RESOLUTION OF THE CABINET OF MINISTERS OF THE REPUBLIC OF UZBEKISTAN

of June 25, 2019 No. 523

About measures for further transformation of joint commercial mortgage bank "Ipoteka-bank" and subsequent its privatization with participation of International Finance Corporation

The measures for reforming of bank system performed in the republic provided conditions for transition to realization of new stage of the development of the bank sphere providing implementation of the market principles in banking activity by means of decrease in the state share and privatization of banks including by the admission to processes of privatization of foreign investors.

Within the undertaken reforms from AKIB "Ipoteka-bank" (further - Ipoteka-bank) performs number of the actions directed to increase in efficiency of corporate management and investment appeal of bank in interaction with the International Finance Corporation (further - IFC), and also study of possibility of attraction of the credits and investments of IFC into the authorized capital the Mortgage bank.

Possible inclusion of IFC in shareholding structure, and also transformation process the Mortgage bank assumes further reorientation of activities of bank to maximization of financial effectiveness and implementation of modern business model taking into account the advanced international practice.

For the purpose of ensuring effective transformation of the business model the Mortgage bank providing high-quality increase in competitiveness and investment appeal of bank for the subsequent privatization the Cabinet of Ministers decides:

1. Take into consideration that the Mortgage bank and IFC is implemented the program of cooperation, within which:

agreements according to which institutional transformations and stages of creation of bases of modern commercial bank are performed are signed, and also the conclusion until the end of 2019 of agreements on realization of the following stage of transformation of bank is provided;

agreement signature according to which IFC the Mortgage bank will provide money in the amount of 35 million US dollars in equivalent (in Uzbekistan sum) in type of loan, with possibility of converting of all amount or part of debt the Mortgage bank before IFC on this credit in in addition issued common shares the Mortgage bank is planned.

2. Determine that, for ensuring independence of activities the Mortgage bank, until the end of 2020 the measures including are implemented:

non-proliferation on Ipoteka-bank of procedure for coordination with state bodies and their heads of the proposed and appointed alternate members of the supervisory board and bank board provided by Items 1 and 2 of the resolution of the Cabinet of Ministers of the Republic of Uzbekistan of April 26, 2019 No. 356 "About measures for further enhancement of management system the state assets";

forming of new structure of the supervisory board of bank without participation of heads of state bodies, with bringing number of independent directors to five and election of the chairman of the supervisory board the Mortgage bank from among independent directors;

forming of management the Mortgage bank (executive body) and determination of the amount of compensation of members of executive body (the chairman and board members) on the basis of standards of market practice and requirements the Mortgage bank the supervisory board of bank;

independent acceptance the Mortgage bank of decisions concerning crediting and financing of projects, proceeding from market conditions;

prohibition on attraction of financial resources the Mortgage bank for investment into the authorized capital of the commercial organizations with profile unusual for banking activity.

3. To agency on management of the state assets of the Republic of Uzbekistan to transfer to two-month time to the Ministry of Finance of the Republic of Uzbekistan on a grant basis the state shares in the authorized capital the Mortgage bank which are in management of the Agency on management of the state assets of the Republic of Uzbekistan.

4. To the Ministry of Finance, Agency on management of the state assets together with the Central bank of the Republic of Uzbekistan in coordination with IFC to develop and approve in two-month time the "Road map" on privatization the Mortgage bank (further - the Road map) providing the main stages of process of privatization and the obligation of the parties on realization of process of privatization until the end of 2022.

5. Agree with the offers of the Ministry of Finance and Fund of reconstruction and developments of the Republic of Uzbekistan providing:

privatization the Mortgage bank and reduction of the state share in the authorized capital of bank is lower than 50 percent until the end of 2023 according to the Road map;

possibility of converting of all amount or part of debt the Mortgage bank before IFC on the credit in the common shares which are in addition issued the Mortgage bank on the conditions provided by the credit agreement between the Mortgage bank and IFC;

adoption of the obligation by the state on the return share repurchase the Mortgage bank, belonging to IFC, in case of privatization non-realization the Mortgage bank to the term specified in the Road map, or non-execution of conditions of the agreements specified in Item 6 of this resolution.

6. Authorize the Minister of Finance of the Republic of Uzbekistan on negotiating on behalf of the Republic of Uzbekistan and the conclusion with IFC in accordance with the established procedure of the following agreements:

the agreement on investment attraction with indication of obligations of the parties on implementation of this project, including procedure, terms and methods of decrease in the controlling stake of the state in the Mortgage bank and measures for achievement of commercialization of activities and increase in operational independence the Mortgage bank;

the agreement on preserving the size of the authorized capital providing preserving the state share in the authorized capital the Mortgage bank at the level of at least than 50 percent and one share during effective period of the credit agreement with IFC, except as specified execution of the obligations by the state according to the Road map;

the shareholders' agreement in the relation the Mortgage bank signed in case of realization of IFC of the option for converting of all amount or part of debt the Mortgage bank before IFC on granted loan in in addition emitted common shares the Mortgage bank with accurate differentiation of powers of Fund of reconstruction and development of Uzbekistan and IFC on management the Mortgage bank;

the agreement on the return share repurchase including the obligation of the state on behalf of the Fund of reconstruction and development of the Republic of Uzbekistan in share repurchase the Mortgage bank belonging to IFC, according to the procedure, established by this agreement, signed in case of option exercise of IFC on converting of all amount or part of debt the Mortgage bank before IFC on granted loan in in addition emitted shares Mortgage bank in case of non-execution by the state of conditions of the Road map and agreements;

other agreements necessary for implementation of this project and Road map.

7. Recommend to realize the Mortgage bank the assets unusual for banking activity formed as a result of its investing activities.

8. Determine that:

a) in case of non-execution by the state of conditions of the Road map and agreements Fund of reconstruction and development of the Republic of Uzbekistan:

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