SB Bank: liquidity problems

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

Sudostroitelny Bank or SB Bank experienced liquidity problems simultaneously with other Russian banks at the end of 2014. This period was marked by the peak of the economic crisis. The fall of the ruble, the decline in oil prices, unstable foreign economic relations and many other factors influenced the course of events.

First official statements

"SB Bank" began to experience problems in its work even before official statements appeared. It was on January 16, 2015 that the difficulties faced by the credit institution were made public. In fact, the first violations of the work regulations took place at the end of 2014. It was during this period that failures in conversion-type payments began. Sending funds from accounts in one currency to accounts in another began to be carried out with a significant delay. Legal entities faced a daily delay in the transfer of funds. The situation was explained by the company's management as a consequence of excessive customer activity. The problems of the financial organization "SB Bank" did not end there. By the end of January, the payment of deposits began to be severely limited, and payment orders were delayed for 2-3 days. The experts managed to fix the difficulties with the transactionsREPO.

Loud fall

As of December 1, 2014, when the economic imbalance in the country was only heating up, SB Bank ranked 80th in the country in terms of assets. In terms of net profit, he owned the 22nd position in the ranking. In 2013, the financial institution was among the 20 most active operators in the interbank market. Starting from mid-January 2015, the international agency Standard &Poor's assigned a new rating to the bank. The institution's status was downgraded from 'B-' to 'CCC', which can be interpreted as a pre-default position. A forecast was made, according to which there is a high probability of Central Bank interference in the activities of the institution.

First rumors and negative reviews

"SB Bank" could not hide and veil problems from its customers already at the first stages of their appearance. Difficulties began to arise towards the end of 2014, as mentioned above. Many customers began to complain about the reduction in the overdraft limit, including for old cards. There is a category of people who noted the delay in payments, which, as we approached the New Year, became more and more prolonged. By mid-January, there were massive claims against the bank due to the refusal to pay deposits. There were messages in which clients said that the financial institution arbitrarily changes the date of receipt of payments to the bank. It was not possible to hide the fact that SB Bank does not make payments. This provoked a massive outflow of capital and aggravated the situation.

No chance ofproblem solving

Financial institution "SB Bank" failed to solve problems with liquidity on its own. Having collected deposits from the population for 16.4 billion rubles, the bank simply failed to fulfill its obligations. As problems arose, the situation was not expected to improve, and the bank's management was not able to explain the reasons for what was happening. The limit on the issuance of funds, which was supposed to be a temporary measure, was gradually reduced from 100 to 50 thousand rubles a day. As a result of delays in payments, people faced such unpleasant situations as late payment of taxes, delays in loan payments. Andrey Egorov, who at the end of 2014 served as president of a financial institution, systematically refused to comment on the situation. He has been in charge of the bank since 2011 and resigned, and Vasily Melnikov took his place.

What determined the situation?

"SB Bank" does not make payments, does not pay out deposits, does not carry out conversion operations - these are just a few of the signals that have become harbingers of liquidity problems. According to the counterparty bank, OFZ revaluation had a significant impact on the situation. In particular, on December 16 OFZ, the payment of which was scheduled for 2028, fell in price by 12.5 points, which amounted to 53% of the nominal value.

OFZ, which were due in December 2019, decreased by 11.2 points - about 65.1% of the nominal value. A source of information close to the management reported that the amount of funds that had to be paidfinancial institution of the Central Bank of the Russian Federation, exceeded the amount of 2 billion rubles.

Circumstances were supplemented by an increase in the interest rate, an increase in the level of collateral within the exchange, which led to a shortage of collateral. You can add the fact that about 12% of the institution's liabilities, equivalent to 10.2 billion rubles, are funds raised in the Central Bank.

Why has the economic crisis affected the bank so much?

It is well known that the bank, which appears in the country's financial sector as "SB Bank", has its license revoked due to low liquidity. Many sources report that the drastic impact on the financial institution from economic changes is justified by the bank's use of a complex funding scheme, which is characterized by a strong dependence on repo transactions conducted with the Central Bank. Despite the presence of a powerful liquidity cushion, the external conditions that had formed by the end of 2014 played the role of a trigger in the emergence of urgent problems. Analysts and experts have already foreshadowed the fact that no one will undertake the rehabilitation of the financial institution. SB Bank of Russia just went to the bottom, like many of its competitors.

Provisional Administration

A short time after there were problems with payments at a financial institution called SB Bank, the Bank of Russia appointed a temporary administration. This decision, taken on February 16, was stimulated by the revocation of the license giving the right toconducting financial transactions. From the first days of the introduction of the provisional administration, there were serious opposition to its activities. As reported in the report, the management of the organization "SB Bank", unable to solve the problems on their own, refused to transfer the original loan agreements. It tried to prevent the provisional administration from accessing pledge and surety agreements in the framework of loan debts of both legal entities and individuals. This was seen as clear evidence of an attempt to withdraw assets from the bank.

This behavior made it impossible not only to meet the requirements of creditors, but also to obtain legal pen alties. According to the results of the assessment of the work of the financial institution SB Bank, whose liquidity problems turned out to be more significant than expected, the size of its assets was estimated at the level of 8.9 billion rubles, with liabilities to creditors in the amount of 48 billion rubles.

Breach of law

Before the license was revoked, interesting actions of the management of the SB Bank organization were revealed. What is happening within the framework of a financial institution, it was possible to understand thanks to the formation of a register of the institution's obligations. When there were already problems with the organization's solvency, the creditors' claims were transformed into a privileged order of their fulfillment. There was a split of deposits to such an extent that it would be possible to compensate for the loss through payments from the deposit insurance agency. Actions of the formermanagement and owners of the organization had a shade of criminal activity. Information about them was sent by the Central Bank to the Prosecutor General's Office and the Ministry of Internal Affairs. One can attest to the fact that the financial institution known as "SB Bank" has had its license revoked legally.

Payments to victims

According to the official statement of the Deposit Insurance Agency, payments to former clients of the SB Bank structure will be made in accordance with the regulations from March 1, 2015 to March 2 next year. It will be possible to receive compensation at Sberbank, VTB 24, as well as on the rights of an agent bank at the Khanty-Mansiysk Otkritie Bank.

After March 2, 2016, information on the specifics of payments will be presented separately. Compensations are focused not only on compensation for damage to deposit holders, but also to customers who had settlement accounts with the institution. For all open accounts in the aggregate, the amount of compensation will not exceed the amount of more than 1.4 million rubles. If there are counterclaims from the bank to the depositor, their amount will be deducted from the amount of compensation in accordance with the current regulations of the Deposit Insurance Agency.