Russian payment providers knocked offline after Qiwi Bank licence revoked (updated)

Qiwi

21/02/2024 07:44

(Recasts with wider impact, adds detail throughout)
    By Elena Fabrichnaya, Oksana Kobzeva and Alexander Marrow
       MOSCOW, Feb 21 (Reuters) - 
    Payment services used by Russians to transfer money overseas
were knocked offline on Wednesday after the central bank revoked
digital bank Qiwi's licence, sending its Moscow-listed shares
plummeting almost 50% to a record low. 
    The central bank, which has taken regulatory action against
Qiwi five times in the last year, said Qiwi Bank had engaged in
high-risk operations, systematically violating requirements on
anti-money laundering and terrorism financing legislation.    
    Nasdaq-listed Qiwi  QIWI.O , on of Russia's largest payment
services provider, said it was aware of the revocation and that
temporary administrators were currently working at the bank. It
said it was looking into the matter and that Qiwi Group's
business, which is not related to Qiwi Bank, was operating as
usual.   
    Qiwi, a Russian analogue to PayPal, had 29 million users at
the end of 2022 and 13.8 million active wallets. Users were
unable to withdraw funds from wallets and Qiwi's Contact payment
system, used by many to transfer funds overseas, stopped
working. 
        Other cross-border payment agents remained operational. 
  
        Russia's Deposit Insurance Agency (ASV) said
compensation payments would start being paid by March 6.
According to Qiwi Bank reports, the ASV's liability is estimated
at 4.6 billion roubles. 
  
        Qiwi Bank is a member of Russia's deposit insurance
system and up to 1.4 million roubles per depositor should be
returned as a result. 
  
        E-wallets are not insured, but the central bank said
Qiwi should have enough assets cover those funds. 
  
    
    COLLATERAL DAMAGE
    The central bank's move inflicted wider collateral damage on
Russia's financial system. Raiffeisenbank, the Russian unit of
Austria's Raiffeisen Bank International  RBIV.VI , said payments
for mobile services were temporarily unavailable as a result. 
        MetalloInvestBank said mobile and internet payments were
temporarily unavailable on its mobile application, through
online banking and at ATMs. 
  
        Tochka Bank also reported issues.       
    "Qiwi Bank did not take effective measures to reduce risks
in its activities, despite the Bank of Russia's active
supervisory work, and continued conducting high-risk
operations," the central bank said. 
    Qiwi's Moscow-listed depositary receipts  QIWIDR.MM  were
down 41.5% as of 1320 GMT having earlier fallen almost 50% to a
record low.  
    The sharp drop prompted the exchange to repeatedly adjust
the lower boundary for the shares and to hold a discrete auction
of shares, a tool used to ease extraordinary volatility and
allow a base price to be established.
    Trading of its Nasdaq-listed American Depositary Shares has
been suspended since soon after Russia sent troops into Ukraine
in February 2022. 
    The company said in January it had entered into an agreement
to sell its Russian assets and had thus completed a
restructuring process. It said the sale of the Russian business
was expected to secure its continued listings on both the Nasdaq
and Moscow Exchange  MOEX.MM . 

 (Reporting by Oksana Kobzeva and Elena Fabrichnaya in Moscow,
Alexander Marrow in London; editing by Sharon Singleton and
Jason Neely)
 ((alexander.marrow@thomsonreuters.com))