Monday, November 30, 2009

Government takes control of Zoos Bank, RENAMED STATE BANK

Government takes control of Zoos Bank, RENAMED STATE BANK
The Mongolbank announced that the Government will own 100 percent of the troubled Zoos Bank. The newly created bank will be renamed State Bank. The press conference was attended by the Vice Minister for Finance T. Ochirkhuu, Mongolbank President L. Purevdorj, Mongolbank First Deputy President B. Enkhhuyag, and the Director of the Financial Regulatory Commission D. Bayarsaikhan. The announcement came after Zoos Bank’s request to merge with the Mongolshuudan and Savings Banks was denied by the EBRD which owns 25 percent of Zoos Bank.
Furthermore, an inspection of the bank found serious defects. The bank gave MNT 60 billion in loans to Mongol Gazar gold company. The loans are now verified as bad loans. Zoos Bank now has MNT 10 billion in losses, while the asset write-offs reached MNT 40 billion. The estimated assets of the bank are only MNT 7 billion.

Central Bank President L. Purevdorj stated that Mongolbank is taking full control of the bank according to its rights indicated by law. Mr. Purevdorj said that the Central Bank has been taking serious actions to save the troubled Zoos Bank since its first signs of financial difficulties a year ago. Zoos Bank was provided MNT 17 billion late 2008. It was one of the banks that was bailed out by the Government. USD 18 million was also placed in the bank to give loans to gold mining companies. Since Zoos Bank was unable to use these measures, the Central Bank had no other choice but to take control of it.


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