The Central Bank found cases of false reporting and more than 15-day delays in providing monthly reports. In addition, Finanstorgbank was unable to pay its financial obligations.

The Central Bank also found cases of non-compliance with cash requirements in 2004, failure to fulfill financial obligations, false reporting and non-compliance with the Central Bank’s requirements.

“These facts show that there is a real threat to the interests of the bank’s creditors and depositors,” the Central Bank said in its report.

Since March 2004, Finanstorgbank has faced repeated warnings and other measures, but its financial situation has not stabilized.

In view of this, and based on Articles 19 and 20 of the Federal Law “On banks and banking activity” and Article 74 of the federal law “On the Central Bank of the Russian Federation”, the Bank of Russia decided to revoke the license for conducting banking operations (in rubles and foreign currency) from ZAO Commercial Bank Finanstorgbank starting September 29.

A provisional administration will be appointed to the bank on September 29, until a trustee in bankruptcy or a liquidator is appointed. Alexey Lyubenchenko, Deputy Manager of the Department No. 3 of the Central Bank’s Moscow Division, was appointed Chairman of the provisional administration.

Russian banks are increasingly facing difficulties connected with pressure from the authorities and growing competition.

In July, the Central Bank revoked licenses from Credittrust, Sobbusinessbank and some other banks, including Commercial Savings Bank, Industrial Export and Import Bank, Investment Commercial Moscow Housing and Construction Bank, and RIKOM. Many banks had cash problems, and clients began withdrawing their deposits. The situation has stabilized, but license revocations continue. In September, the Central Bank revoked licenses from Meritbank, the banks Paveletsky and Dialog-Optim.

In July 2004, about RUR 17bn was withdrawn from banks by individual depositors. At the same time, the assets of the banking system increased 0.7 percent. Individual deposits in rubles dropped by RUR 17.3bn in July 2003, or 13 percent, while individual deposits in foreign currency increased.

Meanwhile, according to Economy Ministry’s report on Russia’s social and economic development in January-August 2004, the Russian banking system recovered from the July crisis, without significant losses.