Bank of Russia Screws Depositors

August 21, 2013
Oleg Kharseyev/Kommersant

One of Russia’s banks took a loan from Bank of Russia in order to stay afloat. However, that bank also owed creditors billions of rubles. An appeals court has pronounced that the bank rightfully transferred money to the Central Bank before its other creditors. This decision, however, means that now that the bank is bankrupt, those creditors will likely never be repaid. – Ed.

An appeals court of the second instance has ruled that the Bank of Russia had rightfully received payments of more than a billion rubles for loans from AMT Bank before its license was revoked. This billion in rubles is now a shortfall for creditors of the bankrupt bank.

The Ninth Arbitrage Appeals Court satisfied the complaint of the Central Bank on 15 August and overturned the decision of the court of the first instance to levy a payment of 1.178 billion rubles in favor of AMT Bank in a lawsuit by the Agency for Depositors’ Insurance, RIA Novosti reported, citing the legal reporting agency RAPSI.

The suit between Central Bank and the Agency for Depositors’ Insurance (ADI) addressed the issue of the legality of the satisfaction of the demands from the Bank of Russia to AMT Bank, which was in a state of bankruptcy. The ADI is the bankruptcy manager for AMT Bank, and in performing its function was trying to return the maximum amount of funds to pay creditors. Central Bank in turn had provided loans to AMT Bank. The ADI insisted that the funds received from the Bank of Russia to pay these loans on the eve of bankruptcy should be returned to the bankrupted bank. According to the ADI, the regulator of the banking market could not help but know about the pre-bankrupt status of the bank, indicating that funds from the bank should not have been paid out.

Earlier, the court of the first instance had taken the side of the ADI. On 28 May, the Moscow Arbitrage Court declared invalid transactions to pay the debts of AMT Bank in the period before its loan license, issued by the Bank of Russia, was withdrawn. As the court of first instance noted, a representative of the ADI, Central Bank and Bank of Russia signed a general agreement in 2009 to provide a loan from the Bank of Russia. AMT Bank missed some payments and the two banks signed an agreement to restructure the loan. As a result, AMT Bank owed the Central Bank 7.7 billion rubles. Starting in February 2011 until the withdrawal of its license, AMT paid 1.178 billion rubles of its debt. According to the bank’s lawyer, the Bank of Russia could not have failed to know about the unsatisfactory state of affairs at AMT Bank during this period and that the payment of such a large sum of debt would lead to non-fulfillment of obligations to other persons, including to depositors.

Central Bank representatives stated in turn that at the time the disputed transactions were made by AMT Bank, the missed payments were not recorded (i.e. files of payment documents not made on time). He noted that AMT Bank had assets for fulfilling its obligations to other persons. The plaintiff did not provide proof that in payment of the debts, priority was given to the Bank of Russia, the respondent’s representative also noted. Moreover, in the opinion of the Central Bank’s lawyer, the ADI missed the deadline for filing suit. Central Bank removed AMT Bank’s license in July 2011, and on 20 June 2012, the Moscow Arbitrage Court declared the bankruptcy of AMT Bank.

The appellate court found the reasoning of the Bank of Russia more persuasive.