February 11, 2014 / 7:07 AM / 5 years ago

Russia's central bank revokes licences from two Moscow banks

MOSCOW, Feb 11 (Reuters) - Russia’s central bank has withdrawn the licences of two small Moscow-based banks, part of its widening campaign to clean up the banking system and crack down on money laundering.

Russia has more than 900 banks, mostly small, and many are suspected of servicing the shadow economy. Since taking up her position as central bank head last year, Elvira Nabiullina, has made it clear she wants to tighten banking supervision and shore up large-scale capital flight to boost the flagging economy.

The central bank said on Tuesday it had withdrawn Eurotrust bank’s licence because of a failure to meet obligations to its creditors and depositors, and to create sufficient reserves to cover potential losses on loans.

LINK-bank also failed to create provisions against risk and both banks were involved in “dubious operations”, such as money laundering, the central bank said in a statement.

Both banks are part of Russia’s system of retail deposit insurance, under which the state guarantees small savings if a bank fails. Last year, the withdrawal of Master Bank’s licence cost the state about 30 billion roubles ($890 million).

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