Top 30 Russian bank Jugra faces inspection

By Jason Corcoran in Moscow April 4, 2016

Bank Jugra, One of Russia's 30 largest lenders, faces an inspection from the regulators on April 4 after it was restricted from taking deposits.

Both the Central Bank of Russia (CBR) and the Deposit Insurance Agency (DIA) will check the register of depositors at the bank and the size and structure of Jugra's liabilities relative to deposits, according to a report by Vedomosti newspaper.

In the past, CBR inspections have led to banks being put in administration and wound down as the regulator continues to purge the sector's bloated ranks.

Jugra was founded in 1990 in the Tyumen region and is one of Russia's oldest banks. It is the nation's 28th largest lender with RUB270bn in assets as of January  1, and climbing to 27th before the CBR began its check, according to ratings website banki.ru.

The lender last year applied for a state recapitalisation through the OFZ programme but never received the funds.

On March 31, chairman of the bank's management board Yuri Gusev said Jugra considered it inexpedient to participate in the OFZ recap programme.

"Today, the capital of Bank Jugra is RUB65bn and the bank feels confident in terms of capital adequacy," he said in a statement on the lender's website. "The Bank is ready to continue to consider the options offered by the state to maintain a high level of regulatory cooperation with the country's government agencies."

The bank's counterparties told Vedomosti that the CBR had instructed the lender not to take funds on deposit.

Jugra's management also said in February that the bank would be listed on the Moscow Exchange in the middle of March but the listing has yet to take place.

The bank's deposits grew by 136% during 2015 and these funds were funnelled into lending to companies. Jugra's corporate portfolio increased by 137% over the same period.

A purge of Russia's financial sector is accelerating as the CBR takes down bigger targets and gets more powers to track down and prosecute blacklisted bankers guilty of money laundering and asset stripping.  

In the two years to January 2016, the number of banks in Russia was slashed by 20% to 596 from 733. The trend is accelerating this year, and saw the stripping of licenses belonging to Vneshprombank, the country's 37th largest lender, and Intercommerz bank (67th) in January.

If Jugra topples it will be the biggest banking collapse since Trust Bank at the end of 2014. Trust, fronted by Hollywood beefcake Bruce Willis, received a RUB127bn bailout.

President Vladimir Putin's government committed RUB1 trillion to support the capital of banks as the recession bit deeper since 2014. But the estimated RUB2.5 trillion that so far had to be covered by the DIA, which guarantees savings of up to RUB1.4mn and provides loans to banks to rescue troubled lenders, is just the start of that bill.

In a report late last year, S&P speculates the state will have to somehow come up with another RUB 2.5 trillion this year, as well as plug a gaping hole in the 2016 budget.

Related Articles

RBI doubles net profit y/y in Q1 as Russian business recovers

Raiffeisen Bank International (RBI), the second largest bank operating across Central and Eastern Europe by assets, reported that net profit almost doubled year-on-year to €220mn in the first ... more

World Bank forecasts a 0.4% y/y decline in Belarus's GDP for 2017

The Belarusian economy will decline by 0.4% year-on-year in 2017, followed by a modest growth of 0.7% in 2018 and 1.2% in 2019, the World Bank forecasts in its Belarus Economic Update published on ... more

EIB and Belarus sign Framework Cooperation Agreement

The European Investment Bank (EIB) and Belarus inked the Framework Agreement on Cooperation on May 15, which paves the way for the lender to invest up to €200mn in Belarusian projects, the Foreign ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss