment the funds are placed on the basis of a bank deposit/account agreement.

All the depositor needs to do to receive insurance is to come with a passport to the bank (agent bank) selected by the Agency and fill out an application there. The DIA reports the place and time in the media and directly to investors. As a rule, payments begin within 14 days from the date of license revocation.

The depositor's right to receive compensation for deposits arises upon the occurrence of an insured event:

— When the Bank of Russia’s license to carry out banking operations is revoked (cancelled) from a bank (if the Agency’s participation plan in measures for the financial rehabilitation of the bank is not implemented);

— When the Bank of Russia introduces a moratorium on satisfying the claims of bank creditors.

The procedure for receiving insurance payment on deposits:

1. Contact the Deposit Insurance Agency or the agent bank with a request for compensation of the deposit at any time from the date of the insured event until the completion of the bankruptcy procedure, or until the end of the moratorium, providing:

— an application in the form determined by the Agency;

— identification documents.

As a rule, the DIA announces the start of payments no later than 14 days after the occurrence of the insured event. These documents can be submitted by mail, through an expedition or directly to an official.

2. If the deadline for contacting the DIA was violated, then you must write a statement indicating the reasons. An excuse may be force majeure, military service or illness.

Payment of compensation for deposits is made by the Agency in accordance with the register of the bank's obligations to depositors within 3 working days from the date the depositor submits the necessary documents to the Agency, but not earlier than 14 days from the date of the insured event.

All funds in deposits and bank accounts are subject to insurance, with the exception of the following funds:

— Placed in bank accounts (deposits) of lawyers, notaries and other persons, if such accounts (deposits) are opened for the implementation of professional activities provided for by federal law;

— Placed by individuals in bank deposits payable to bearer, including those certified by a savings certificate and (or) savings book payable to bearer;

— Transferred by individuals to banks for trust management;

— Placed as deposits in branches of banks of the Russian Federation located outside the territory of the Russian Federation;

— Being electronic money;

— Placed on nominal accounts, with the exception of separate nominal accounts that are opened for guardians or trustees and the beneficiaries of which are wards, collateral accounts and escrow accounts, unless otherwise established by this Federal Law;

— Placed by individual entrepreneurs in subordinated deposits;

— Placed on impersonal metal accounts.

A few important points.

Payment of compensation is made in rubles in cash or to a specified bank account. And if the deposit was opened in foreign currency, then the amount of compensation is determined in rubles at the Central Bank exchange rate on the day the insured event occurred.

If an insured event occurs simultaneously in relation to several banks in which the depositor has deposits, the amount of insurance compensation is calculated for each bank separately.

If the bank in respect of which the insured event occurred also acted as a creditor in relation to the depositor, the amount of compensation for deposits is determined based on the difference between the amount of the bank’s obligations to the depositor and the amount of the bank’s counterclaims to the depositor that arose before the day the insured event occurred.

You can receive insurance compensation through a representative if you have the appropriate notarized power of attorney. Heirs are also entitled to payment.

If the amount of deposits in a bank with a revoked license exceeds 1.4 million rubles, then returning the funds may be difficult.

A depositor who has received compensation for deposits in the amount of 1.4 million rubles retains the right to claim against this bank for the remaining amount of the deposit. Satisfaction of such a requirement is carried out after the arbitration court makes a decision on bankruptcy (liquidation) of the bank and occurs at the expense and within the funds of the bankruptcy estate, which includes all identified property of the debtor.

Moreover, the claims of individuals who are creditors of a credit institution under bank deposit agreements and (or) bank account agreements concluded with them are satisfied first of all.

It is much more difficult for legal entities to return funds. According to the law, they are not included in the Deposit Insurance System, and they are not entitled to insurance payments. After the liquidation of the bank, their claims will be satisfied in the third stage.

For bondholders

It will be much more difficult for bondholders of a liquidated bank to get their money back than for depositors. And it’s most likely not worth counting on the entire amount.

The law does not provide for bonds without any guarantees or insurance indemnities. So their owners receive their funds during the liquidation of the bank along with other creditors and in the very last place.

Sequence of payments:

1. First of all, the claims of individuals who are creditors of a credit organization under bank deposit agreements and (or) bank account agreements concluded with them are satisfied;

2. Secondly, calculations are made for the payment of severance pay and wages of persons working or working under an employment contract;

3. Thirdly, settlements are made with other creditors.

Moreover, the claims of creditors of each subsequent queue are satisfied after the demands of the creditors of the previous queue are fully satisfied.

Secured bonds, including mortgage bonds, are much safer.

Secured bonds include bonds, the fulfillment of obligations under which is fully or partially secured by a pledge, surety, bank guarantee, state or municipal guarantee. The terms of the security obligation must be contained in the decision to issue bonds, as well as in the bond prospectus.

If a bank's license is revoked, the claims of mortgage bond holders are satisfied through the sale of mortgage coverage. Owners of mortgage-backed bonds have the right to claim satisfaction of their claims during bankruptcy proceedings only to the extent of the amount lost from the sale of the mortgage-backed bonds.

For borrowers

For bank borrowers, the situation does not change at all. Revocation of a license does not relieve them of the obligation to fulfill their obligations to the credit institution in a timely manner and in full.

A credit organization has the right to receive debt on issued loans until the decision of the arbitration court to declare it insolvent (bankrupt) or to liquidate it comes into force. Subsequently, debt collection is carried out by the bankruptcy trustee (liquidator).

At the same time, there are no grounds to require the borrower to repay loans early if this is not provided for in the agreement. The issue of early repayment of debt can be resolved exclusively by agreement of the parties.

The procedure for repaying the debt can be clarified with representatives of the temporary administration.

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How to understand that the bank has problems

You can find out if a bank has problems before it is liquidated. Here are the main signs that indicate an unstable situation in the bank:

• the bank's rating decreased;
• the number of ATMs has decreased and some branches have closed;
• there was a change of ownership of the bank;
• problems arise with performing operations and making payments;
• The official website stopped working, the mobile application does not open;
• it is impossible to withdraw cash;
• Alarming news appears in the media about the bank and so on.

If you notice at least one of these signs, then you should think about closing the account and transferring funds to another bank.

What to do if a current account is opened

Every day, the Central Bank posts on its official website a list of credit institutions that have lost their licenses. Clients of such banks must be notified of this. If your bank's license has been revoked, the first step is to apply for a refund. The application period is 60 days. Those who missed this period will receive the money last, that is, within two years. Therefore, it is better not to delay submitting an application. You can find out which bank will accept applications from individual entrepreneurs and legal entities 2 weeks after the license is revoked on the Deposit Insurance Agency website. There is no need to close a current account in a bank that has lost its license. It will close automatically and all data will be sent to the tax office. Current accounts with no funds will be closed immediately. Otherwise, only after the client’s money is returned. The next step will be to warn counterparties that the bank has lost its license and there is no need to transfer funds to your account. Otherwise, the money will simply hang in the correspondent account of the credit institution. Don't forget to warn your employees too. The amount sent to the employee as salary is also insured by the state. Therefore, the salary will definitely come to the card, but with a delay. You will have to pay compensation for the delay. If you managed to make a payment to the tax authorities when the bank’s license was revoked, you need to make sure that the money reached them. If this does not happen, contact the inspector with the following documents: tax payment receipt, account statement and application. Then the obligation to pay tax will be considered fulfilled.

How to get insurance?

Information about the revocation of a bank’s license is posted on the official website of the Bank of Russia, on the website of the Deposit Insurance Agency, in the Unified Federal Register of Bankruptcy Information (EFRSB) and also in the media. The DIA publishes information for depositors on its website in the “Insured Events” section.

What to do next?

1. Find out where you can get insurance.
   The DIA will determine a list of agent banks - those banks that will pay you insurance. The list will be posted on the DIA website and on the doors of your former bank, and published in the press one day before the start of payments.
2. Fill out an application for the agent bank
   You can submit an application for compensation from the moment payments begin until the day the bank’s liquidation is completed. This process has been going on for about a year. Please note that there may be queues during the first days of payment. To submit an application for compensation to an agent bank, you only need a passport and a completed application form. It will be given to you at an agent bank or posted on the bank’s website. If you cannot come to the bank yourself (you are sick, live in another country, or there is no branch of an agent bank in your city), you can send an application by mail, but then you will need documents certified by a notary. If you are the investor's heir, you must also provide documents that confirm your right to inheritance.
3. Select the form of compensation.
   If you had a deposit for individuals, you can receive compensation both in cash and by bank transfer. If you are an individual entrepreneur, money can only be received in a current account.

How to avoid losing money in the future

In order to avoid financial problems in the future and protect yourself from losing money, you need to constantly monitor the state of the bank. How this can be done:

• Be more interested in ratings. Pay attention at least to the list published by the Central Bank;
• check banks for participation in legal proceedings;
• show interest in the details (before revoking the license, banks may delay payments, etc.).

In addition, we recommend having several accounts in different banks. This will not only protect you from significant losses of funds, but also from sudden blocks from banks and the tax office.

For example, now it will be profitable to open a current account in Modulbank, UBRD or VTB. Opening an account in the listed banks is free; if you wish, you can activate a free tariff for cash settlement services. All new clients will receive gifts from partner banks. So in Modulbank you can get up to 538,000 rubles for business development:

• 10,000 rubles for a Google advertising campaign through Aori;
• free number 8800 from Beeline;
• 3 months of accounting from My Business and much more.

You can fill out an application for the service right now on our service.

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