Vneshprombank licence revoked as $2.4bn hole found in balance sheet

Russian Central Bank’s purge of the country’s banking system claimed its biggest scalp this week when it announced that it was revoking Vneshprombank’s licence after ruling that its liabilities exceeded its assets by as much as $2.4bn and accusing its management of plundering assets “over a long period of time” and of falsifying accounts. “The prospect of recovery through the courts is low and will need to involve cooperation with law enforcement authorities,” the Central Bank’s Deputy Governor Mikhail Sukhov  said on Thursday.  In a separate statement, the CBR  suggested that its  former management may have been engaged in asset withdrawal, with the assets possibly invested in real estate, expensive vehicles and financial instruments.
Vneshprombank’s financial difficulties have been apparent for weeks. The CBR placed it under temporary administration on Dec. 18, citing concerns about its liquidity and asset quality and violation of minimum capital requirements. Shortly afterwards, the bank’s head Larisa Markus was arrested on suspicion of fraud,  although her lawyers insisted that there was no evidence she had been engaged in criminal activity. 
The bank is one of Russia’s top 40 lenders and counts the Russian Orthodox Church, and  the wives of Deputy Prime Minister Dmitry Kozak and Defence Minister Sergei Shoigu among its most high-profile clients.
Its collapse is the latest in a series of costly bank failures and  bail-outs that are imposing a mounting financial burden on the state as it seeks to shore up the  sector. “The banking sector is slowly beginning to unravel,” said Maxim Osadchiy, head analyst at CFB Bank in Moscow. “For now, thank God, it is happening in quite a mild form because the fires are being extinguished with state money. It’s not clear how the central bank will continue to be able to save the banking sector, except by printing money.” 

Source: Bloomberg