An economist explained the Central Bank's revocation of the license of Garant-Invest Bank

Garant-Invest Bank had a high-risk business model, economist Andrei Barkhota told Izvestia on December 26, commenting on the Central Bank of Russia's revocation of the credit institution's license.

"Ultra-expensive client deposits were placed in low-quality assets: first of all, corporate loans to doubtful borrowers. This created a threat of widening the "hole" in the bank's capital. In addition, highly liquid assets accounted for about half of Garant-Invest Bank's assets. Thus, the bank had an operationally unprofitable model combined with the presence of schemes for cashing out funds of not quite clear origin", - said the expert.

He noted that high rates on deposits can hardly be paid back by profitable assets. This applies both to loans, the demand for which is declining, and investments in securities, which do not always pay off expensive liabilities or require large amounts of bank capital. For small banks, the risks increase because such credit organizations cannot work with the largest clients due to lower credit ratings, the economist added.

"Depositors of small banks should remember the insurance limit and try not to exceed the amount of deposits in such banks above 1 million rubles", - concluded Barkhota.

You have a shortage: Central Bank revoked the license of Garant-Invest Bank

Deposit payments will begin no later than January 9, 2025

Earlier in the day it became known that the regulator revoked the license for operations from the Moscow commercial bank Garant-Invest. This decision was explained by the fact that the credit organization violated federal laws regulating banking activities, as well as regulations of the Central Bank.