You're reading: Cabinet approves conditions for additional capitalization of banks by state

The state could take part in the additional capitalization of a private bank to the required level if shareholders in the bank agree to transfer at least 755 plus one share to state ownership or to the disposal or use and if the charter capital of the bank is reduced by the largest sum of losses revealed after conducting an audit.

The conditions of the state participation in the capitalization of banks which have not enough charter capital are stipulated in cabinet resolution No. 633 of Nov. 19 posted on the government’s website on Monday.

According to the resolution, the shareholders in the bank being capitalized are to decide to increase the charter capital thanks to investment by shareholders with stakes over 10 percent and members of the supervisory board, board of directors and the audit commission.

Other conditions are agreement to conduct the audit under a request of the Finance Ministry and reduce the charter capital by the sum of losses revealed after conducting the audit, as well as agreement ot appoint a candidate from the Finance Ministry an advisor to the bank’s board chairman to monitor the operation of the financial institution.

According to the resolution, the state can participate in removing an insolvent bank from the market, assets or deposits of individuals and companies of which amount to 2 percent and more than 2 percent of total assets or deposits of the whole banking system. Another condition is the reduction of the charter capital of the insolvent bank to Hr 1.