MOSCOW: Russia’s Central Bank effectively closed down two of the country’s smaller banks Monday after it revoked their operating licenses, its latest effort to consolidate the sprawling banking sector.

The Central Bank pulled the license for Interkommerzbank, saying there was a significant imbalance between the assets and liabilities of the country’s 67th largest bank. It also withdrew the license of the country’s 186th largest bank, Alta Bank, on the grounds that it was unable to meet creditors’ claims.

Each Interkommerzbank and Alta Bank client will be able to recover up to 1.4 million rubles ($18,207).

The closures are part of the Central Bank’s strategy to consolidate the banking sector that is currently characterized by a large number of small banks, many of which fail to meet regulatory standards — they are also a way to fortify Russia’s larger banks, many of which are state-owned.

The campaign has been controversial; though it’s designed to boost long-term stability, there is uncertainty about which bank will face closure next.

The closures began with the appointment of Elvira Nabiullin as the Central Bank’s head in June 2013.

The most recent closure prior to Monday’s occurred in August, when the Central Bank shuttered what was then the 51st largest bank, Probusinessbank.

Source:AP