State Corporation "Deposit Insurance Agency" (Russian Federation)

The State Corporation “Deposit Insurance Agency” was established in January 2004 on the basis of Federal Law No. 177-FZ dated December 23, 2003, “On Insurance of Deposits in Banks of the Russian Federation” to ensure the functioning of the deposit insurance system.

Deposit Insurance

The main function of the Agency is to ensure the payment of reimbursement on deposits in the deposit insurance system member banks upon the occurrence of an insured event.

Participation in the deposit insurance system is mandatory for all banks holding a license to attract funds from individuals into deposits.

The main objectives of the Mandatory Deposit Insurance System in Russia are:

– protecting the rights and legitimate interests of depositors of banks of the Russian Federation;

– strengthening confidence in the banking system of the Russian Federation and stimulating the attraction of funds into the banking system of the Russian Federation.

Guaranteeing Pension Savings

A system for guaranteeing pension savings with a mechanism of member premiums similar to the deposit insurance system also operates in the Russian Federation.

The System for Guaranteeing the Rights of Insured Persons protects mandatory pension savings in the Social Fund of Russia (the government pension fund) and non-government pension funds. The source of guarantee payments is the Fund for Guaranteeing Pension Savings.

The System for Guaranteeing the Rights of Participants protects voluntary savings in non-government pension funds. Upon the occurrence of an insured event, citizens will be refunded voluntary contributions, taking into account investment income, from the Fund for Guaranteeing Pension Reserves.

Bankruptcy Prevention

In accordance with Federal Law No. 127-FZ dated October 26, 2002, “On Insolvency (Bankruptcy),” the Agency implements measures to prevent the bankruptcy of banks that are menbers of the Deposit Insurance System (DIS). According to the law, measures to prevent bank bankruptcy may be implemented by the Agency through:

– providing financial assistance to investors acquiring shares (stakes in the authorized capital) of the bank in an amount of not less than 75 percent of the ordinary shares of a bank in the form of a joint-stock company (stakes in the authorized capital representing not less than three-quarters of the votes of the total number of votes of participants of a bank in the form of a limited liability company);

– acquiring shares (stakes in the authorized capital) of the bank in an amount of not less than 75 percent of the ordinary shares of a bank in the form of a joint-stock company (stakes in the authorized capital representing not less than three-quarters of the votes of the total number of votes of participants of a bank in the form of a limited liability company);

– providing financial assistance to the bank, provided that the Agency and (or) the investor have acquired the bank’s shares (stakes) in the established amount.

Liquidation and Bankruptcy Proceedings

According to Federal Laws No. 395-1 dated December 2, 1990, “On Banks and Banking Activities” and No. 127-FZ dated October 26, 2002, “On Insolvency (Bankruptcy),” the Agency manages bankruptcy (liquidation) procedures of credit institutions.

The Arbitration Court appoints the Agency as the receiver (liquidator) in the following cases:

– if the credit institution held a license from the Bank of Russia to attract funds into deposits of individuals;

– in the bankruptcy of absent credit institutions–debtors;

– upon the removal of an individual receiver.

The Agency addresses tasks such as establishing and settling creditors’ claims, forming the bankruptcy estate, ensuring the preservation of the property of the liquidated credit institution, conducting settlements with creditors, and identifying the circumstances of bankruptcy.

The Agency exercises the powers of the receiver (liquidator) through its representatives acting on the basis of a power of attorney in accordance with the Agency’s instructions on behalf of the liquidated credit institution.

In addition, the Agency exercises the powers of a receiver in relation to liquidated insurance organizations and non-government pension funds.

More information can be found on the Agency’s website.