Ergo Bank, a Russian lender with links to the Orthodox Church, had its license revoked in the first withdrawal by the Central Bank of Russia this year.

The CBR cited the poor quality of assets and identified "a total loss of the bank's capital", according to a statement on its website.  In relation to its loss of liquidity, the bank failed to fulfill its obligations to creditors and depositors.

The bank, which has a Roman legionnaire motto meaning "You must, so you can", said on January 11 it had two weeks to find  a new investor.

RBC reported that Ergo had been in talks to sell a controlling stake to the Church but the late intervention failed to save the bank. The report said the church was interested in buying the bank to save money belonging to accounts opened by the dioceses. Moscow-based Ergo, which was set up in 1994, serves over 60 organisations drawn from 18 dioceses of the Russian Orthodox Church.

The lender, which is the 311^th largest in Russia with RUB6.5bn ($85mn) in assets, had been growing fast in recent years by opening new offices in the regions, boosting its capital and joining the Swift and Visa international payment systems.

The CBR, led by governor Elvira Nabiullina, is continuing its campaign of cleaning up the financial sector as the economy lurches into its second year of recession.

Since 2013, the regulator has stripped licenses from over 200 Russian banks, reducing the total number to less than 700. The CBR has been denying licenses to credit institutions suspected of unlawful operations and money laundering, as well as encouraging takeovers of weakly capitalised and troubled banks by larger players.

While Prime Minister Dmitry Medvedev spoke of the "sustainability of the financial system" at the Gaidar Forum on January 13, many of the country's leading bankers say the sector is in a serious crisis.

With oil trading at near $31 a barrel, the country's largest lender Sberbank has started stress-testing its models if oil drops below $25 a barrel for six months.

The government, which needs to raise funds to plug holes in its budget, has been talking about reviving its discredited privatisation programme.

Economy Minister Alexei Ulyukayev told the forum the state should consider further cutting its stakes Sberbank and VTB, the nation’s second-biggest lender, to help capitalise the banking system.

The Russian government holds a 60.9% stake in VTB, while the central bank controls a 50% plus 1 share in Sberbank. The state has been gradually cutting its stakes in both, which together account for over 40% of Russia's banking assets.

Previous sales of government stakes in banks and other assets have been disastrous for retail and institutional investors. Investment bankers hired to organise the sales say privately that the Kremlin has always sought unrealistic prices for its assets.

VTB's 'People's IPO' in 2007 attracted $8bn but left more than 100,000 retail investors in the hole after the company's shares plunged by nearly 50% from the IPO price of 13.6 kopeks per share.

The agency, which runs the sale of the assets, may be without its head Olga Dergunova after Kommersant reported on January 13 that she will be stepping down. Kremlin spin in the article suggested Dergunova was not up to handling monster deals for Rosneft, Sberbank, VTB and Sovcomflot.