The State Duma of the Federal Assembly of the Russian Federation (SDRF) has adopted a law significantly simplifying the procedure for completing bank resolutions.

According to the new law, the reorganization of a bank undergoing resolution through merger with an investor bank, in accordance with the participation plan of the Deposit Insurance Agency (DIA) or the Bank of Russia, will now be an independent basis for terminating such a plan.

This means that bankruptcy prevention measures will be considered completed not only upon eliminating the causes of financial instability, but also upon successful reorganization.

In the event of a bank's merger, the participation plan of the Central Bank of the Russian Federation or the DIA terminates automatically from the date the merged bank's termination is entered into the Unified State Register of Legal Entities (USRLE).

Furthermore, if the Bank of Russia's Banking Supervision Committee decides not to apply supervisory measures to the investor bank, the DIA is relieved of the obligation to submit a report to the regulator on the implementation of the resolution plan.

Reporting ceases in the month following the month in which such a decision is made.

These changes are aimed at streamlining and accelerating the financial recovery process in the banking sector.

Conclusion:

Simplifying the procedure for terminating participation plans with the DIA and the Central Bank during reorganization through merger will speed up banks' recovery from crisis situations. This may also impact strategies for handling distressed assets and risk assessment in transactions involving rehabilitated credit institutions. It is important to note that automatic termination of participation plans during reorganization is a significant change that requires a review of current approaches.