Regulation on Consolidated Supervision (National Bank of the Kyrgyz Republic)


	Approved by Resolution No. 2/3 of the Board of the National Bank of the Kyrgyz Republic dated February 17, 2010

Regulation on Consolidated Supervision

(As amended by Resolutions of the Board of the National Bank of the Kyrgyz Republic dated November 16, 2012 No. 43/1, November 27, 2014 No. 53/8)

Chapter 1

General Provisions

This Regulation is developed in accordance with the Laws of the Kyrgyz Republic "On the National Bank of the Kyrgyz Republic", "On Banks and Banking Activities in the Kyrgyz Republic", and standards adopted by the Basel Committee on Banking Supervision (1) for the purpose of implementing consolidated supervision over the activities of banking groups and their affiliated persons.
For the purposes of this Regulation, the following definitions apply:

Bank - a commercial bank or microfinance company licensed by the National Bank of the Kyrgyz Republic (hereinafter - the National Bank), or the State Development Bank of the Kyrgyz Republic.

Affiliated persons:

significant participants of a legal entity, including banks;
legal entities in which other legal entities, including banks, are significant participants;
legal entities, including banks, in which other legal entities are significant participants.

Banking Group:

a group consisting of a bank operating in the territory of the Kyrgyz Republic and its subsidiaries and/or dependent companies, as well as their affiliated persons;
a group consisting of a banking holding company established in the territory of the Kyrgyz Republic, one of whose subsidiaries and/or dependent companies is a bank operating in the territory of the Kyrgyz Republic;
a group of legal entities engaged in banking and/or financial activities, which also includes a bank, over which control is exercised by the same legal or natural person, individually or jointly with other persons.

Banking Holding Company - a parent company, a subsidiary or one of the subsidiaries of which is a bank.

Subsidiary Company - a legal entity controlled by another legal entity (parent company). A subsidiary of another subsidiary is also considered a subsidiary (of the first) parent company.

Subsidiary Bank - a bank controlled by another bank or any other legal entity (parent company). A subsidiary bank of a subsidiary bank is also considered a subsidiary bank of the parent company.

Dependent Company - a legal entity in which any person, individually or jointly with another person, exercises direct or indirect ownership or management of more than twenty percent of the voting shares or equity in the capital of any legal entity.

Significant Participation - individually or jointly with other persons:

direct or indirect ownership or management of ten or more percent of the voting shares (of any type) of a joint-stock company, ten or more percent of the authorized capital of a legal entity that is not a joint-stock company;
or, regardless of participation in the authorized capital of a legal entity, the ability to exercise significant influence on the management and/or policy of the given legal entity on the basis of an agreement or otherwise.

Significant Participant - a person exercising significant participation in a legal entity in accordance with the Law of the Kyrgyz Republic "On Banks and Banking Activities in the Kyrgyz Republic".

Insiders (Internal Persons) - members of the executive body(2), members of the supervisory body(3), other officials(4), significant participants, and any other natural persons associated with the specified persons by common interests.

Company - any legal entity.

Control - individually or jointly with other persons:

direct or indirect ownership or management of fifty or more percent of the voting shares of a joint-stock company or the authorized capital of a legal entity that is not a joint-stock company, or;
the ability to elect at least half of the members of the supervisory body of a legal entity, or;
regardless of participation in the capital of a legal entity, the ability to exercise decisive influence on the management or policy of the given legal entity on the basis of an agreement or otherwise.

Controlling Person - a person exercising control over a legal entity.

Parent Company - a legal entity controlling another legal entity.

Primary Parent Company - a parent company in a group that is not subordinate to another company in the group.

Common Interests between two and/or more natural and legal persons are recognized as existing in the presence of any of the following conditions:

a) one legal or natural person controls another person;

b) these persons are affiliated legal entities or insiders;

c) one of these persons is a dependent company of another person.

Managing Company - a company that may be created by the primary parent company, in the form of a joint-stock company, exclusively for the purpose of managing subsidiaries and/or dependent companies (participants) included in the banking group.

Participant of the Banking Group - a legal entity included in the composition of the banking group.

(As amended by Resolution of the Board of the National Bank of the Kyrgyz Republic dated November 16, 2012 No. 43/1)

For the purposes of determining a significant participant, a dependent company, and control:

a) shares held by companies that are dependent companies of one person or controlled by one person are considered to be held indirectly by that person and are combined with shares held directly by that person when determining the total number of shares owned by the person;

b) shares owned by a person and their close relatives (heirs of the first and second degree according to civil legislation) are considered to be directly owned by that person.

Persons jointly owning shares of a bank are recognized as persons:

a) being close relatives;

b) jointly owning shares by virtue of a concluded agreement or otherwise;

c) being significant participants individually or jointly;

d) having provided a loan (credit or funds equivalent to it) to another person for the purchase of shares and persons who received this loan;

e) being officials or representatives of another person.

The National Bank exercises consolidated supervision over:

a bank operating in the territory of the Kyrgyz Republic and its subsidiaries and/or dependent companies;
a banking group consisting of a banking holding company established in the territory of the Kyrgyz Republic, one of whose subsidiaries and/or dependent companies is a bank operating in the territory of the Kyrgyz Republic;
a group of legal entities engaged in banking and/or financial activities in the territory of the Kyrgyz Republic, which also includes a bank operating in the territory of the Kyrgyz Republic, over which control is exercised by the same person, individually or jointly with other persons.

In the event that in a group of legal entities engaged in banking and/or financial activities, over which control is exercised by the same person, individually or jointly with other persons, there is no parent company, then a legal entity authorized by a corresponding decision of the controlling person and agreed with the National Bank (engaged in banking and/or financial activities) fulfills the requirements established by the National Bank, including the provision of information and reporting.

(As amended by Resolution of the Board of the National Bank of the Kyrgyz Republic dated November 16, 2012 No. 43/1)

Chapter 2. Transparency of the Activities of the Banking Group

Companies included in the banking group may carry out only banking and/or financial activities, as well as activities related to banking and/or financial activities, including ownership of shares of group participants in the case of banking holding companies.
The National Bank has the right at any time to demand necessary information from controlling persons and significant participants of the bank, any other participant of the banking group, and persons having common interests with the bank to determine:

the financial condition, level of risk management system, and quality of corporate governance of the banking holding company;
the degree of influence of the banking holding company on the subsidiary bank;
the controlling person and/or persons (natural and legal);
activities carried out by the banking group and its participants;
the financial condition of the banking group and its participants;
types of risks inherent in the banking group and its participants;
the risk management system of the banking group;
business, financial, and other relations between participants of the banking group.

The National Bank may require the provision of additional information from the banking holding company or from any participant of the banking group.

Any natural or legal person is obliged to obtain prior permission from the National Bank if it intends to become a significant participant of the bank individually or jointly with other persons, exercise direct or indirect ownership or management of more than twenty percent of the voting shares, or become a controlling person of the bank.

Legal entities not engaged in banking and/or financial activities, as well as activities related to banking and/or financial activities, cannot individually or jointly with other persons exercise:

direct or indirect ownership or management of more than twenty percent of the voting shares (of any type) of the bank;
or, regardless of participation in the authorized capital of the bank, exercise significant influence on the management and/or policy of the given bank on the basis of an agreement or otherwise.

Permission from the National Bank is also required in the event that as a result of additional acquisition of bank shares or otherwise any natural or legal person becomes directly or indirectly a significant participant of the bank, will exercise direct or indirect ownership or management of more than twenty percent of the voting shares of the bank, or become a controlling person of the bank.
When submitting an application for the acquisition of bank shares, information must be submitted to the National Bank in accordance with the requirements of the Law of the Kyrgyz Republic "On Banks and Banking Activities in the Kyrgyz Republic", the Regulation on Licensing of Banking Activities approved by Resolution No. 5/7 of the Board of the National Bank of the Kyrgyz Republic dated March 2, 2006, registration number of the Ministry of Justice No. 34-06 dated 07.04.2006 (hereinafter - the Regulation on Licensing of Banking Activities).
A bank that is a participant of the banking group carries out its activities independently of the other participants of the banking group.
The banking holding company or the bank at the head of the banking group is responsible for the activities of the entire banking group in compliance with the requirements of the National Bank.
The supervisory body and the executive body of the banking holding company or the bank at the head of the banking group must ensure the proper exchange of necessary information between all participants of the banking group.
The parent company (including a non-resident of the Kyrgyz Republic), in the presence of facts or circumstances that may negatively/significantly(5) affect the activities of its subsidiary and/or dependent bank licensed by the National Bank, within 5 working days from the moment of identification of such facts or circumstances, sends a written notification to the National Bank indicating measures taken to prevent such influence.

In the event of failure to notify by the parent company or notification with a violation of the established deadline, the National Bank has the right to apply impact measures to the subsidiary and/or dependent bank located in the territory of the Kyrgyz Republic and its parent company (resident of the Kyrgyz Republic), provided for by the legislation of the Kyrgyz Republic.

The parent company, in the event of the presence of facts or circumstances that may negatively/significantly affect the activities of its subsidiary and/or dependent bank licensed by the National Bank, for the purpose of preventing such influence, timely informs the subsidiary and/or dependent bank located in the territory of the Kyrgyz Republic about this.

The subsidiary and/or dependent bank licensed by the National Bank, upon receiving the above information from the parent company, notifies the National Bank in writing within 2 working days after receiving this information.

In the event of a threat to the financial condition of a bank licensed by the National Bank arising as a result of participation in the banking group, the bank within 2 working days from the moment the threat arises, notifies the National Bank in writing about this, indicating measures taken to prevent such impact.

Chapter 3. Capital of the Banking Group

The banking group must have an appropriate level of capital sufficient to cover unforeseen possible losses and losses of all group participants.
Participants of the banking group must have policies and procedures for ensuring capital adequacy, providing for protection from possible shocks to banks within the group and corresponding to their economic activities.
The capital of the banking group and participants of the banking group must comply with the requirements established by the legislation of the Kyrgyz Republic and regulatory legal acts of the National Bank. The banking holding company or the bank at the head of the banking group is responsible for ensuring compliance with this requirement by participants of the banking group.
The banking holding company or the bank at the head of the banking group must submit to the National Bank the approved by the supervisory body policy of the banking group on capital adequacy, including the approved methodology for assessing capital adequacy.
When conducting inspection checks, the National Bank has the right to check the presence and compliance of the corresponding policies and procedures of the banking group on capital adequacy.
For the purpose of ensuring the protection of banks included in the banking group, the National Bank may require changes and additions to policies and procedures for ensuring capital adequacy.
The National Bank may require a bank to contribute additional capital or introduce higher economic capital adequacy ratios if it establishes that the group capital is insufficient to protect the bank and there is a significant risk of negative impact on the financial condition of the bank associated with its participation in the banking group, or that the activities of the banking group are not sufficiently transparent to comply with the legislation of the Kyrgyz Republic, including the requirements of the National Bank.
The banking holding company or the bank at the head of the banking group is obliged to notify the National Bank of all facts or circumstances that may significantly affect its capital or the capital of any of its subsidiaries or dependent companies.

Chapter 4. Risk Management and Internal Control of the Banking Group

Participants of the banking group in their activities must not take on risks that could endanger the financial stability of any participant of the banking group or the banking group as a whole.
Banking groups must have risk management and internal control systems corresponding to the activities of the banking group.
The banking group must comply with the National Bank's restrictions on large risks, investment sizes, and currency positions on a consolidated basis.
The risk management policy of the banking group must include:

adequate management of risks taken by the banking group in accordance with policies approved by the governing body of the banking group;
standards ensuring the maintenance of a capital level sufficient to cover risks taken by the banking group;
provisions according to which risk management systems cover the entire banking group.

The internal control system must include:

adequate mechanisms for significant risks determining the assessment of capital adequacy in relation to risks taken by the banking group;
reliable reporting and accounting procedures for determining, assessing, monitoring, and controlling intra-group operations and concentration risk.

The banking holding company or the bank at the head of the banking group is responsible for the banking group's compliance with the National Bank's requirements for the risk management system.
The banking group, whose participants carry out financial (non-banking) activities, must have policies and procedures for limiting large credit risks, liquidity risk, investment, currency, and other risks characteristic of their activities and protecting banks within the group.
Participants of the banking group who carry out financial (non-banking) activities must include a description of policies and procedures in the annual risk management report of the banking holding company or the bank at the head of the banking group.
The National Bank may require adjustments to the policies and procedures of participants of the banking group carrying out financial (non-banking) activities in order to minimize risks and prevent violation of the legislation of the Kyrgyz Republic by the bank(s) included in the group.

Chapter 5. Corporate Governance of the Banking Group

Officials, members of the supervisory body, and the executive body of the banking holding company or the bank at the head of the banking group must meet the minimum qualification requirements established by the legislation of the Kyrgyz Republic. Fiduciary duties performed by members of the Board of Directors and the Board of Banks also apply to members of the supervisory body and the executive body of the management of the banking holding company.
The banking holding company must provide the National Bank with information about members of the supervisory body and the executive body, about significant participants, about persons directly or indirectly exercising control, together with information about the business reputation and reliability of appointed officials in accordance with the requirements of the Regulation on Licensing of Banking Activities.

The banking holding company - resident of the Kyrgyz Republic must provide the National Bank with the above information within ten working days after their appointment.

The banking holding company - non-resident of the Kyrgyz Republic must provide the National Bank with the above information within thirty calendar days after their appointment.

A person cannot be a member of the supervisory body of the banking holding company and must be removed from office:

if they have an unexpunged and/or unrehabilitated criminal record;
if they were the head of a legal entity subjected to bankruptcy proceedings by liquidation;
if they were deprived of the right to be a member of the governing bodies of a legal entity or to engage in professional activity in accordance with the legislation of the Kyrgyz Republic;
if they are a member of the executive body of the banking holding company.

The supervisory and executive bodies of the banking holding company or the bank at the head of the banking group are responsible for establishing and implementing general policies and strategies of the banking group for the purpose of determining the optimal structure of management of its subsidiary/dependent banks and subsidiary/dependent companies, which will facilitate the implementation of effective and consistent control over the activities of the banking group as a whole.
The supervisory body of the banking holding company or the bank at the head of the banking group must:

provide the National Bank with information on the structure of the banking group, information on participants of the banking group, including information on the main activities of group participants, the banking group's risk management and internal control policies approved by the supervisory body of the banking holding company, information on controlling persons of the banking group participants, information on persons who exercise actual control in the banking group, information on the financial condition of group participants;
submit to the National Bank the approved development strategy of the banking group and the banking holding company for the upcoming three-year period of activities;
develop and approve a policy on adequate capitalization of the banking group to cover risks characteristic of the activities of the banking group, satisfying regulatory, market, and strategic needs of the banking group;
develop and approve a policy on identifying and managing all risks associated with participants of the banking group or types of activities;
establish appropriate limits on transactions with participants of the banking group;
monitor compliance by the banking group with legislative requirements and internal policies;
ensure the proper exchange of necessary information between all participants of the banking group;
ensure safe and reliable management guaranteeing the protection of depositors of banks included in the banking group and other creditors of the banking group.

The supervisory body of the banking holding company or the bank at the head of the banking group, for the purpose of improving the efficiency of corporate governance, establishes requirements for including the adequacy check of internal control in the implementation of all types of activities of participants of the banking group regarding compliance with strategic goals and legislation, assessment of risks arising from the activities of participants of the banking group.
The supervisory and executive bodies of the banking holding company or the bank at the head of the banking group must be aware of risks that may affect the activities of participants of the banking group, and therefore must exercise appropriate control over their activities. The executive body must inform the Supervisory Body in writing at least once a quarter, and if necessary - immediately, about risks present in the activities of the banking holding company or the bank at the head of the banking group and the banking group, as well as about measures taken for their timely identification and elimination.
The banking holding company must have an Audit Committee consisting of 3-5 members of the supervisory body, appointed by the general meeting of shareholders for one year. Members of the executive body of the banking holding company or its employees must not simultaneously be members of the Audit Committee. A member of the Audit Committee cannot be a member of the executive body or an employee of a subsidiary bank or a subsidiary company of the banking holding company.

Chapter 6. Requirements for subsidiary and dependent companies of the bank

A bank may create or acquire a subsidiary or dependent company. In this case, legal entities over which control is exercised or in which participation is held by subsidiary and/or dependent companies of the banking holding company or the bank licensed by the National Bank are not entitled to create and/or acquire subsidiary and/or dependent companies.
Subsidiary and/or dependent companies included in the banking group may carry out only the following types of activities:

banking activities;
microfinance activities in accordance with the Law of the Kyrgyz Republic "On Microfinance Organizations in the Kyrgyz Republic";
investment fund activities in accordance with the Law "On Investment Funds";
insurance activities in accordance with the Law of the Kyrgyz Republic "On the Organization of Insurance in the Kyrgyz Republic";
audit activities in accordance with the Law of the Kyrgyz Republic "On Audit Activities";
activities for the organization and maintenance of accounting in accordance with the Law of the Kyrgyz Republic "On Accounting";
leasing activities;
pawnshop activities;
payment services activities:

acceptance and processing of payments and settlements on behalf of third parties without opening an account;
acceptance, processing, and issuance of financial information (processing) for payments and settlements of third parties to participants of payment systems;
acceptance, processing, and issuance of financial information (interbank processing) for payments and settlements of third parties to participants of both interbank and non-bank payment systems;
issuance, distribution, acceptance for payment, and confirmation of prepaid cards equivalent to electronic money;

purchase and sale of debt obligations (factoring);
acquisition of the right to claim from third parties the performance of monetary obligations;
provision of brokerage services, including the purchase and sale of securities on behalf of the client, acting on the client's instructions;
provision of trust management (trust) of property under a contract with an individual or legal entity;
issuance of securities in its own name in accordance with regulatory legal acts, except for the issuance of debt securities;
purchase and sale of securities for the company in its own name in accordance with regulatory legal acts;
provision of consulting and information services related to the company's activities.

The creation or acquisition by a bank of a subsidiary or dependent company is carried out on the basis of written permission from the National Bank.
The creation and/or acquisition by a bank of a subsidiary or dependent company is carried out in accordance with the procedure established by the regulatory legal acts of the National Bank.
The creation or acquisition of a subsidiary or dependent company must not violate the transparency of the organizational structure of the banking group.
If the acquired or created company is foreign and subject to regulation by the financial sector supervisory authority, the application must contain information about the supervisory regime to which the company is subject in its country of origin.
A bank that creates or acquires a foreign subsidiary or dependent company must ensure:

the provision to the bank by the subsidiary or dependent company of all information necessary for the bank to comply with the requirements of this Regulation;
the prevention of the establishment of common interests with other persons that could lead to a violation of the National Bank's requirements regarding the transparency of the banking group's structure.

The National Bank may withdraw its consent to the creation or acquisition of a subsidiary or dependent company if facts become known on the basis of which permission to create a bank could be refused, or if the subsidiary or dependent company is involved in activities not permitted by the legislation of the Kyrgyz Republic.
In the event of the National Bank withdrawing its permission, the bank must sell the shares of the subsidiary company it owns to persons not affiliated with the bank within a period determined by the National Bank.
If a bank creates or acquires a subsidiary or dependent company without prior written consent from the National Bank, such transaction is void.

Chapter 7. Economic standards established by the National Bank

The National Bank establishes the following economic standards and requirements mandatory for compliance by the banking group:

capital adequacy ratio (own funds);
maximum risk size per single borrower;
liquidity ratio;
other standards and requirements necessary to reduce the risks of the banking group and protect the interests of depositors of banks included in this group.

The capital adequacy ratio (own funds) of the banking group (K) must be at least 12%. It is determined as the ratio of the sum of the net total capital of the commercial bank included in the banking group and the own capital (own funds) of the participants of the banking group to the sum of the assets of the commercial bank included in the banking group, weighted by risk degree, and the total assets of the participants of the banking group according to the formula:

K = CK / SA x 100%, where:

CK - sum of the net total capital of the commercial bank included in the banking group and the own capital (own funds) of the participants of the banking group.

SA - sum of the total assets of the participants of the banking group and the assets of the commercial bank included in the banking group, weighted by risk degree, minus the bank's investments in subsidiary and/or dependent companies.

The net total capital and assets, weighted by risk degree, of the commercial bank included in the banking group are determined in accordance with the Instruction on determining the capital adequacy standards of commercial banks of the Kyrgyz Republic (6). In this case, when calculating the net total capital of the commercial bank included in the banking group, investments in the charter capital of the participants of the banking group are excluded.

The size of the own capital of a participant of the banking group is determined in accordance with the requirements of the regulatory legal acts of the Kyrgyz Republic.

The size of the own capital of a participant of the banking group that is a non-resident of the Kyrgyz Republic is determined by the regulatory legal acts of the authorized body regulating its activities in the country of its location.

In the event that no special procedure for calculating the size of own capital is established for a participant of the banking group, the capital of the participant of the banking group is determined as the difference between its assets and liabilities in accordance with the established norms of accounting and financial reporting formation.

The liquidity ratio must be maintained at a level of no less than 30%.

The liquidity ratio is determined by the formula:

LR = LA / O, where:

LA - sum of liquid assets of the participants of the banking group, which include:

liquid assets of the bank, a participant of the banking group, determined in accordance with the regulatory legal acts of the National Bank;
liquid assets of the participant of the banking group, determined in accordance with the legislation of the Kyrgyz Republic, including cash and securities that can be converted into cash within 30 days from the date of assessment, minus pledged assets.

O - sum of liabilities of the participants of the banking group, which for the calculation of the liquidity ratio include:

liabilities of the bank, a participant of the banking group, determined in accordance with the regulatory legal acts of the National Bank;
liabilities of the participant of the banking group, determined in accordance with the legislation of the Kyrgyz Republic, the settlement of which occurs within 30 days after the reporting date.

The maximum risk size per single borrower of the banking group (MR) must not exceed the following values:

maximum risk size per single borrower not affiliated with the banking group - 15%;
maximum risk size per single borrower affiliated with the banking group - 10%.

The maximum risk size standard per single borrower (MR) is calculated as follows:

MR = DB / K x 100%, where:

DB - total debt, total debt of one borrower for all assets provided to him by the participants of the banking group, carrying credit risk, including for:

loans (regardless of repayment term);
factoring;
financial leasing;
interbank placements;
capital investments;
investments in the form of debt obligations;
accrued interest receivable;
any other type of direct or indirect provision of funds to borrowers that are essentially credit substitutes;
sum of off-balance sheet obligations (guarantees, letters of credit, obligations to issue loans) issued to this borrower;
any risk of the participant with respect to a third party that is unconditionally guaranteed by this borrower;
previously written-off loans, including interest. In the credit file of each borrower, information on previously written-off loans and interest of this borrower and affiliated persons must be filed, which must contain the following information: name of the borrower and affiliated persons, amount of written-off loan and interest, date of write-off, and reason for which this debt was written off.

K - sum of the net total capital of the commercial bank included in the banking group and the own capital (own funds) of the participants of the banking group.

Compliance with the maximum risk size per single borrower affiliated with the banking group is carried out in cases where the borrower:

is included in the banking group;
is an affiliated person and/or insider of a participant of the banking group;
is affiliated with another borrower by a joint activity agreement or any other document containing signs of a joint activity agreement;
is a person capable of exerting direct or indirect (through third parties) significant influence on decisions made by the management bodies of legal entities - borrowers.

Companies, including banks, included in the banking group, must comply with the relevant requirements and economic standards established for them by the legislation of the Kyrgyz Republic.
To comply with economic standards and reduce risks, the banking group is recommended to establish internal limits on economic standards and requirements, which must be lower than the maximum and higher than the minimum limits established by the relevant regulatory legal acts of the National Bank.
A bank, a participant of the banking group, cannot enter into a transaction and/or carry out operations with any person in order to provide him with the opportunity:

to pay an obligation to an insider or affiliated person of a participant of the banking group;
to purchase any property from an insider or affiliated person of a participant of the banking group;
to acquire securities issued by an affiliated person of a participant of the banking group;
to carry out operations/transactions that could lead to a deterioration in the financial condition of the bank.

An insider and/or affiliated person of one of the participants of the banking group is recognized as an insider and/or affiliated person of each participant of the banking group.

The banking holding company or the bank at the head of the banking group is responsible for ensuring compliance with the requirements and economic standards by the participants of the banking group.

Chapter 8. Reporting and information provided by the banking group to the National Bank

The banking group must disclose and provide information about its activities to the National Bank in the form, order, and deadlines established by the National Bank, including any significant changes in the group's structure, as well as information about the creation or acquisition of non-bank subsidiary companies or dependent companies.
The bank at the head of the banking group or the banking holding company, in the event that this company is a resident of the Kyrgyz Republic, submits periodic regulatory reporting/periodic regulatory banking reporting (hereinafter - PRR/PRBR) to the National Bank both on an individual and consolidated basis according to forms established by the National Bank. PRR/PRBR on an individual basis is submitted by the banking holding company to the National Bank within the deadlines established by the regulatory legal acts of the National Bank, and on a consolidated basis - quarterly within 12 calendar days from the end of the reporting period.
The bank at the head of the banking group or the banking holding company, including the parent company - a non-resident of the Kyrgyz Republic, sends information to the National Bank about changes made to the constituent documents, charters, structure of subsidiary or dependent companies, expansion of their activities, change of officials in subsidiary or dependent companies, as well as information about the creation and/or acquisition of subsidiary companies by the bank's subsidiary companies within a period no later than 30 days from the moment of adopting the corresponding decision.
The bank at the head of the banking group or the banking holding company, including the parent company - a non-resident of the Kyrgyz Republic, submits to the National Bank an annual report together with annual financial reporting confirmed by an independent audit company, on an individual and consolidated basis within a period no later than 180 days from the end of the reporting year, containing an assessment of the adequacy of internal control for the banking group and the banking holding company. These reports must also contain information about the activities of the banking group, including information about all subsidiary and dependent companies of the banking holding company, including the name, percentage of ownership, type or types of activities in which each participant of the banking group is involved.

(In the edition of the Resolution of the Board of the National Bank of the Kyrgyz Republic of November 27, 2014 No. 53/8)

The annual report must be signed by the chairman of the supervisory body, the executive body, and the chief accountant of the banking holding company or the bank at the head of the banking group.

Chapter 9. Applicable measures to participants of the banking group

In the event of violations by participants of the banking group of economic standards and other requirements of the regulatory legal acts of the National Bank, unlawful actions or inaction of officials of companies-participants of the banking group that may threaten the financial security and stability of the banking group, as well as the interests of group participants, their creditors, and depositors, the National Bank has the right to apply impact measures to a participant of the banking group in accordance with the legislation of the Kyrgyz Republic.
In the event of a violation by an affiliated person of a bank of the requirements of the National Bank and/or banking legislation, or if its activities or financial position, in the opinion of the National Bank, cause or may cause damage to the financial stability of the bank and the interests of the bank's depositors, the National Bank may require the affiliated person to take measures to eliminate the identified violations and deficiencies.

The form of stating the National Bank's requirements is a directive of the National Bank or a written agreement between the National Bank and the affiliated person of the bank.

The National Bank may require significant participants of the bank to take measures with respect to companies controlled by them, the activities or financial position of which, in the opinion of the National Bank, cause or may cause damage to the financial stability of the bank and the interests of the bank's depositors.

The form of stating the National Bank's requirements is a directive of the National Bank or a written agreement between the National Bank and the significant participant.

If the requirements of the National Bank, taken in accordance with Articles 64 and 65 of this Regulation, are not fulfilled within the deadlines established by the National Bank, the National Bank has the right:

in the case of a subsidiary company of the bank - to require the bank to suspend any investments in this company;
in the case of a banking holding company - to require the banking holding company to suspend the exercise of control over the bank, including suspending the exercise, directly or indirectly, of voting rights on shares and transferring shares to a third legal entity (trustee) for the period necessary to fulfill the requirements of the National Bank, and if necessary - suspending the voting rights of the trustee on shares transferred to him in trust;
in the case of affiliated persons of the bank - to require the affiliated persons and/or the bank to suspend the conduct of operations, transactions between such affiliated persons and the bank;
in the case of companies controlled by significant participants of the bank, to require the significant participant:

a) to suspend participation in the activities of the bank, including suspending the exercise, directly or indirectly, of voting rights on shares and transferring shares to a third legal entity (trustee) for the period necessary to fulfill the requirements of the National Bank;

b) and/or to suspend the conduct of direct and indirect operations, transactions between the bank and the significant participant and/or between the bank and the company in which significant participation is exercised.

The form of stating the National Bank's requirements is a directive of the National Bank or a written agreement between the National Bank and the person(s) specified in paragraphs 1), 2), 3), 4) of Article 66.

The transfer of shares of the bank, in the cases specified in paragraphs 2) and 4) of Article 66, to a trustee for trust management is carried out on the basis of a written agreement between them, after coordination (approval) with the National Bank of the trustee. The contract must provide for (mandatory conditions):

the right of the trustee to participate in the management of the bank;
the right of the trustee to alienate shares in the securities market in cases established in paragraph 4) of Article 66.

In the event of non-fulfillment by the persons specified in paragraphs 1), 2), 3), 4) of Article 66 of the requirements of the National Bank, the National Bank has the right to appeal to the court to compel the specified persons to conclude an agreement with the trustee for the transfer of shares of the bank to trust management.

If the requirements of the National Bank, taken in accordance with Articles 64 and 65 of this Regulation, are not fulfilled within the deadlines established by the National Bank, the National Bank has the right:

in the case of a subsidiary or dependent company of the bank - to require the bank to reduce its investments to a level where the company will no longer be a subsidiary or dependent company of the bank;
in the case of a banking holding company - to annul the permission to acquire control over the bank and require the cessation of control and significant participation in the bank;
in the case of a subsidiary company of the parent company of the bank - to require the banking holding company to cease control over the subsidiary company or the bank;
in the case of companies that are significant participants of the bank - to annul the permission to be a significant participant in the bank and require the cessation of significant participation in the bank.

The alienation of shares of the bank in the cases provided for in this paragraph must be carried out within the deadlines prescribed by the National Bank.

In the event of non-fulfillment by the above persons of the requirements of the National Bank within the deadlines established by the National Bank, the National Bank has the right to require the fulfillment of its requirements in a court order.

An agreement between the National Bank and the person(s) specified in Articles 64, 65, 66, and 67 of this Regulation is a written agreement on the acceptance by this person(s) of measures to eliminate the identified violations or deficiencies within the period established by the National Bank.

A directive of the National Bank is an instruction to take mandatory measures aimed at eliminating the identified violations or deficiencies within the period established by the National Bank. Appeal of the directive of the National Bank does not suspend its execution.

The National Bank has the right to apply preventive measures and sanctions to an official and/or significant participant of the bank, banking holding company in cases:

violation by the specified person of the requirements of the legislation of the Kyrgyz Republic, including the regulatory legal acts of the National Bank;
creation by the specified person of a situation that puts the financial stability of the bank and the interests of its depositors at risk;
abuse by the specified person of their official position;
commission by the specified person of unlawful actions;
if the specified person does not inspire the trust necessary for holding their position.

Preventive measures and sanctions to an official and/or significant participant of the bank, banking holding company include the right of the National Bank to require the suspension of voting rights on shares owned by them or to impose a ban on further participation in the activities of the bank or its affiliated persons in the manner provided for by this Regulation.

No one may remain in office or participate in the activities of the bank or its affiliated persons if such a ban is established with respect to the specified person by the National Bank in accordance with the legislation.

In the event of the initiation of a criminal case against an official of the bank or banking holding company, the National Bank has the right to issue a directive on the temporary dismissal of the specified person from office in the manner established by the legislation of the Kyrgyz Republic, and in the event of the recognition of the specified person as guilty of committing a criminal offense - to dismiss them from office.

Before taking measures in accordance with this section, the National Bank shall officially notify the authorized state body of the grounds and deadlines for the proposed measures regarding a participant of a banking group (not being a bank) or a significant participant of a bank subject to supervision (control) by another authorized state body. The authorized state body, in connection with the notification by the National Bank, must inform the National Bank, in accordance with the Law of the Kyrgyz Republic "On Banks and Banking Activity in the Kyrgyz Republic," of the actions (measures, sanctions) taken by it or the reasons for inaction regarding the participant of the banking group.

In the event of inaction or insufficiency of actions by the authorized state body to rectify a situation threatening the interests of the bank or its creditors, the National Bank has the right to apply any measures provided for by the legislation of the Kyrgyz Republic.

In the event of cancellation by the National Bank of the permission to exercise significant participation or control in a bank in accordance with this Regulation, the provisions of paragraph 7 of Article 44 of the Law of the Kyrgyz Republic "On Banks and Banking Activity in the Kyrgyz Republic" shall apply.
The National Bank has the right to immediately apply the measures specified in this Regulation if, in its opinion, an emergency situation exists that makes it necessary to take such measures to protect the bank or its depositors.

Measures and sanctions provided for by other provisions of the legislation of the Kyrgyz Republic may be applied to banks and other participants of the banking group.

Chapter 10. Interaction between financial sector supervisory authorities

If a company that is part of a banking group is subject to supervision or regulation by another authorized state body, the National Bank and the other authorized state body must cooperate for the purpose of comprehensive regulation and supervision of the banking group.
The authorized state body provides the National Bank with information in its possession concerning the banking group or any participant of the banking group:

allowing determination of the structure of the banking group, controlling persons, and officials;
regarding changes in ownership structure, management, or organizational structure of any participant of the banking group that require approval or notification of this authorized state body;
regarding the activities and policies of the banking group or participant of the banking group;
regarding the financial condition of the banking group and its participants (special attention should be paid to capital adequacy, transactions with interested parties, intragroup risks, and profits);
regarding the organization of the internal control system of the banking group or participant of the banking group, risk management;
regarding the procedure for collecting information from the management bodies of participants of the banking group and verification of such information;
regarding operations, transactions, and other events within the banking group or participant of the banking group that may seriously affect the activities of the bank-participant of the banking group;
regarding measures and sanctions taken by the authorized state body regarding participants of the banking group;
other information necessary for the implementation of effective banking supervision.

The National Bank has the right to request reports and other materials from this authorized state body for the purpose of implementing consolidated supervision. The National Bank also has the right to inspect participants of the banking group if the other authorized state body does not possess information necessary for the National Bank, or if the information provided by the other authorized state body is, in the opinion of the National Bank, insufficient. The specified companies and their officials are obliged to provide assistance and not hinder the National Bank in the exercise of its powers to the same extent as is required of the bank and their officials.
For the purpose of comprehensive regulation and supervision of the banking group on a consolidated basis, memoranda of cooperation may be concluded between the supervisory authorities of the home country and the host country.

(1) Principles of supervision over foreign branches of banks.

(2) Executive body - the body (board, directorate) carrying out management of the current activities of the company.

(3) Supervisory body - the body (Board of Directors, supervisory board) of company management carrying out general management of the company during the period between general meetings of founders (shareholders).

(4) For the purposes of this Regulation, company officials are: the chairman and members of the supervisory body, the chairman of the executive body, members of the executive body, chief employees of the company in finance, in credits. "Company officials" also include persons who determine the policy of the company or have the authority to participate or actually participate in major operations of the company, regardless of whether these persons work on a voluntary basis or receive remuneration. This definition also applies to officials of the parent company.

(5) Negative/significant influence is understood as facts or circumstances that may lead to a violation by the bank licensed by the National Bank of the legislation of the Kyrgyz Republic.

(6) Approved by the Resolution of the Board of the National Bank of the Kyrgyz Republic "On Approval of the New Edition of the Instruction on Determining Capital Adequacy Standards for Commercial Banks of the Kyrgyz Republic" No. 18/2 dated July 21, 2004, registration number of the Ministry of Justice of the Kyrgyz Republic 94-04 dated August 23, 2004.