‘Banks’ IPO must begin before election’

The Standing Committee on Economic system reviewed the draft modification to the Legislation on Procedures for Imposing the Amended Banking Legislation on Could 17.

The invoice gives for the extension of the time required to transform some banks into open joint inventory corporations. In accordance with the Legislation on Procedures for Imposing the Amended Banking Legislation, which was handed on January 29, 2021, some influential banks have to be restructured into publicly-traded corporations by June 30, 2022. Nevertheless, the Standing Committee on Economic system handed a decision on Could 3 this yr, proposing Prime Minister L.Oyun-Erdene to increase the interval for remodeling banks into open joint inventory corporations.

Particularly, the draft modification extends the deadline for the transition of banks to an open joint inventory firm till June 30 subsequent yr.

Invoice initiators knowledgeable that the Monetary Regulatory Fee and Mongol Financial institution are reviewing proposals submitted by banks for restructuring in accordance with joint rules.

Mongol Financial institution views it essential to re-evaluate the standard of banks’ property and take measures to mirror the outcomes of the evaluation within the monetary statements of banks.

In the course of the assembly, lawmaker Kh.Gankhuyag commented, “This deadline subject was settled after a number of discussions. In accordance with the legislation, one particular person can’t personal greater than 20 p.c stakes in a financial institution after December 31, 2023. There have been studies that banks have been embezzling state property and even influencing elections. To shut this, the deadline was set for the banking reform. Due to this fact, this work should start earlier than the election cycle. Nevertheless, this era is about to be prolonged. That is the most important reform of the present Parliament. Why is it being postponed due to solely 4 to 5 individuals? I don’t suppose there are sufficient grounds to postpone it.”

“Banks have been capable of launch an IPO final yr. Final yr, 2 trillion MNT was transformed into cryptocurrencies. Two trillion MNT has been invested in nugatory issues. However at present, invoice initiators are saying that some banks shouldn’t have sufficient cash to subject shares price 500 billion MNT. When issuing an IPO, banks shouldn’t have to subject all their shares at first. It’s potential to subject further shares and make clear the possession share earlier than December 31, 2023. Some banks that haven’t been ready prior to now and don’t need to achieve this won’t be able to switch 80 p.c of their shares to others. On this approach, the problem of deadline extension might be mentioned once more. So, I wish to say to Governor of Mongol Financial institution B.Lkhagvasuren to take brave motion on this subject,” he mentioned.

On the assembly, Chairman of the Standing Committee on Finances Ch.Khurelbaatar criticized Mongol Financial institution for performing poorly. He famous, “Why didn’t Mongol Financial institution put together banks’ quantitative danger evaluation? Invoice initiators clarify that the deadline might be postponed in accordance with suggestions from the Worldwide Financial Fund (IMF). I perceive that the central financial institution has not executed its job and is mainly suspending it. Residents are vulnerable to shopping for shares of dangerous banks. So it’s best to have executed the asset high quality assessment prematurely. B.Lkhagvasuren is simply too irresponsible.”

Governor of Mongol Financial institution B.Lkhagvasuren knowledgeable, “Banks have submitted their IPO plans to the central financial institution. They’ll be capable of keep away from potential challenges within the inventory market if their authorized deadline for providing their shares to the general public on the first market is prolonged. Furthermore, the financial scenario will not be steady because of the worldwide scenario. Due to this fact, we consider that it’s essential to re-evaluate the standard of banks’ property and take measures to mirror the outcomes of the evaluation within the monetary statements of banks. The interval extension is an extension to the deadline for banks to remodel into an open joint inventory firm. It’s not a postponement. If the 5 largest systemically influential banks supply their shares on the similar time earlier than June 30, there’s a danger that the share value might be affected.”

Final April, IMF expressed its help for the concept of economic banks launching IPO however suggested to postpone this work in consideration of the present pandemic scenario and the worldwide disaster.