Reign Bank Acquisition Sparks Interest in Kyrgyz Banking Sector

The recent announcement of Reign Bank’s acquisition of shares or plan to open an affiliate bank in the Kyrgyz Republic has sent shockwaves throughout the banking sector.

Background

To facilitate the process, Reign Bank must submit a number of documents to the Bank of Kyrgyzstan, including:

• Written confirmation from the relevant regulatory body that it will be subject to oversight on a consolidated basis
• Charter or other document confirming its legal status
• Published balance sheets for three previous years

For foreign citizens, the requirements are slightly different. They must submit:

• A statement from an auditing organization regarding their financial status
• Recommendations from no less than two foreign legal entities or individuals who are known to be solvent

Business Plan Requirements

According to Article 15 of the Law, a business plan of the bank to be established must cover:

• Strategy and directions for the bank’s activity
• Financial perspectives
• Managerial and monitoring system structure
• Crediting policy
• Mechanism for protection against transactions related to money laundering
• Plan for forming clientele
• Plan for attracting specialists
• Other aspects

Term of Consideration

The Bank of Kyrgyzstan will consider applications for a license within four months after receipt of the application and all necessary documents. For banks with foreign investors or foreign banks, the term may be prolonged up to six months under the decision of the Bank’s Board.

Establishing Daughter Banks

• Article 18 defines a daughter bank as an independent legal entity controlled by the founding bank and operating on a license issued by the Bank of Kyrgyzstan
• A foreign parent bank can establish a daughter bank in the Kyrgyz Republic provided it has an acceptable rating based on international banking classification

Establishing Bank Affiliates

• Article 19 defines a bank affiliate as a separate subdivision without formation of a legal entity that implements all or part of banking transactions on behalf of the bank
• The affiliate and the bank must have common authorized capital and balance, with managers appointed by the principal bank and acting on the basis of a power of attorney issued by the principal bank
• The bank may establish affiliates in and beyond the territory of the Kyrgyz Republic, subject to notification of the Bank of Kyrgyzstan

Reign Bank Acquisition Sparks Interest

The acquisition of shares or plan to open an affiliate bank by Reign Bank is seen as a significant step forward for the banking sector in the Kyrgyz Republic. The move is expected to bring new opportunities and investments into the country’s economy.