Moscow Arbitration Court declares International Industrial Bank bankrupt

PRIME-TASS. The Moscow Arbitration Court declared International Industrial Bank (IBB) insolvent (bankrupt) at its hearing on Tuesday, Prime-TASS reported. The court appointed the Deposit Insurance Agency (DIA) a bankruptcy commissioner.

The Bank of Russia was the claimant into the bankruptcy case.

As a representative of IIB’s temporary administration said at the hearing, the bank’s assets total Rub 62.2 bln, while its aggregate obligations amount to Rub 92.8 bln. The CBR representative noted that at present the bank’s obligations unsettled are around Rub 5 bln.

Both the temporary administration’s representative and the CBR representative requested to declare the bank bankrupt.

For the record, by its October 4 order the Central Bank of the Russian Federation revoked IIB’s banking license effective October 5. The lender’s license was cancelled due to the bank’s failure to fulfill federal laws regulating banking activities and CBR statutory acts, identified instances of material misstatement of financial reports, its inability to meet monetary claims of creditors and also taking into account the application on numerous occasions of the measures stipulated by the Federal Law “On the Central Bank of the Russian Federation”.

At the same time, the Bank of Russia appointed in its October 4 order a temporary administration team effective October 5 to manage IIB in accordance with the Federal Law “On Insolvency (Bankruptcy) of Lending Institutions” for a term until the arbitration court declares the bank bankrupt and commences bankruptcy proceedings (appoints a bankruptcy commissioner) or until the arbitration court’s ruling to appoint a receiver takes effect.

In line with CBR’s expert opinion, due to the loss of liquidity IIB failed to ensure the fulfillment of its obligations to the creditors in a timely fashion. Furthermore, the lending institution pursued a high-risk lending policy and did not form any adequate reserves against possible loan losses. When doing so, the bank forwarded misstated financials to the Bank of Russia and did not fulfill the demands of the supervisory body.

International Industrial Bank was not a member of the national deposit insurance system.

At present, the Moscow Arbitration Court hears three lawsuits filed by the Bank of Russia seeking to levy an attachment on the collaterals provided under the loans granted to IIB. For the record, in July 2010 the Bank of Russia extended to IIB uncollateralized loans for a total of Rub 32 bln, which later were converted into collateralized. The Bank of Russia received from IIB as collateral the shares of Severnaya Shipyard, Baltic Plant and Central Design Bureau Iceberg, which is part of United Industrial Corporation. Preliminary hearings into these lawsuits should be conducted on December 1, December 2 and December 23.

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