An analysis of the resolution regimes for failing banks in Russia

by Ilya A. Goncharenko and Gennadi P. Tolstopyatenko

 

Abstract: This article discusses the regulatory framework of resolution regimes for failing banks in the Russian banking sector. It includes an analysis of the Central Bank of Russia and its policies to strengthen the financial stability sound. The aim of the article is to examine current regulatory solutions for the failing banks in Russia, including grounds to claim insolvency of commercial banks and the effects of their practical implications. It also provides an overview of the recent trends in court practices regarding failing banks’ cases.

Summary: 1. Overview of the Russian banking sector: trends and challenges. – 2. Regulatory regime for failing banks in Russia. – 3. Recent court practice on failing banks in Russia. – 4. Conclusion.

1. In the past years Central Bank of the Russian Federation has been steadily cutting down the number of commercial banks[1] in Russia. If back in 2001 there were some 2,124 credit institutions[2] all over Russia registered by the Central Bank as of 01.01.2001[3] (of which some 2,084 were commercial banks), then in 2010 that number dropped almost twice to as low as 1,178 credit institutions of which 1,124 were banks.[4] And currently as of 01.10.2019[5] there are only 846 credit institutions in Russia, registered by the Central Bank of Russia and other agencies, of which there are only 454 operating credit institutions (credit institutions authorized to carry out banking operations). Out of those 454 operating credit institutions only as few as 414 are commercial banks. Out of those 414 banks nearly half (273) have a universal license and 141 have a basic license for banking operations[6] issued by the Central Bank of Russia.[7]

Interesting to note that more than half of all the operating credit institutions in Russia are in Moscow and Moscow Region (233, which is 51.3% as of 01.10.2019[8]). Besides, there is a remarkable asset concentration in the Russian banking sector among the operating credit institutions. Top 5 Russian credit institutions hold more than 58 trillion rubles[9] of assets, which is 60.8% of all the assets in the Russian banking sector (as of 01.10.2019[10]).

There is an emerging trend in the Russian banking sector in 2019: small banks merge in order to meet the Central Bank of Russia’s requirements and to oppose federal giant banks on a local level[11]. There have already been two of such deals this year, but eight more banks conduct negotiations to merge. Small banks understand clearly that they stand little chance to stay in business if they remain on their own, as the only alternative for them is a revocation of license due to loosing competition. As long as the Central Bank of Russia continues to tighten regulation over banking sector and requirements to banks’ capital the Russian banking sector would have to undergo consolidation processes. A couple of years ago big banks absorbed the small ones, but nowadays this trend has changed. In fact, if a small bank does not specialize in servicing some big Clients’ or industry-wide enterprises’ money then its prospect of successful development in the market is very limited. Small banks started to merge more often, because this allows them to increase capital reserve and limits to lend to quality borrowers, otherwise such clients would leave for the federal banks.[12]

As of 01.10.2019 only 368 of the operating credit institutions were profit-making, and as many as 82 credit institutions were making losses.[13] Since the beginning of 2019 as many as 22 credit institutions have had their licenses revoked (cancelled) and additional 9 credit institutions have been restructured (as of 01.10.2019).[14] The real value of the bankrupt banks’ assets in 2017 amounted to 40.2% of the assets value recorded in the banks’ accounts (as transferred to the Temporary administrations by the former management of bankrupt banks); in 2018 – 38%[15].

As of 01.10.2019 as many as 23 credit institutions in Russia are undergoing bankruptcy prevention measures (with the participation of the Central Bank of Russia or a Deposit Insurance Agency[16] in accordance with a Federal Law N127-FZ “On insolvency (Bankruptcy)” dated October 26, 2002), which account for 5.1% of all the credit institutions in Russia and those failing credit institutions hold 8.2% of the Russian banking sector assets[17].

2. In accordance with a Russian Federal Law dated 26.10.2002 N127-FZ “On insolvency (bankruptcy)”[18] a bank shall be deemed unable to satisfy creditors’ claims on monetary obligations, on severance payments and on remuneration for persons employed under labor contracts, and to pay mandatory payments (like taxes and duties), if it does not fulfill the relevant obligations within fourteen days after the due date and the value of the bank’s property (assets) is insufficient to fulfill its obligations to creditors and to pay mandatory payments[19]. Before the Central Bank of Russia revokes a bank’s license there may be measures taken to prevent its bankruptcy. And if such measures fail, then such bank may be declared bankrupt by an arbitration court through regular bankruptcy proceedings. In 2018 as many as 41 (in 2017 – 44) credit institutions were declared bankrupt by arbitration courts on the grounds of claims by Temporary administrations and the Central Bank of Russia. And 16 credit institutions were ordered to be forcibly liquidated by arbitration courts’ orders.[20] Following measures may be implemented to prevent bankruptcy of a commercial bank up until the date of its license for banking operations revocation[21]:

1) extrajudicial financial recovery;

2) appointment of a Temporary administration to manage the failing bank;

3) reorganization of the failing bank;

4) measures to prevent bankruptcy of a bank having a license to work with individuals. These measures are fulfilled with the involvement of the Central Bank of Russia or a Deposit Insurance Agency. If the Central Bank of Russia is involved, then there has to be a relevant decision passed by its Board of Directors. To further such a decision the Central Bank of Russia appoints a Management company.

It is the Central Bank of Russia that has a right to require from a commercial bank to take measures for its financial recovery, to reorganize it or to appoint a temporary administration to manage the bank in case certain grounds emerge. Current legislation provides for six grounds that allow taking measures to prevent bankruptcy of a commercial bank[22]. Such grounds emerge when a commercial bank:

• in the past six months does not satisfy repeatedly creditors’ requirements on monetary obligations and/or does not fulfill mandatory payments within three days from the due date because of an absence or insufficiency of money on bank’s correspondent accounts;
• does not satisfy creditors requirements on monetary obligations and/or does not fulfill mandatory payments for more than three days from the due date because of an absence or insufficiency of monetary funds on its correspondent accounts;
• allows an absolute decrease in the value of its own funds (capital) comparing with their maximum value reached over the past twelve months, by more than twenty percent while violating one of the mandatory standards established by the Central Bank of Russia;
• violates any of the equity (capital) sufficiency standards established by the Central Bank of Russia;
• in the last month violates current liquidity standard for banks, established by the Central Bank of Russia, by more than ten percent;
• allows reduction in the size of its own funds (capital) at the end of the reporting month down to the level below the size of its authorized capital. It is interesting to note that in case of such a specific ground taking place within the first two years of the bank obtaining its banking operations license, then such a bank is not entitled to measures to prevent bankruptcy.

Let’s consider measures to prevent bankruptcy of a commercial bank in a more detailed way. Current legislation establishes that following measures may be taken for the purposes of extrajudicial financial recovery of a failing bank[23]:

• bank’s founders (participants) and other persons providing financial assistance to the bank;
• changes in the structure of assets and liabilities of the bank;
• changing an organizational structure of the bank;
• matching the size of the authorized capital of the bank and the size of its own funds (capital);
• other measures in accordance with federal legislation.

It is necessary to highlight that if the Central Bank of Russia must revoke a banking operations license from a failing bank, then measures of extrajudicial financial recovery shall not apply.

Temporary administration for the failing bank’s management is a special management body of the bank appointed by the Central Bank of Russia in accordance with legislation[24]. There are seven legal grounds for the Central Bank of Russia to appoint Temporary administration[25]:

• the failing bank does not satisfy creditors’ claims on monetary obligations and (or) does not fulfill mandatory payments for seven days or more from the due date, because of the lack or insufficiency of funds in the bank’s correspondent accounts;
• the failing bank allows a reduction of its own capital in comparison with its maximum size reached in the last twelve months, by more than thirty percent while violating one of the mandatory standards established by the Central Bank of Russia;
• in the last month the failing bank violates current liquidity standard established by the Central Bank of Russia by more than twenty percent;
• the failing bank does not comply with the Central Bank’s order to replace a head of the bank or to implement measures for financial recovery or to reorganize the bank within a prescribed period;
• in accordance with the Federal law “On banks and banking activities”[26] there are grounds to revoke a license for banking operations from the failing bank;
• Board of Directors of the Central Bank of Russia has approved a plan for the Central Bank’s participation in realizing measures to prevent bankruptcy of the failing bank;
• Banking Supervision Committee of the Central Bank of Russia has approved a plan for the Deposit Insurance Agency’s involvement in realizing measures to prevent bankruptcy of the failing bank.

It is necessary to mention that the Central Bank of Russia shall appoint Temporary administration to a failing bank by no later than one day since a revocation of the bank’s license. In accordance with official statistics[27] there were 71 Temporary administrations operating in failing credit institutions in 2018. Reorganization of the failing banks takes place in a form of a merger or takeover in accordance with legislation and Regulations by the Central Bank of Russia[28]. Central Bank of Russia has a right to demand reorganization of a failing bank in cases 1) – 3) (supra) that entitle to appoint Temporary administration.

Once an order of the Central Bank of Russia is received by a failing bank, then its CEO has 5 days to address executive bodies of the bank regarding a need to perform reorganization. Executive bodies of the failing bank have ten days to take a decision on reorganization and to inform the Central Bank of Russia accordingly.

Measures to prevent bankruptcy of a bank having a license to work with individuals are taken by the Central Bank of Russia if there are signs of the bank’s unstable financial situation creating threat to interests of its creditors (investors) and (or) threat to stability of the whole banking system[29]. Among the signs of a bank’s unstable financial situation, that endanger the interests of its creditors (depositors), there are, for instance:

– reflecting transactions and duly documented facts in bank’s accounts, that lead to violation of mandatory standards or terms for the bank to execute its liabilities and(or) conditions for participation in the system of mandatory deposit insurance and(or) to emergence of grounds for the implementation of measures to prevent insolvency (bankruptcy) of the bank;

– and(or) the presence of other documented evidence of a threat to the interests of creditors (depositors)[30].

The Central Bank of Russia may decide to send its representatives and representatives of the Deposit Insurance Agency to the failing bank for the purposes of conducting a financial standing analysis. The period for the financial standing analysis of a bank shall not exceed forty-five calendar days and it may only be further extended by no more than ten calendar days on the grounds of an application by the Deposit Insurance Agency.

Main purpose of the financial standing analysis is to uncover insolvency marks, including signs of deliberate bankruptcy. When signs of deliberate and (or)fictitious bankruptcy are detected by Temporary administrations and the Central Bank of Russia, then statements are sent to law enforcement agencies (information about the revealed facts).

In 2018, both the Bank of Russia and Temporary administrations in failing credit institutions sent 99 statements to law enforcement agencies (in 2017 – 91) with information about signs of crimes disclosed in the activities of bank’s management and owners, including those provided for by the following articles of the Criminal Code of the Russian Federation[31]:

– article 159 “Fraud”;

– article 159.5 “Fraud in the insurance industry”;

– article 160 “Appropriation or embezzlement”;

– article 195 “Illegal actions in bankruptcy”;

– article 196 “Deliberate bankruptcy”;

– article 201 “Abuse of authority”[32].

According to the information available in the Central Bank of Russia, in 2018, law enforcement agencies initiated 29 criminal cases against management(owners) of credit institutions (including cases based on statements sent in previous years), in 2017 – 41 criminal cases[33].

3. In 2016-2019 there were many judicial cases concerning failing banks in Russia. The most famous ones are three: Fininvest Bank, Vneshprombank and Promsvyazbank cases. These cases reached the Supreme Court of the Russian Federation which has worked out its own legal positions as to different matters arising during the bankruptcy procedure of credit institutions from inclusion in the register of creditors’ claims and up to invalidation of bank transactions. In some of these matters there is already a sustainable practice in applying the law while as to the other issues legal position of the Supreme Court of the Russian Federation has been changing depending on the peculiarities of the cases heard. We will analyse those cases in the sphere of failing banks, where the legal positions formulated by the Supreme Court of the Russian Federation greatly influenced further practice of Russian courts. In Fininvest Bank’s case there were several court rulings held. These rulings may be divided in two categories: (1) court decisions on the invalidation of bank transactions; (2) court decisions on the invalidation of transactions aimed at the computation and payment of salary bonuses. This classification seems to be rational because it reflects not only the subject matters of these cases but their outcome as well. As an example of court decisions from the first category we will analyze the Definition of the Supreme Court of the Russian Federation dated June 17, 2016 N 307-ES16-6350.[34]

In this case Mr. Ruslan A. Vanchugov appealed on cassation the decisions held by the courts of lower instances which unanimously characterised the transaction by Fininvest Bank as an invalid transaction. The aim of this transaction was to withdraw money from the account of Ruslan Vanchugov. The Supreme Court of the Russian Federation decided that there were no substantial breaches of material or procedural law by the courts of lower instances while hearing the case and it rejected to review the case on the merits. Holding such a decision, the Supreme Court of the Russian Federation agreed with the references made by the courts of lower instances to the particular provisions of the Federal Law “On insolvency (bankruptcy)”[35], Federal Law “On insolvency (bankruptcy) of credit institutions”[36] and the Resolution of the Plenum of the Supreme Arbitration Court of the Russian Federation dated December 23, 2010 N 63 On some matters connected with the application of chapter III.1 of Federal Law “On insolvency (bankruptcy)”.

It is necessary to point out that in other cases in the sphere of failing banks courts are guided by the provisions of the aforementioned Resolution of the Plenum of the Supreme Arbitration Court of the Russian Federation, though this court ceased to exist in 2014 and its functions were transferred to the Supreme Court of the Russian Federation where the Judicial Chamber on Economic Disputes was established. Speaking about the laws, courts that hear similar cases refer only to the provisions of the Federal Law “On insolvency (bankruptcy)” since Federal Law On insolvency (bankruptcy) of credit institutions was repealed.

Speaking about Ruslan Vanchugov, the courts held decisions invalidating the bank’s transaction because his brother – Mr. Maxim A. Vanchugov was a Director General of the participating companies – «Fininvest» LLC and «Capital» LLC and therefore he knew that Fininvest bank was facing insolvency. In the Definition of the Supreme Court of the Russian Federation dated July 25, 2016 N 307-ES16-6350 which was held within the same Fininvest Bank’s case but due to the appeal on cassation by Mr. Valentin E. Landgraf the courts supported the same legal position. That decision was held on the basis that Valentin Landgraf was the Chairman of the Board of Directors of Fininvest Bank and thus he knew that the bank was in the state of insolvency at the moment when the transaction under dispute took place. The aim of this transaction was to return the money under the bank deposit contract prior to the scheduled maturity date.

As an example of court decisions from the second category we will analyse the Definition by the Supreme Court of the Russian Federation dated May 30, 2017 N 307-ES16-6350. It was held following the appeal on cassation by a trustee in bankruptcy – Deposit Insurance Agency. That was an attempt to review the decisions by the courts of lower instances that qualified the transactions under dispute as valid ones. The nature of these transactions was in the computation and payment of salary bonuses by Fininvest Bank for the benefit of Ms. Natalya S. Gromova within the period from June 2013 to July 2014. The Supreme Court of the Russian Federation rejected the appeal on cassation upholding that the conclusions made by the courts of lower instances were correct. These courts took for a start a fact that there was no evidence in the materials of the case that would certainly prove that the bank in question was insolvent within the period under dispute and that the parties to the transaction were going to infringe the rights of the bank’s creditors. The courts also took into account that the sum of salary bonuses was lower than one percent of the assets value of the debtor and the amount of salary bonuses complied with the order prescribed by the Rule of the debtor on salary and salary bonuses.

In Vneshprombank case there was a number of decisions held as well. They were held on the following matters: (1) rejection to include moratorium interest in the register of creditors’ claims[37]; (2) invalidation of bank transactions; (3) rejection to include the claims after payment of insurance premium in the register of creditors’ claims[38]; (4) claim to stop blocking the bonds and debentures[39]. As to the matter of invalidating bank transactions there were positive and negative court decisions. That is why we will concentrate on their analysis.

Bank transactions were held invalid in the Definition of the Supreme Court of the Russian Federation dated April 13, 2018 N 305-ES16-21459(4). According to the courts’ opinion, the transfer of money under payment order by “Astro-Volga” Insurance Company PLC was an invalid transaction. During the proceedings it was found by the courts that the aforementioned transfer of money exceeded one million rubles and it was significantly different from the transfers of money for the benefit of the company while interacting with the debtor. Taking into consideration all these facts, the courts concluded that the transaction under dispute led to the situation where the company as a creditor turned out to be in a better position than other creditors. Moreover, the transaction was beyond the usual business activity of the debtor.

Bank transactions were also held invalid in the Definition of the Supreme Court of the Russian Federation dated May 28, 2018 N 305-ES16-21459(7). In this case a trustee in bankruptcy – Deposit Insurance Agency filed a suit with a court attempting to hold invalid the following transactions: (1) intrabank transaction aimed at money transfer from the deposit account opened by The British Insurance House LLC in Vneshprombank to the account opened by Mr. Peter A. Naumenko in the same bank; (2) bank transaction aimed at withdrawing money from the transactional account of Peter Naumenko in order to settle in advance the debt under a consumer credit contract. Courts found these transactions invalid since they took place between affiliated parties in the period under dispute beyond the usual business activity of the debtor. And more, the transactions under dispute led to the situation where one creditor turned out to be in a better position than others.[40]

Nevertheless, some bank transactions in the context of Vneshprombank case were held valid. For example, the Definition of the Supreme Court of the Russian Federation dated August 27, 2017 N 305-ES16-21459(15) supported decisions by the courts of lower instances on validation of a bank transaction. The aim of this bank transaction was to transfer money based on payment order by “Industrial Leasing Company” LLC with a following description of payment purpose «the transfer of own funds for the settlements with counterparties». Rationale to hold such a decision by the courts was the fact that during the period in question the debtor was neither insolvent nor lacked property. Moreover, it was not proved in the proceedings that the rights of other creditors were infringed.

Bank transactions were also held valid in the Definition of the Supreme Court of the Russian Federation dated February 21, 2019 N 305-ES16-21459(17). In this case a trustee in bankruptcy – Deposit Insurance Corporation filed a suit with a court to hold bank transactions invalid. The aim of these bank transactions was to withdraw (to transfer) money from the account of Mr. Alexey G. Barantsev to settle a debt under credit contracts with Ms. Snejana V. Trantina. Despite the fact that the claim of the trustee in bankruptcy was supported by the court of the first instance, the courts of higher instances took different position. As a result, the Supreme Court of the Russian Federation agreed with the conclusions by the court of appeals and the district court. Their conclusions were based on the fact that there was no evidence in the materials of the case that the transactions under dispute led to the situation where one creditor turned out to be in a better position than others.[41]

In Promsvyazbank case the following questions were discussed: (1) challenging certain laws and regulations[42]; (2) invalidation of bank transactions with securities; (3) reversal of a loan agreement.[43] Further on only the second question will be analyzed since it is the most significant matter in the context of failing banks. In the Definition of the Supreme Court of the Russian Federation dated July 17, 2019 N 305-ES19-10542 the conclusions made by the courts of lower instances were supported. These opinions referred to invalidation of the contracts as concluded between Promsvyazbank and Company Minga Management Limited aimed at purchasing securities. Courts decided that the parties were not acting in good faith. The bank while concluding a contract to buy securities for the amount higher than one million rubles – the monthly limit established by the Central Bank of Russia right before an appointment of Temporary administration – should have realised that its actions looked like an abuse of law. In addition, the courts paid attention to the affiliation between the claimant and the issuer of the securities in question. According to the courts’ opinion, the consequences of such actions must have been obvious for the bank as a professional securities market participant. The courts also mentioned that the contracts in question were entered into not at auction and the price of securities in question was chosen by the parties to the contracts without any reference to the objective indicia. This choice was based on the principle of freedom of contract and implied all the possible risks that may arise.[44]

4. As a result of the analyses of the Court’s decisions in the cases dealing with failing banks, we shall conclude that according to the legal position of the Supreme Court of the Russian Federation, the decisive moment in the cases of invalidation of bank transactions is the evidence that the transactions in question led to the situation where one creditor turned out to be in a better position than others. In order to prove that the bank transactions are valid it is necessary to demonstrate that these transactions were made within the usual business activity of a bank.

Authors: Ilya A. Goncharenko is Associate Professor, Head of the Administrative and Financial Law Department, Moscow State Institute of International Relations of the Ministry of Foreign Affairs of Russia (MGIMO University), School of Law. E-mail: i.goncharenko@inno.mgimo.ru.

Gennadi P. Tolstopyatenko is Doctor of Law, professor, Dean of the International Law School at Moscow State Institute of International Relations of the Ministry of Foreign Affairs of Russia (MGIMO University). E-mail: decanatmp@inno.mgimo.ru.

This article is a result of joint research. Sections 1 and 2 have been written by I. Goncharenko; section 3 has been written by G. Tolstopyatenko.

[1] A Bank is a credit institution that has an exclusive right to carry out the following banking operations in aggregate: attracting money from individuals and legal entities to deposits, placement of these funds on its own behalf and at its own expense on the terms of repayment, payment, urgency, opening and maintaining bank accounts of individuals and legal entities – Section 1 of the Federal Law N395-1 dated 02.12.1990 “On banks and banking activities” (as amended on 02.12.2019), available at <http://www.consultant.ru> (accessed December 16, 2019).

[2] Credit institution is a legal entity which has a right to conduct banking operations established in a Federal Law “On banks and banking activities” for the purposes of generating profit as a main purpose of its activities on the grounds of a special permission (license) from the Central Bank of Russia – Section 1 of the Federal Law N395-1 dated 02.12.1990 “On banks and banking activities” (as amended on 02.12.2019), available at <http://www.consultant.ru> (accessed December 16, 2019). Credit institution is considered a wider term comparing to a bank (commercial bank), as the former includes nonbank credit institutions as well as the banks.

[3] Official statistical data from the Central Bank of Russia official website, available at <https://cbr.ru/statistics/bank_system_new/inform_01/&gt; (accessed December 14, 2019).

[4] Ibid.

[5] Official statistical data from the Central Bank of Russia official website, available at <https://cbr.ru/Collection/Collection/File/25584/obs_eng_205.pdf&gt; (accessed December 14, 2019).

[6] Compared to a universal banking license it is limited by type and number of activities a bank is allowed to perform. This new division of banking licenses came into force in Russia starting January 1, 2019.

[7] Official statistical data from the Central Bank of Russia official website, available at <https://cbr.ru/Collection/Collection/File/25584/obs_eng_205.pdf&gt; (accessed December 14, 2019).

[8] Ibid.

[9] In excess of 690 billion pounds sterling at the exchange rate valid on 16.12.2019.

[10] Official statistical data from the Central Bank of Russia official website, available at <https://cbr.ru/Collection/Collection/File/25584/obs_eng_205.pdf&gt; (accessed December 14, 2019).

[11] Kseniya Dementjeva «Only the merged survive», Kommersant newspaper N198 (6678), available at https://kommersant.ru/daily/118265 dated 29.10.2019 (accessed December 15, 2019).

[12] Ibid.

[13] Official statistical data from the Central Bank of Russia official website, available at <https://cbr.ru/Collection/Collection/File/25584/obs_eng_205.pdf&gt; (accessed December 14, 2019).

[14] Ibid.

[15] Termination of activities of credit institutions, 2018. Information-analytical paper, Central Bank of Russia official web-site, available at < https://cbr.ru/Content/Document/File/72231/pub_2018.pdf> (accessed December 16, 2019).

[16] Deposit Insurance Agency is a state corporation created by the Russian Federation for the purposes of effecting functions in the field of mandatory deposit insurance. The Agency is primarily regulated by a Federal Law dated 23.12.2003 N177-FZ “On insuring bank deposits in the Russian Federation” (as amended on 02.12.2019), available at <http://www.consultant.ru> (accessed December 16, 2019).

[17] Official statistical data from the Central Bank of Russia official website, available at <https://cbr.ru/Collection/Collection/File/25584/obs_eng_205.pdf&gt; (accessed December 14, 2019).

[18] Federal Law dated 26.10.2002 N127-FZ “On insolvency (bankruptcy)” (as amended on 02.12.2019), available at <http://www.consultant.ru> (accessed December 15, 2019).

[19] Ibid. Section 189.8.

[20] Termination of activities of credit institutions, 2018. Information-analytical paper, Central Bank of Russia official web-site, available at < https://cbr.ru/Content/Document/File/72231/pub_2018.pdf> (accessed December 16, 2019).

[20] Section 189.45 of the Federal Law dated 26.10.2002 N127-FZ “On insolvency (bankruptcy)” (as amended on 02.12.2019), available at <http://www.consultant.ru> (accessed December 16, 2019).

[21] Section 189.9 of the Federal Law dated 26.10.2002 N127-FZ “On insolvency (bankruptcy)” (as amended on 02.12.2019), available at <http://www.consultant.ru> (accessed December 15, 2019).

[22] Ibid. Section 189.10.

[23] Ibid. Section 189.14.

[24] Ibid. Section 189.25.

[25] Ibid. Section 189.26.

[26] Federal Law dated 02.12.1990 N395-1 “On banks and banking activities” (as amended on 02.12.2019), available at <http://www.consultant.ru> (accessed December 16, 2019).

[27] Termination of activities of credit institutions, 2018. Information-analytical paper, Central Bank of Russia official web-site, available at < https://cbr.ru/Content/Document/File/72231/pub_2018.pdf> (accessed December 16, 2019).

[28] Section 189.45 of the Federal Law dated 26.10.2002 N127-FZ “On insolvency (bankruptcy)” (as amended on 02.12.2019), available at <http://www.consultant.ru> (accessed December 16, 2019).

[29] Ibid. Section 189.47.

[30] Ibid.

[31] Criminal Code of the Russian Federation dated 13.06.1996 N395-1 (as amended on 02.12.2019), available at <http://www.consultant.ru> (accessed December 16, 2019).

[32] Termination of activities of credit institutions, 2018. Information-analytical paper, Central Bank of Russia official web-site, available at < https://cbr.ru/Content/Document/File/72231/pub_2018.pdf> (accessed December 16, 2019).

[33] Ibid.

[34] Information on court cases is taken from the ConsultantPlus company’s official web-site, available at <http://www.consultant.ru> (accessed December 16, 2019).

[35] Federal Law dated 26.10.2002 N 127-FZ «On insolvency (bankruptcy)» (as amended on 02.12.2019), available at <http://www.consultant.ru> (accessed December 16, 2019).

[36] Federal Law dated 25.02.1999 N 40-FZ «On insolvency (bankruptcy) of credit institutions» (as amended on 14.10.2014), available at <http://www.consultant.ru> (accessed December 16, 2019).

[37] Cf. the Definition of the Supreme Court of the Russian Federation dated May 10, 2017 N 305-ES16-21459(2); the Definition of the Supreme Court of the Russian Federation dated February 26, 2019 N 305-ES16-21459(18), available at <http://www.consultant.ru> (accessed December 16, 2019).

[38] Cf. the Definition of the Supreme Court of the Russian Federation dated April 16, 2018 N 305-ES16-21459(5, 6), available at <http://www.consultant.ru> (accessed December 16, 2019).

[39] Cf. the Definition of the Supreme Court of the Russian Federation dated September 25, 2018 N 305-ES18-13925, available at <http://www.consultant.ru> (accessed December 16, 2019).

[40] The bank transaction was held invalid on the similar grounds in the Definition of the Supreme Court of the Russian Federation dated February 27, 2019 N 305-ES16-21459(19), available at <http://www.consultant.ru> (accessed December 16, 2019).

[41] A similar outcome of the case may be found in the Definition of the Supreme Court of the Russian Federation dated October 8, 2018 N 305-ES16-21459, available at <http://www.consultant.ru> (accessed December 16, 2019).

[42] See the Definition of the Supreme Court of the Russian Federation April 26, 2019 N 305-ES19-5886, available at <http://www.consultant.ru> (accessed December 16, 2019).

[43] See the Definition of the Supreme Court of the Russian Federation dated December 2, 2019 N 305-ES19-21416, available at <http://www.consultant.ru> (accessed December 16, 2019.

[44] The bank transactions were held invalid on the similar grounds in the Definition of the Supreme Court of the Russian Federation dated July 22, 2019 N 305-ES18-19817, available at <http://www.consultant.ru&gt; (accessed December 16, 2019).