of June 28, 2019 No. 2019-P-12/34-4-(NPA)
About approval of the Provision "About the Consolidated Supervision" and the Provision "About the Periodic Regulating Consolidated Statements"
According to articles 20 and 68 of the Law of the Kyrgyz Republic "About National Bank of the Kyrgyz Republic, banks and banking activity" the Board of National Bank of the Kyrgyz Republic decides:
1. Approve the Provision "About the Consolidated Supervision" (Appendix 1).
2. Approve the Provision "About the Periodic Regulating Consolidated Statements" (Appendix 2).
1) in the resolution of Board of National Bank of the Kyrgyz Republic "About approval of the Provision "About the Consolidated Supervision" of June 8, 2017 No. 2017-P-12/23-6-(NPA):
- Item 1 of the resolution;
- Appendix to the resolution;
2) the resolution of Board of National Bank of the Kyrgyz Republic "About approval of the Provision "About the Periodic Regulating Consolidated Statements" of June 30, 2010 No. 52/3;
3) Item 30 of Appendix to the resolution of Board of National Bank of the Kyrgyz Republic "About modification and amendments in some regulatory legal acts of National Bank of the Kyrgyz Republic" of April 25, 2012 No. 18/9;
4) Item 10 of Appendix to the resolution of Board of National Bank of the Kyrgyz Republic "About modification and amendments in some regulatory legal acts of National Bank of the Kyrgyz Republic" of November 16, 2012 No. 43/1;
5) Item 2 of the resolution of Board of National Bank of the Kyrgyz Republic "About modification and amendments in some regulatory legal acts of National Bank of the Kyrgyz Republic" of March 26, 2014 No. 12/8;
6) in the resolution of Board of National Bank of the Kyrgyz Republic "About modification and amendments in some regulatory legal acts of National Bank of the Kyrgyz Republic and recognition voided some regulatory legal acts of National Bank of the Kyrgyz Republic" of June 15, 2017 No. 2017-P-12/25-12-(NPA):
- subitem 2 of Item 1 of the resolution;
- Item 2 of Appendix to the resolution.
4. To legal management:
- publish this resolution on the official website of National Bank of the Kyrgyz Republic;
- after official publication to send this resolution to the Ministry of Justice of the Kyrgyz Republic for entering into the State register of regulatory legal acts of the Kyrgyz Republic.
5. This resolution becomes effective after fifteen days from the date of official publication.
6. To management of methodology of supervision and licensing of banks to bring this resolution to the attention of commercial banks, OYuL "Union of Banks of Kyrgyzstan", the Mikrocreditny agency Financial fund "BT of Innoveyshns", A Plus Insurance Company Ltd, structural divisions, regional managements and representative office of National Bank of the Kyrgyz Republic in Batken Province.
7. To impose control of execution of this resolution on the board member supervising Management of methodology of supervision and licensing of banks.
Chairman of the board of National Bank of the Kyrgyz Republic
T. Abdygulov
Appendix 1
to the Resolution of Board of National Bank of the Kyrgyz Republic of June 28, 2019 No. 2019-P-12/34-4-(NPA)
1. This Provision is developed for the purpose of implementation of supervision on the consolidated basis of activities of banking groups and their affiliates.
2. For the purpose of this provision the following determinations are applied:
Banking group:
- the group consisting of the bank operating in the territory of the Kyrgyz Republic, and his subsidiary and/or dependent companies, and also their affiliates;
- the group consisting of bank holding company one of the subsidiary and/or dependent companies of which is the bank created in the territory of the Kyrgyz Republic;
- group of the legal entities who are engaged in banking and/or financial activities which part the bank over which control is exercised by the same legal entity or physical person, solely or together with other persons is.
The bank holding company - mother company, subsidiary company or one of the subsidiary and/or dependent companies of which is bank, and equally in the company which is created by the main mother company only for the purpose of management of the subsidiary and/or dependent companies (participants) entering into banking group (managing company). The bank holding companies created in the Kyrgyz Republic and entering into banking group shall be in the form of joint-stock company.
The subsidiary bank is the bank controlled by other bank or other legal entity (mother company). The subsidiary bank of subsidiary bank is also considered as subsidiary bank of mother company.
The dependent bank is bank in which any person, solely or together with other person, exercises direct or indirect control of more than twenty percent of voting shares.
The member of banking group - the legal entity who is part of banking group.
Bank branch - the separate division of bank located out of the bank location, not being the legal entity, performing everything or part of banking activities from bank name, and acting within the powers conferred to it by bank (except for branch of foreign bank).
The subsidiary company of bank is the legal entity controlled by bank (mother company). The subsidiary company of subsidiary bank is also considered as subsidiary company of mother company.
Control - individual or together with other persons:
1) immediate or indirect possession or management of more than fifty percent of voting shares of the joint-stock company or the authorized capital of the legal entity which is not joint-stock company; or
2) opportunity to elect, at least, a half of board members of the legal entity; or
3) irrespective of equity participation of the legal entity opportunity directly or indirectly to perform the determining influence on management or policy of this legal entity.
The faces tied with bank are understood in that value which is specified in the Law of the Kyrgyz Republic "About banks and banking activity".
The dependent company of bank - the legal entity in whom the bank, solely or together with other person, exercises immediate or indirect possession or control of twenty and more percent of voting shares or equity interests of the legal entity.
3. For the purposes of determination of the considerable participant, the dependent company and control:
1) the shares which are in ownership of the companies which are the dependent companies of one person or are controlled by one person, are considered as being in indirect possession of this person and unite together with the shares which are in immediate possession of this person in case of establishment of total quantity of the shares belonging to person;
2) the shares belonging to person and his close relatives (heirs of the first and second priority, according to the civil legislation), are considered as directly belonging to this person.
4. Banking groups can have different structures, depending on members of banking group, and also finding of head bank / holding company or the bank entering into banking group in the territory of the Kyrgyz Republic or beyond its limits.
5. The consolidated supervision is exercised depending on structure of banking group. The National Bank has the right to establish cases of non-use of requirements of the consolidated supervision.
6. The National Bank exercises supervision on the consolidated basis concerning the banking groups having the following structures:
1) Structure No. 1: The group consisting of the bank / non-bank financial credit institution operating in the territory of the Kyrgyz Republic, and his subsidiary and/or dependent companies (non-bank/financial) and banks (Appendix 1).
The consolidated supervision of groups with structure No. 1 is exercised by application of all requirements and restrictions specified in this Provision (on the capital of banking group, according to the economic standard rates established for banking group), and also high-quality estimative factors (risk management and internal control of banking group, corporate management by banking group, etc.).
2) Structure No. 2: The group consisting of bank / the non-bank financial and credit organization / the bank holding nonresident company of the Kyrgyz Republic one of the subsidiary and/or dependent companies of which is the bank operating in the territory of the Kyrgyz Republic. This structure is characterized by structure of the international banking group (Appendix 2).
For the purpose of ensuring effective banking supervision at the level of parent bank / the National Bank provides to holding company proper supervision of activities of banking group by means of establishment of supervising contacts with relevant organs of banking supervision of country of source of members of banking group.
For the purpose of comprehensive regulation and supervision of banking group on the consolidated basis between supervisory authorities of country of source and the host country agreements on cooperation are signed.
Within implementation of cooperation with foreign supervisory authorities on the consolidated supervision the National Bank has the right to exchange necessary information, including information containing bank secrecy, to carry out target inspections on request (including joint) and mutual consultations, and also to notify on the applied corrective actions.
To groups with structure No. 2 requirements for disclosure of information (information on mother companies, their balances, income statements, information about persons connected with bank, etc.) are exposed.
Structure No. 3: The group consisting of bank / non-bank financial credit institution and legal entities who are headed by the holding company / legal-faced/physical person (Appendix 3).
Within realization of the powers the National Bank exercises supervision of groups which participants are bank and the participants involved in wider range of financial activities or other non-financial types of activity (groups which participants were transformed from microfinance company to bank within transformation process), and also of groups, which are headed by the holding company / legal-faced/physical person which control also other companies which are involved in wider range of financial activities, or other non-financial types of activity. Requirements to the specified groups are imposed depending on structure of group and their reference to the relevant structure of banking group (No. 2 or No. 3).
For the purpose of understanding and the analysis of wider range of activities, and also determination of nature and potential influence on banking group the National Bank can establish requirements, including for receipt of necessary information on groups of wider structure which can consist in addition to financial credit institutions also of the other persons performing non-bank and/or non-financial activities.
For these purposes other persons who render concerning banking group or its participants essential (direct or indirect) influence, shall represent them the reporting on the activities for the purposes of creation of the consolidated statements. The National Bank can request any information determining influence on financial condition of financial credit institutions (about structure and about participants of group, including data on the main activities of participants of group, financial statements of participants of group, information on transactions in group).
7. Requirements of this provision extend to all types of structures of banking groups, except for the separate requirements which are specially specifying structure of group.
8. If in group of the legal entities who are engaged in banking and/or financial activities there is no mother company, that authorized person according to the relevant decision of the controlling person approved with National Bank (engaged in banking and/or financial activities), carries out obligations on provision of the consolidated statements and information to National Bank.
9. The banking group shall open and represent to National Bank the consolidated statements and data on the activities for the list, in shape, amount, procedure and terms, the established National Bank in this Provision, the Provision "About the Periodic Regulating Consolidated Statements", including concerning participants bank nonresident groups of the Kyrgyz Republic, and also other information upon the demand of National Bank.
10. Requirements for provision of the consolidated statements do not extend to the state bodies participating in commercial banks from 100% the state share and also to National Bank in cases of its participation in banking groups.
11. The National Bank also has the right to demand submission of data from the banking group and its participants who are not included in the reports specified in this Provision for carrying out additional assessment of financial condition, risk management system, quality of corporate management and other purposes of supervision including on the bases of provision of unreliable/incomplete information.
12. The consolidated financial statements of banking group are constituted according to regulatory legal acts of National Bank and international accounting standards. The bank which is in the head of banking group or bank holding company, including mother/managing company - the nonresident of the Kyrgyz Republic (managing company of bank holding), annually publish the consolidated accounting reports and consolidated income statements after confirmation of their reliability the conclusion of auditing firm (auditor) and approval in the procedure established by the legislation.
13. The annual consolidated financial statements annually are subject to publication. The audit opinion is published together with annual consolidated financial statements. The annual consolidated financial statements are posted on the official website of bank and mass media providing its availability to all of persons interested in it irrespective of the purposes of receipt of this reporting under the procedure guaranteeing its stay and obtaining.
The bank which is in the head of banking group or bank holding company (resident) posts the reporting on the website in chronological procedure on the periods and specifies the name of the reporting, the accounting period for which it is constituted, date of its submission to National Bank, date, number and the name of the edition in which the reporting is published, and also date of its placement on the website of bank and date to which it is available to persons interested in it. The reporting posted on the website of bank shall be available to persons interested in it at least three years from the date of its placement.
The bank which is in the head of banking group or the bank holding nonresident company of the Kyrgyz Republic (managing company of bank holding) posts the reporting on the official website of bank and/or other Internet resource providing its availability to all of persons interested in it irrespective of the purposes of receipt of this reporting under the procedure guaranteeing its stay and obtaining.
14. If the bank which is in the head of banking group or bank holding company, takes other actions concerning the reporting providing its availability to all persons interested in it, it can perform them, for example, by provision to specified persons of booklets, brochures and other editions. In case of publication of the reporting in booklets, brochures and other editions in terms, later, than placement of the specified reporting on the website of bank or publication in mass media, the bank specifies in booklets, brochures and other editions date of submission of the reporting to National Bank, and also the address of the website of bank, date of its placement on the website of bank and date to which this reporting will be available to persons interested in it, or date of publication in mass media.
15. The companies entering into banking group can perform only banking and/or financial activities, and also the activities connected with banking and/or financial activities including shareholding of participants of group in case with bank holding companies (except for banking groups which members were transformed from microfinance company to bank within transformation process).
16. The National Bank has the right to demand necessary information from the controlling persons and considerable members of bank, any other member of banking group and persons having with bank common interests for determination at any time:
- financial condition, level of risk management system and quality of corporate management of the bank which is in the head of banking group or bank holding company, including mother/managing company and members of banking group;
- extents of influence of bank holding company, including mother/managing company on subsidiary bank;
- the controlling person and/or persons (physical and legal);
- the activities performed by banking group and its participants;
- financial condition of banking group and its participants;
- types of the risks inherent in banking group and to its participants;
- risk management systems of banking group;
- business, financial and other relations between members of banking group.
The National Bank can demand provision of the additional information from bank holding company, including mother/managing company or from any member of banking group. In this case all necessary information is requested by National Bank through bank / non-bank financial credit institution and/or directly from bank holding company, or from any member of banking group.
17. Any physical person or legal entity shall get preliminary permission of National Bank if it intends solely or together with other persons to acquire or alienate threshold equity participation of bank, according to the legislation.
The legal entities who are not engaged in banking and/or financial activities and also the activities connected with banking and/or financial activities cannot solely or together with other persons, perform:
- immediate or indirect possession, or management of more than twenty percent of voting shares (any type) of bank;
- or, irrespective of participation in the authorized capital of bank to perform considerable influence on management and/or policy of this bank based on the agreement or otherwise.
18. Permission of National Bank needs to be got also if as a result of additional share acquisition of bank or otherwise any physical person or legal entity becomes directly or indirectly the considerable member of bank, will perform immediate or indirect possession, or management of threshold participation or becomes the controlling face of bank.
19. In case of application for share acquisition of bank in National Bank information according to requirements of the Law of the Kyrgyz Republic "About banks and banking activity", the Provisions "About Licensing of Activities of Banks" shall be provided.
20. The bank, being the member of banking group, performs the activities irrespective of other members of banking group.
21. The bank which is in the head of banking group, the bank holding company or mother/managing company controlling group of legal entities bear responsibility for compliance of activities of all banking group to requirements of the legislation.
22. The supervisory body and executive body of the bank which is in the head of banking group, bank holding company or parent company / the managing company controlling group of legal entities shall provide proper exchange of necessary information between all members of banking group.
23. The mother company (including the nonresident of the Kyrgyz Republic) in the presence of the facts or circumstances which can negatively/significantly influence activities of its subsidiary and/or dependent bank licensed by National Bank within 5 (five) working days from the moment of identification of the specified facts or circumstances sends to National Bank the written notice of it, with indication of the undertaken measures for non-admission of such influence.
Note: The negative and/or significant effect is understood as the facts or circumstances which can lead to violation of the law of the Kyrgyz Republic or changes in activities of the bank licensed by National Bank.
24. In case of the non-notification mother company or the notification with violation of fixed term the National Bank has the right to apply to the subsidiary and/or dependent bank located in the territory of the Kyrgyz Republic, and its mother company (resident of the Kyrgyz Republic) of corrective action, stipulated by the legislation the Kyrgyz Republic.
The mother company in case of availability of the facts or circumstances which can negatively and/or significantly influence activities of its subsidiary and/or dependent bank licensed by National Bank for the purpose of non-admission of such influence timely informs on it the subsidiary and/or dependent bank located in the territory of the Kyrgyz Republic.
The subsidiary and/or dependent bank licensed by National Bank in case of receipt of the above-stated information from mother company in writing informs on this Natsionalnoy bank within 2 (two) working days after receipt of this information.
25. In case of availability of threat to financial condition of the bank licensed by National Bank, resulting participations in banking group, the bank within 2 (two) working days from the moment of emergence of threat in writing reports to National Bank about it with indication of the undertaken measures for non-admission of such impact.
26. Members of banking group in the activities shall not assume risks which can endanger financial stability of any member of banking group or banking group in general.
27. Banking groups shall have risk management system and internal control, the related activities of banking group. Registered in the territory of the Kyrgyz Republic the bank which is in the head of banking group, the bank holding company or mother/managing company controlling group of legal entities shall have the internal documents approved by the board of directors regulating questions of procedure for realization of stipulated by the legislation shareholder rights, including procedure for issue of the power of attorney on participation in shareholder meetings, procedure for decision making about promotion of candidates for supervisory governing bodies and on other questions carried to competence of general shareholder meeting.
28. Banking group (with structure No. 1) shall observe restrictions of National Bank on large risks, the amounts of investments on the consolidated basis, and also to fulfill other requirements for risk minimization and restriction of activities.
29. The risk management policy of banking group shall include:
1) adequate management of the accepted risks of banking group according to the politicians approved by governing body of banking group;
2) the regulations providing maintenance of level of the capital sufficient for covering of the risks accepted by banking group;
3) provisions according to which risk management systems cover all banking group.
30. The internal control system shall include:
1) the mechanisms adequate to substantial risks determining capital adequacy assessment in relation to the risks accepted by banking group;
2) reliable procedures of the reporting and accounting for determination, assessment, monitoring and control of transactions in group and concentration risk.
31. The bank which is in the head of banking group the bank holding company or mother/managing company controlling group of legal entities bears responsibility for observance by banking group of requirements of National Bank to risk management system.
32. Banking group which members perform financial activities (non-bank) politicians and procedures for restriction of the large credit risks, liquidity risk, investment, currency and other risks characteristic of their activities and protecting banks as a part of group shall have.
33. Members of banking group who perform financial activities (non-bank) shall include the description the politician and procedures in the annual report of bank holding company or the bank which is in the head of banking group.
34. The National Bank can demand introduction of adjustments in policy and the procedure of the members of banking group performing financial (non-bank) activities for the purpose of risk minimization and non-admission of violation of the law of the Kyrgyz Republic by the bank (banks) entering (entering) into group.
35. In case of attraction of money by bank, the member of banking group the relevant contract for attraction of money from mother company, the member of banking group or any other foreign company / participant of banking group shall contain condition about the obligatory notification of National Bank about early agreement cancelation in 30 (thirty) working days prior to its termination. At the same time the initiator of the notification shall be that member of banking group who is person under surveillance to National Bank.
36. Officials, members observant and executive bodies of bank, at the head of the banking group, bank holding company or mother/managing company controlling group of legal entities including any controlled financial credit institution entering into banking group which is in the territory of the Kyrgyz Republic shall have faultless goodwill according to the legislation of the Kyrgyz Republic.
Officials, members observant and executive bodies of the bank which is at the head of banking group, bank holding company or mother/managing company which are in the territory of the Kyrgyz Republic, controlling group of legal entities, including financial credit institutions, any of which is in the territory of the Kyrgyz Republic also are persons under surveillance to National Bank, shall conform to the minimum qualification requirements established by National Bank for officials.
37. The banking holding company / mother/managing company shall provide in National Bank information on members of supervisory body and executive body, on considerable participants, on persons directly or indirectly exercising control and on other related persons together with information on goodwill and reliability of the designated officials according to requirements of the Regulations on licensing of activities of banks.
The bank holding resident company of the Kyrgyz Republic shall provide in National Bank the above-stated information within 30 (thirty) working days after their appointment.
The bank holding nonresident company of the Kyrgyz Republic shall provide in National Bank the above-stated information within 40 (forty) working days after their appointment.
38. Person cannot be the member of supervisory body of the bank holding resident company of the Kyrgyz Republic, subsupervising to National Bank if:
It has no 1) or lost faultless goodwill;
2) it does not conform to the minimum qualification requirements established by National Bank for officials of banks (the banking group, bank holding company or mother/managing company controlling group of legal entities in the territory of the Kyrgyz Republic).
39. Supervisory and executive bodies of the bank which is in the head of the banking group, bank holding company or mother/managing company controlling group of legal entities bear responsibility for establishment and realization of general the politician and the strategy of banking group for the purpose of determination of optimum management structure by its subsidiary/dependent banks and subsidiary/dependent companies which will promote implementation of effective and sequential control behind activities of banking group in general.
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