Resolution of the Board of the National Bank of the Kyrgyz Republic dated June 28, 2019 No. 2019-P-12/34-3-(NPA) On Amendments and Additions to Certain Regulatory Legal Acts of the National Bank of the Kyrgyz Republic

NATIONAL BANK OF THE KYRGYZ REPUBLIC

RESOLUTION

dated June 28, 2019 No. 2019-P-12/34-3-(NPA)

On Amendments and Additions to Certain Regulatory Legal Acts of the National Bank of the Kyrgyz Republic

In accordance with Articles 20 and 68 of the Law of the Kyrgyz Republic "On the National Bank of the Kyrgyz Republic, Banks and Banking Activity", the Board of the National Bank of the Kyrgyz Republic resolves:

1. To introduce amendments and additions to the following resolutions of the Board of the National Bank of the Kyrgyz Republic (attached):

• "On Approval of the Instruction on Determining Capital Adequacy (Sufficiency) Standards for Commercial Banks of the Kyrgyz Republic" dated July 21, 2004 No. 18/2";

• "On Approval of the Regulation on Economic Norms and Requirements Mandatory for Commercial Banks of the Kyrgyz Republic dated July 21, 2004 No. 18/1";

• "On Certain Regulatory Legal Acts of the National Bank of the Kyrgyz Republic" dated August 25, 2005 No. 26/5";

• "On Approval of the Instruction "On Lending Restrictions" dated September 15, 2004 No. 24/4";

• "On Approval of the Regulation "On Corporate Governance in Commercial Banks of the Kyrgyz Republic" dated May 17, 2017 No. 19/12";

• "On Approval of the Regulation on Minimum Requirements for External Audit of Banks and Other Financial and Credit Organizations Licensed by the National Bank of the Kyrgyz Republic dated June 15, 2017 No. 2017-P-12/25-2-(NPA)".

2. This Resolution shall enter into force on January 1, 2020.

3. To the Legal Department:

• to publish this Resolution on the official website of the National Bank of the Kyrgyz Republic;

• after official publication, to send this Resolution to the Ministry of Justice of the Kyrgyz Republic for inclusion in the State Register of Regulatory Legal Acts of the Kyrgyz Republic.

4. To the Department of Supervision Methodology and Bank Licensing to bring this Resolution to the attention of the Association of Legal Entities "Union of Banks of Kyrgyzstan", commercial banks, the State Development Bank of the Kyrgyz Republic, OJSC "Financial Company of Credit Unions", relevant structural divisions, regional departments, and the representative office of the National Bank in Batken region.

5. Control over the execution of this Resolution shall be entrusted to the Board Member overseeing the Department of Supervision Methodology and Bank Licensing.

Chairman of the Board of the National Bank of the Kyrgyz Republic		T. Abdygulov

		Appendix to the Resolution of the Board of the National Bank of the Kyrgyz Republic dated June 28, 2019 No. 2019-P-12/34-3-(NPA)

AMENDMENTS AND ADDITIONS to certain regulatory legal acts of the National Bank of the Kyrgyz Republic

1. To introduce the following amendments to the Resolution of the Board of the National Bank of the Kyrgyz Republic "On Approval of the Instruction on Determining Capital Adequacy (Sufficiency) Standards for Commercial Banks of the Kyrgyz Republic" dated July 21, 2004 No. 18/2:

in the Instruction on Determining Capital Adequacy (Sufficiency) Standards for Commercial Banks of the Kyrgyz Republic, approved by the aforementioned Resolution:

• paragraph 2.1.2 shall be reworded as follows:

"2.1.2. Own (regulatory) capital is Tier 1 capital, taking into account the deductions provided for in paragraph 3.10 of this Instruction.";

• paragraph 2.2 shall be reworded as follows:

"2.2. Capital adequacy (sufficiency) ratios based on weighting on-balance sheet assets and off-balance sheet liabilities by risk degree:

a) the total capital adequacy (sufficiency) ratio (K2.1) must be at least 12%. It is defined as the ratio of net Total Capital to the sum of on-balance sheet assets and off-balance sheet liabilities, weighted by risk degree, minus special reserves for potential losses and impairments. Net Total Capital is defined as the sum of Tier 1 capital and Tier 2 capital;

b) the Tier 1 capital adequacy (sufficiency) ratio (K2.2) must be at least 6%. It is defined as the ratio of Tier 1 capital to the sum of on-balance sheet assets and off-balance sheet liabilities, weighted by risk degree, minus special reserves for potential losses and impairments. Tier 1 capital is defined according to paragraph 3.6 of this instruction;

c) the Common Equity Tier 1 capital adequacy (sufficiency) ratio (K2.3) must be at least 4.5%. It is defined as the ratio of Common Equity Tier 1 capital to the sum of on-balance sheet assets and off-balance sheet liabilities, weighted by risk degree, minus special reserves for potential losses and impairments.

The National Bank of the Kyrgyz Republic (hereinafter - the National Bank), based on risk assessment and systemic importance of banks, has the right to increase the minimum capital adequacy ratios.";

• the first subparagraph of paragraph 2.3 shall be reworded as follows:

"Leverage (K2.4) must be at least 8%.";

• Chapter 3 shall be reworded as follows:

"3. Capital Structure

3.1. The basis of capital is the fully paid-up authorized capital of the bank. According to the standards of the Basel Committee on Banking Supervision, authorized capital is "a key element of capital common to banking systems in all countries; it is clearly visible in banks' published reports and is the basis on which market assessment of capital adequacy is based; it is crucial for determining the bank's profitability and competitiveness indicators."

3.2. Capital includes only such authorized capital (common and preferred shares) for which there are no obligations to return funds invested by the bank's shareholders. These funds can only be received by shareholders by transferring or selling shares to third parties.

3.3. The bank has no right to accept its own shares as collateral.

3.4. For the purposes of banking supervision, a distinguishing feature of capital components is their ability to absorb losses that may arise in the course of the bank's activities. For this reason, when assessing capital adequacy, some "non-capital" accounting accounts (e.g., "General reserve for potential losses and impairments" or "Subordinated bonds and other debt obligations") are included in capital.

3.5. For the purposes of calculating capital adequacy (sufficiency) ratios, bank capital is divided into Tier 1 capital and Tier 2 capital.

3.6. Tier 1 capital is necessary to absorb losses during the bank's ongoing operations.

Tier 1 capital consists of the following elements:

• Common Equity Tier 1 Capital;

• Additional Tier 1 Capital.

3.7. The structure of Common Equity Tier 1 Capital includes the following elements:

1) "common shares" - issued and fully paid common shares of the bank that meet the conditions established by law;

2) "non-cumulative preferred shares" - issued and fully paid preferred shares of the bank that meet the conditions established by law and do not require the bank to distribute dividends.

If there are circumstances/conditions where dividend distribution is mandatory, such preferred shares and capital contributed in excess of par value for these shares must be accounted for in Additional Tier 1 Capital or Tier 2 capital;

3) "capital contributed in excess of par value" - the difference between the selling price of common and preferred shares included in Common Equity Tier 1 capital and their par value as a result of the issue.

Capital contributed in excess of par value is not subject to distribution to shareholders as dividends and remains with the bank.

With the written consent of the National Bank, capital contributed in excess of par value may be used to increase authorized capital only for the purpose of complying with the minimum authorized capital requirement;

4) "reserves for future needs of the bank" - reserves created from after-tax profit for future and/or unforeseen events;

5) "retained earnings (losses) of previous years" - the balance of net after-tax profit (losses) of previous years after deducting declared dividends and distribution to other capital accounts.

3.8. The structure of Additional Tier 1 Capital includes the following elements:

1) "additional capital contributed by individuals and legal entities" - funds contributed by individuals and legal entities in excess of the paid-up authorized capital. The need to contribute these funds arises if the bank fails to meet the National Bank's requirements for the minimum amount of own (regulatory) capital (Tier 1 capital) and/or economic norms, and/or if there is a risk of non-compliance, including at the request of the National Bank, and/or the need to increase authorized capital by a deadline determined by the National Bank. These funds are credited only if the bank has an agreement with individuals and legal entities on contributing funds for the acquisition of bank shares by them, with the condition of: irrevocability (under no circumstances), indefinite term of the contributed funds, and also with the condition that in case of bank bankruptcy, claims for these funds will be satisfied in the same order as claims of bank shareholders. The amount of additional capital must be sufficient for the bank to meet the minimum values for these requirements and norms. Subsequently, additional funds contributed by individuals and legal entities must be converted into common and/or preferred shares, and these persons must be granted an indisputable right to acquire the issued shares for the amount of these provided funds;

2) "other capital instruments" - instruments that have characteristics of both capital and debt obligations. These include:

a) preferred shares that meet the criteria for Additional Tier 1 Capital but are not acceptable for Common Equity Tier 1 Capital. Preferred shares in this article are indicated taking into account the difference between the selling price of preferred shares and their par value;

b) perpetual subordinated debt - perpetual subordinated debt instruments.

Additional Tier 1 Capital instruments issued by the bank must meet the established criteria for them.

3.8-1. Additional Tier 1 Capital must meet the following criteria for capital elements:

1) must be issued and paid-up;

2) must be subordinated, i.e., claims on these instruments are satisfied last after all claims from depositors, primary creditors, and subordinated debt of the bank have been satisfied;

3) the instrument must not be collateral or a guarantee for the obligations of the bank/related parties of the bank, and must not fall under any requirements/conditions that could legally or economically oblige the bank to satisfy the claim on a priority basis;

4) must be perpetual, i.e., have no maturity dates;

5) may be repurchased by the issuer or redeemed at its initiative only after a minimum period of not less than five years. In this case:

a) the bank must not take any actions when issuing the instrument, expecting that the instrument will be repurchased;

b) repurchase/redemption is allowed only if:

• the instrument is replaced by an instrument of the same kind or of the highest quality, if the replacement of the specified instrument is made on terms that are reliable for the bank's capital;

• the National Bank's minimum capital requirements are not violated;

• prior permission from the National Bank is obtained;

6) any payment of the principal amount (e.g., by repurchase or payment) must be made with the prior consent of the National Bank, and banks must not assume or create expectations that the consent of the National Bank will be obtained;

7) discretion regarding dividends/interest payments:

a) the bank must, under all circumstances, have the full right to cancel dividend/interest payments;

b) the decision to cancel dividend and interest payments must not be considered an event of default or insolvency of the bank;

c) the possibility of fulfilling other obligations as they fall due at the expense of unpaid dividends;

d) cancellation of dividend/interest payments must not impose restrictions on the bank. At the same time, restrictions on dividend payments on common shares may also be established;

8) the instrument cannot be included in liabilities in excess of assets if such excess is a sign of insolvency according to legislation;

9) if the bank's Common Equity Tier 1 capital ratio falls to 5.125%, the bank must have the right to convert these instruments into common shares or write off these instruments by allocating losses to them.

In this case, the write-off must result in:

a) a reduction in the claim on the instrument upon liquidation of the bank;

b) a reduction in the amount paid upon repurchase of the instrument;

c) a partial or full reduction in the amount of interest/dividend payments;

10) neither the bank nor a related party over which the bank exercises control or has significant influence has the right to repurchase the instrument, including the bank's right to directly or indirectly participate (including by allocating funds in the form of loans, prepayments, etc. and/or providing other services) in the purchase of the instrument.

3.9. Tier 2 capital is necessary to absorb losses upon liquidation of the bank.

The structure of Tier 2 capital includes the following elements:

1) "current year profit" - after-tax profit received in the current year;

2) "general reserves":

a) "general" reserves for potential losses and impairments;

b) "general" reserves for potential losses and impairments from other assets, excluding loans.

These reserves, eligible for inclusion in Tier 2 Capital, will be limited to a maximum of 1.25 percent of the value of assets and off-balance sheet liabilities, weighted by credit risk;

3) "revaluation reserves for securities" - unrealized gains (losses) from the revaluation of available-for-sale securities;

4) "foreign currency translation reserves upon consolidation" - unrealized income (losses) arising from changes in exchange rates when translating the financial statements of the bank's foreign subsidiaries;

5) part of capital instruments and debt instruments that may be included in Tier 2 Capital with the permission of the National Bank upon written application from the bank's Board of Directors;

6) the difference between the selling price of shares included in Tier 2 Capital (not included in Tier 1 Capital) and their par value as a result of the issue.

Instruments included in the structure of Tier 2 capital must meet the following criteria:

1) be issued and paid-up;

2) must be subordinated, i.e., claims on these instruments are satisfied last after all claims from depositors, primary creditors, and subordinated debt of the bank have been satisfied;

3) the instrument must not be collateral or a guarantee for the obligations of the bank/related parties of the bank, and must not fall under any requirements/conditions that could legally or economically oblige the bank to satisfy the claim on a priority basis;

4) maturity period:

a) the minimum maturity period must be at least 5 (five) years,

b) amortization of capital instruments is carried out on the basis of the straight-line method over the remaining five years until maturity;

c) must not provide any incentives for repurchase;

5) may be repurchased by the issuer or redeemed at its initiative only after a minimum period of 5 (five) years, and only after prior approval from the National Bank. In this case:

a) the bank must not take any actions when issuing the instrument, expecting that the instrument will be repurchased;

b) repurchase/redemption is allowed only if:

• the instrument is replaced by an instrument of the same kind or of the highest quality, if the replacement of the specified instrument is made on terms that are reliable for the bank's capital;

• if the National Bank's minimum capital requirements are not violated;

• prior permission from the National Bank is obtained;

6) the investor has no rights to early repayment of future planned payments (interest income or principal amount of the instrument), except in cases of bankruptcy and liquidation;

7) neither the bank nor a related party over which the bank exercises control or has significant influence has the right to repurchase the instrument, including the bank's right to directly or indirectly participate (including by allocating funds in the form of loans, prepayments, etc. and/or providing other services) in the purchase of the instrument.

3.10. Before calculating the Net Total Capital adequacy (sufficiency) ratios, Tier 1 capital adequacy (sufficiency), Common Equity Tier 1 capital, and the Leverage ratio, the following elements are deducted from Common Equity Tier 1 capital:

• current year losses;

• intangible assets;

• investments (in the form of shares or equity participation) in other unconsolidated banks and financial and credit organizations, as well as non-financial organizations. If the bank invests Additional Tier 1 capital or Tier 2 capital in these organizations, these investments must be deducted from the corresponding capital;

• all deferred tax assets that depend on future profitability, calculated based on International Financial Reporting Standards (IFRS) 12, with the exception of deferred tax assets related to temporary differences. Deferred tax assets may be offset against deferred tax liabilities if the conditions of IFRS 12 are met;

• direct or indirect investments in own shares. The bank has the right to repurchase its own shares only for their subsequent sale at a higher price, provided that the bank has concluded a preliminary agreement for the sale of shares for their realization after repurchase and the bank's activity has been profitable for the previous five years prior to the decision to repurchase its own shares. The bank will deduct these shares until they are sold.

Using an identical approach, banks must deduct investments in their own Additional Tier 1 Capital when calculating Additional Tier 1 Capital and must deduct investments in their own Tier 2 Capital when calculating their Tier 2 Capital.

Mutual cross-holdings of capital that lead to an artificial increase in the bank's capital position must be deducted in full. Banks must apply a "corresponding deduction approach" for such investments in the capital of other banks, other financial and insurance organizations. This means that the deduction must be applied to the same capital component for which the capital would also qualify as if it had been issued by the bank itself.

3.11. The values of Tier 1 capital and net Total Capital as of the 1st day of the month following the reporting period are used to calculate capital adequacy (sufficiency) standards and other economic norms and requirements established by the National Bank. When calculating economic norms, the values of which are determined on a daily or weekly basis during the reporting month, the total value of the bank's net total capital as of the 1st day of the reporting month and additional capital, if contributed by legal or physical entities in the established manner by the report date, is used.";

• in the Appendix to the Instruction:

the section "Capital and Capital Adequacy (Sufficiency) Ratios" shall be reworded as follows:

"Capital and Capital Adequacy (Sufficiency) Ratios

(thousand KGS)

No.	Articles +++	Amount
	Tier 1 Capital
	Common Equity Tier 1 Capital
710	Ordinary shares
720	Non-cumulative preferred shares (eligible for inclusion in Common Equity Tier 1 Capital)
730	Capital contributed in excess of nominal value
740	Reserves for future needs of the bank	0
750	Retained earnings (losses) of previous years	0
760	(-) Losses of the current year	0
770	(-) Intangible assets (Art. 430.1)	0
780	(-) Investments in non-consolidated banks, financial and credit organizations and non-financial organizations (Art. 200.1-230.1, Art. 390, Art. 400)	0
790	(-) Deferred tax assets	0
800	(-) Direct or indirect investments in the bank's own shares	0
810	Total Common Equity Tier 1 Capital (sum of Art. 710-800)	0
	Additional Tier 1 Capital
820	Additional capital contributed by individuals and legal entities	0
830	Preferred shares (ineligible for inclusion in Common Equity Tier 1 Capital) and the amount contributed above their nominal value	0
840	Other capital instruments (Art. 630)	0
850	() Direct or indirect investments in own Additional Tier 1 Capital	0
860	(-) Investments in Additional Tier 1 Capital of non-consolidated banks and capital of financial and credit organizations and non-financial organizations (if applicable)	0
870	Total Additional Tier 1 Capital (sum of Art. 820-860)	0
880	Total Tier 1 Capital (sum of Art. 810 and Art. 870)	0
	Tier 2 Capital
890	Profit of the current year	0
900	General reserves (eligible for inclusion)	0
910	Reserves for revaluation of securities	0
920	Reserves for foreign currency translation upon consolidation
920.1	Reserve for profit equalization	0
920.2	Reserve for covering investment risks	0
930	Part of capital and debt instruments approved by the National Bank for inclusion in Tier 2 Capital	0
940	Difference between the sale price of shares included in Tier 2 Capital (not included in Tier 1 Capital) and their nominal value based on the results of the issue	0
950	(-) Direct or indirect investments in own Tier 2 Capital	0
960	(-) Investments in Tier 2 Capital of non-consolidated banks and capital of financial and credit organizations and non-financial organizations (if applicable)	0
970	Total Tier 2 Capital (sum of Art. 890-960)	0
980	Total net aggregate capital (sum of Art. 880 and Art. 970)	0
990	Total capital adequacy (sufficiency) ratio (Art. 980/Art. 620)
1000	Tier 1 capital adequacy (sufficiency) ratio (Art. 880/Art. 620)
1010	Common Equity Tier 1 capital adequacy (sufficiency) ratio (Art. 810/Art. 620)

".

2. To introduce into the resolution of the Board of the National Bank of the Kyrgyz Republic "On approval of the Regulation on economic norms and requirements mandatory for commercial banks of the Kyrgyz Republic" of 21 July 2004 No. 18/1 the following amendments and additions:

in the Regulation on economic norms and requirements mandatory for commercial banks of the Kyrgyz Republic, approved by the above-mentioned resolution:

• subparagraph 3.1.2 of paragraph 3.1 shall be stated in the following wording:

"3.1.2. Minimum amount of own (regulatory) capital (Tier 1 capital).";

• paragraph 3.2 shall be stated in the following wording:

"3.2. Capital adequacy (sufficiency) ratios based on weighting of assets and off-balance sheet liabilities by risk degree:

• total capital adequacy (sufficiency) ratio (K2.1) - not less than 12%;

• Tier 1 capital adequacy (sufficiency) ratio (K2.2) - not less than 6%;

• Common Equity Tier 1 capital adequacy (sufficiency) ratio (K2.3) - not less than 4.5%.";

• paragraph 3.3 shall be stated in the following wording:

"3.3. Leverage (K2.4) - not less than 8%.";

• the name of Chapter 8 shall be stated in the following wording:

"8. Maximum risk amount on transactions with affiliated and connected persons of the bank";

• in Appendix 1 to the Regulation on economic norms and requirements mandatory for commercial banks of the Kyrgyz Republic, the first table shall be stated in the following wording:

"

Name of economic norms and requirements, additional capital buffer of the bank (index "capital buffer")	Designation	Calculation of the norm and additional capital buffer of the bank (index "capital buffer")	Actual value of the norm and additional capital buffer of the bank (index "capital buffer")	Established value of the norm and additional capital buffer of the bank (index "capital buffer")	Deviation from the established norm and additional capital buffer of the bank (index "capital buffer")
Maximum risk amount per one borrower or group of connected borrowers	K1.1	LZ ------ ---- NCC		not more than 20%
K1.2	LZ ------ ---- NCC		not more than 15%
K1.3	LZ ------ ---- NCC		not more than 30%
K1.4	LZ ------ ---- NCC		not more than 15%
Capital adequacy (sufficiency) norm	K2.1	NCC ----- ---- NRA		not less than 12%
K2.2	T1C ------ ---- NRA		not less than 6%
K2.3	CET1C ------ ---- NRA		not less than 4.5%
K2.4	NCC ----- ---- SA		not less than 8%
Liquidity norm (indicator)	K3.1	LA ----- ---- OL		not less than 45%
Additional capital buffer of the bank (index "capital buffer")		NCC ----- ---- NRA		not less than ___% (specify value)

• Appendix 2 to the Regulation on economic norms and requirements mandatory for commercial banks of the Kyrgyz Republic shall be stated in the following wording:

		"Appendix 2

INFORMATION on compliance with economic norms for ______ quarter of 20__ as of ______ 20__ Bank ______

Name of economic norms and requirement to maintain additional capital buffer of the bank (index "capital buffer")	Established value of the norm	Actual value of the norm
Maximum risk amount per one borrower or group of connected borrowers not connected with the bank (K1.1)	not more than 20%
Maximum risk amount per one borrower or group of connected borrowers connected with the bank (K1.2)	not more than 15%
Maximum risk amount on interbank placements to a bank not connected with the bank (K1.3)	not more than 30%
Maximum risk amount on interbank placements to a bank connected with the bank (K1.4)	not more than 15%
Total capital adequacy (sufficiency) ratio (K2.1)	not less than 12%
Tier 1 capital adequacy (sufficiency) ratio (K2.2)	not less than 6%
Common Equity Tier 1 capital adequacy (sufficiency) ratio (K2.3)	not less than 4.5%
Leverage (K2.4)	not less than 8%
Liquidity norm (indicator) of the bank (K3.1)	not less than 45%
Number of days of violations of the total amount of long open currency positions (K4.2)	not more than 20%
Number of days of violations of the total amount of short open currency positions (K4.3)	not more than 20%
Additional capital buffer of the bank (index "capital buffer")	not less than ____% (specify value)
Number of days of violations of the total amount of long open positions in precious metals (K4.5)	not more than 20%
Number of days of violations of the total amount of short open positions in precious metals (K4.6)	not more than 20%

".

3. To introduce into the resolution of the Board of the National Bank of the Kyrgyz Republic "On certain regulatory legal acts of the National Bank of the Kyrgyz Republic" of 25 August 2005 No. 26/5 the following amendments:

in the Regulation "On Periodic Regulatory Bank Reporting", approved by the above-mentioned resolution:

• in Appendix 1:

paragraphs 13 and 18 shall be stated in the following wording:

"

13	Section 9	Information on large risks A. Information on the largest risks A-1. Information on 15 large sources of financing, including FCO and state institutions (Social Fund of the KR, etc.) B. Information on correspondent banks B-1. Information on funds placed on deposit accounts in banks G. Information on broker/dealer/depositary servicing the bank D. Information on transactions with corporate and government securities E. Portfolio of corporate and government securities of the bank Zh. Portfolio of corporate and government securities of clients	Monthly	Within 5 working days after the end of the reporting period	Appendix 1 to the Instruction "On credit restrictions". Appendix No. 2 to the Instruction "On credit restrictions"

18	Section 14	Information on compliance with economic norms/indicators and requirement to maintain additional capital buffer of the bank (index "capital buffer")	Monthly	Within 5 working days after the end of the reporting period	Appendix 1 of the Regulation on economic norms and requirements mandatory for commercial banks of the Kyrgyz Republic
		A. Daily report on compliance with the norm of maximum risk amount on term deposits and other liabilities to individuals (K5.1)	Daily	By 9:00 as of the end of the last operational day
		B. Report on compliance with the norm of maximum risk amount on demand deposits of individuals (K5.2)	Monthly	Within 5 working days after the end of the reporting period
		V. Report on fulfillment of National Bank requirements
		G. Report on compliance with the short-term liquidity norm (K3.2)	Weekly	By 9:00 on the first working day of the week following the reporting week
		D. Daily report on compliance with the instant liquidity norm (K3.3)	Daily	By 9:00 as of the end of the last operational day
		E. Information on the volume of loans issued to members of the GSO	Monthly	Within 5 working days after the end of the reporting period

";

• in Appendix 2:

sections 9.A-1, 9.B, 9.B-1, 14 and 14.V. shall be stated in the following wording:

		"Periodic regulatory
		bank report as of
		"_" ______ 20

SECTION 9.A-1
INFORMATION ON 15 LARGE SOURCES OF FINANCING, INCLUDING FCO AND STATE INSTITUTIONS (SOCIAL FUND OF THE KR, ETC.)

(in thousand soms)

No.	Name of depositor(*)/creditor	TIN of depositor/creditor	Amount of loan/deposit(**)				Currency	% rate/markup/rate of return	Date of contract conclusion	Date of contract completion(***)	Note (encumbrance, on IPF, etc.)
Loan	Settlement account	Term deposit	Demand deposit
1	2	3	4				5	6	7	8	9
1
2
3
…
15
	Total	0.0	0.0	0.0	0.0
	Total amount of liabilities on 15 large sources of financing				0.0	-

(*) "deposits serving as collateral for financing are not included in this table;

() the balance on financing or deposit is indicated (for deposits - broken down into demand, settlement and term) as of the reporting date;

(*) for demand deposits and settlement accounts the cell is left empty.

Executor: ______ Signature: ______

		Periodic regulatory
		bank report as of
		"_" ______ 20

SECTION 9.B.
INFORMATION ON CORRESPONDENT BANKS

(in thousand soms)

No.	11-digit SWIFT code of the bank/Identification code (for non-banking organizations)	Name of bank/Name of legal entity (for non-banking organizations)	Group	Country of affiliation	Name of rating agency	Assigned rating (if any)	Date of rating assignment	Currency	Total		RPPU
in nominal	in soms	in nominal	in soms
1	2	3	4	5	6	7	8	9	10	11	12	13
1		Bank 1
2		Bank 2

Executor: ______ Signature: ______

Full name

		Periodic regulatory
		bank report as of
		"_" ______ 20

SECTION 9.B-1
INFORMATION ON FUNDS PLACED ON DEPOSIT ACCOUNTS IN BANKS

(in thousand soms)

No.	Name of bank	Country of affiliation	Rating		Total deposit amount	Currency	including		Date of contract conclusion	Date of contract completion	% rate/rate of return	Deposits included in calculation of norm (indicator) K1.3	Deposits included in calculation of norm (indicator) K1.4
Name of agency	Assigned rating	in nominal	in soms
1	2	3	4	5	6	7	8	9	10	11	12	13	14
1
2
3
…
100

Executor: ______ Signature: ______

Full name

SECTION 14
INFORMATION ON COMPLIANCE WITH ECONOMIC NORMS AND REQUIREMENT TO MAINTAIN ADDITIONAL CAPITAL BUFFER OF THE BANK (INDEX "CAPITAL BUFFER")

Name of economic norms and requirement to maintain additional capital buffer of the bank (index "capital buffer")	Designation	Calculation of the norm and additional capital buffer of the bank (index "capital buffer")	Actual value of the norm and additional capital buffer of the bank (index "capital buffer")	Established value of the norm and additional capital buffer of the bank (index "capital buffer")	Deviation from the established norm and additional capital buffer of the bank (index "capital buffer")
Maximum risk amount per one borrower or group of connected borrowers	K1.1	LZ ------ ---- NCC		not more than 20%
K1.2	LZ ------ ---- NCC		not more than 15%
K1.3	LZ ------ ---- NCC		not more than 30%
K1.4	LZ ------ ---- NCC		not more than 15%
Capital adequacy (sufficiency) norm	K2.1	NCC ----- ---- NRA		not less than 12%
K2.2	T1C ------ ---- NRA		not less than 6%
K2.3	CET1C ------ ---- NRA		not less than 4.5%
K2.4	NCC ----- ---- SA		not less than 8%
Liquidity norm (indicator)	K3.1	LA ----- ---- OL		not less than 45%
Additional capital buffer of the bank (index "capital buffer")		NCC ----- ---- NRA		not less than ____% (specify value)
Note: T1C - Tier 1 Capital CET1C - Common Equity Tier 1 Capital

	Average values for the reporting period	Week 1	Week 2	Week 3	Week 4	Week 5	Week 6	Total
LA - Liquid assets
OL - Liabilities of the bank
Norm K3 = LA/OL

Executor: ______ Signature: ______

Full name

14.V. Report on fulfillment of NBKR requirements

Begin_nocompare

Designation	Actual value	Established value	Actual value (in conventional units)
Maximum risk amount on blank credits		not more than 50% NCC
Maximum risk amount on transactions with affiliated and connected persons of the bank		not more than 60% NCC
Maximum amount of any investments in each non-banking organization		Not more than 60% of own (regulatory) capital (Tier 1 capital)
Maximum amount of investments in banking premises (fixed assets)		not more than 100% of the amount of paid-in authorized capital
Maximum amount of investments in securities of governments and central banks of other states		not more than 100% of the amount of NCC
Maximum amount of the bank's investments in non-government debt securities		not more than 50% of the amount of NCC

End_nocompare

Executor: ______ Signature: ______

Full name";

section 14 shall be supplemented with subsection "14.E." of the following content:

"14.E. Information on the volume of loans issued to members of the GSO

Designation	Actual value (in %)	Actual value (in conventional units)
Volume of loans issued to members of the group of joint liability

Executor: ______ Signature: ______

Full name";

in section 15, subsection 15.7 "Capital and capital adequacy (sufficiency) ratios" shall be stated in the following wording:

"SECTION 15.7
CAPITAL AND CAPITAL ADEQUACY (SUFFICIENCY) RATIOS

N	Articles	Amount
	Tier 1 Capital
	Common Equity Tier 1 Capital
710	Ordinary shares
720	Non-cumulative preferred shares (eligible for inclusion in Common Equity Tier 1 Capital)
730	Capital contributed in excess of nominal value
740	Reserves for future needs of the bank	0
750	Retained earnings (losses) of previous years	0
760	(-) Losses of the current year	0
770	(-) Intangible assets (Art. 430.1)	0
780	(-) Investments in non-consolidated banks, financial and credit organizations and non-financial organizations (Art. 200.1-230.1, Art. 390, Art. 400)	0
790	(-) Deferred tax assets	0
800	(-) Direct or indirect investments in the bank's own shares	0
810	Total Common Equity Tier 1 Capital (sum of Art. 710-800)	0
	Additional Tier 1 Capital
820	Additional capital contributed by individuals and legal entities	0
830	Preferred shares (ineligible for inclusion in Common Equity Tier 1 Capital) and the amount contributed above their nominal value	0
840	Other capital instruments (Art. 630)	0
850	(-) Direct or indirect investments in own Additional Tier 1 Capital	0
860	(-) Investments in Additional Tier 1 Capital of non-consolidated banks and capital of financial and credit organizations and non-financial organizations (if applicable)	0
870	Total Additional Tier 1 Capital (sum of Art. 820-860)	0
880	Total Tier 1 Capital (sum of Art. 810 and Art. 870)	0
	Tier 2 Capital
890	Profit of the current year	0
900	General reserves (eligible for inclusion)	0
910	Reserves for revaluation of securities	0
920	Reserves for foreign currency translation upon consolidation
920.1	Reserve for profit equalization	0
920.2	Reserve for covering investment risks	0
930	Part of capital and debt instruments approved by the National Bank for inclusion in Tier 2 Capital	0
940	Difference between the sale price of shares included in Tier 2 Capital (not included in Tier 1 Capital) and their nominal value based on the results of the issue	0
950	(-) Direct or indirect investments in own Tier 2 Capital	0
960	(-) Investments in Tier 2 Capital of non-consolidated banks and capital of financial and credit organizations and non-financial organizations (if applicable)	0
970	Total Tier 2 Capital (sum of Art. 890-960)	0
980	Total net aggregate capital (sum of Art. 880 and Art. 970)	0
990	Total capital adequacy (sufficiency) ratio (Art. 980/Art. 620)	0
1000	Tier 1 capital adequacy (sufficiency) ratio (Art. 880/Art. 620)
1010	Common Equity Tier 1 capital adequacy (sufficiency) ratio (Art. 810/Art. 620)

".

4. To introduce into the resolution of the Board of the National Bank of the Kyrgyz Republic "On approval of the Instruction "On credit restrictions" of 15 September 2004 No. 24/4 the following amendment:

in the Instruction "On credit restrictions", approved by the above-mentioned resolution:

• Appendix 2 shall be stated in the following wording:

		"Appendix 2 to the Instruction "On credit restrictions", approved by resolution of the Board of the NBKR of 15 September 2004 No. 24/4

INFORMATION on correspondent banks

(in thousand soms)

No.	11-digit SWIFT code of the bank/Identification code (for non-banking organizations)	Name of bank/Name of legal entity (for non-banking organizations)	Group	Country of affiliation	Name of rating agency	Assigned rating (if any)	Date of rating assignment	Currency	Total		RPPU
in nominal	in soms	in nominal	in soms
1	2	3	4	5	6	7	8	9	10	11	12	13
1		Bank 1
2		Bank 2

Executor: ______ Signature: ______

Full name".

5. To introduce the following amendments and additions to the resolution of the Board of the National Bank of the Kyrgyz Republic "On approval of the Regulation 'On Corporate Governance in Commercial Banks of the Kyrgyz Republic'" of 17 May 2017 No. 19/12:

In the Regulation "On Corporate Governance in Commercial Banks of the Kyrgyz Republic" approved by the above-mentioned resolution:

• Paragraph 3 shall be restated as follows:

"3. The main components of effective corporate governance in banks are:

• distribution of powers, matters of competence and accountability among the bank's management bodies, organization of the effective activity of the Board of Directors and the Management Board of the bank;

• determination and approval of the bank's development strategy and control over its implementation;

• creation of systems for effective risk management and prevention of conflicts of interest;

• approval of internal documents on remuneration of the bank's management and employees;

• determination and observance of professional ethics standards;

• ensuring transparency of the bank's activities.

The methodological basis for effective corporate governance in banks and banking groups is the recommendations of the Basel Committee on Banking Supervision, which are posted on the website of the Bank for International Settlements (Switzerland) www.bis.org, as well as the OECD corporate governance principles posted on the website www.oecd.org.";

• The Regulation shall be supplemented with paragraph 3-1 as follows:

"3-1. The Board of Directors and the Management Board of the bank have the right to engage advisers (specialists, consultants, experts, etc.) to prepare analytical, reference, informational materials and recommendations on matters within their remit in accordance with the duties assigned to them.

The activities of advisers must be carried out within the framework of job descriptions/service provision agreements.

Advisers are not officials of the bank and cannot be involved in the operational activities (lending, etc.) of the bank. The opinions of advisers are advisory in nature, and responsibility for all decisions taken by the Board of Directors and the Management Board of the bank rests with those bodies.";

• Paragraph 10 shall be supplemented with a second paragraph as follows:

"The Board of Directors of the bank carries out strategic management of the bank, determines the main principles and approaches to organizing the bank's risk management and internal control system, monitors the activities of the bank's executive bodies, and also performs other key functions.";

• Paragraph 11 shall be restated as follows:

"11. Matters within the exclusive competence and responsibility of the Board of Directors are defined by the Law and include determining the bank's strategies and policies, as well as forming effective executive bodies and ensuring effective control over their activities.";

• In paragraph 12:

the fourth paragraph shall be restated as follows:

"- determine the principles and approaches to organizing an effective risk management system that meets the requirements established by the National Bank;";

the eleventh paragraph shall be restated as follows:

"- periodically (at least once a year) determine the degree of effectiveness of work and its compliance with the bank's development needs (identifying management effectiveness deficiencies and taking appropriate corrective actions), based on an assessment of the activities of the Board of Directors' committees and its members;";

supplement with a thirteenth paragraph as follows:

"- establish the main directions of the bank's activities for the long term and their indicators;";

• The Regulation shall be supplemented with paragraph 12-1 as follows:

"12-1. The Board of Directors of the bank must play a key role in preventing, identifying and resolving internal conflicts, including between the executive bodies and employees of the bank. The Board of Directors of the bank is responsible for organizing a system for identifying and preventing conflicts of interest, ensuring transparency of the bank's activities, the timeliness and completeness of information disclosure, as well as ensuring unburdensome access for the bank's shareholders to the bank's documents in accordance with the legislation of the Kyrgyz Republic.";

• Paragraph 18 shall be restated as follows:

"18. The bank must create other committees in order to strengthen corporate governance in the bank, in particular:

• a Credit Committee that makes decisions on all matters relating to the issuance of loans, guarantees, obligations, sureties, other assets and liabilities that are essentially credit operations and carry the risk of credit loss;

• a Committee for managing the bank's assets and liabilities, which exercises control over the overall structure of the bank's balance sheet, monitors the structure of assets and liabilities, and also ensures compliance with the asset and liability management policy established by the Board of Directors.

The activities of these committees are regulated in accordance with the legislation of the Kyrgyz Republic and the relevant internal regulations on committees, which are approved by the Board of Directors.

All committees in the bank are headed by the chairmen of the said committees.

It is recommended that the composition of committees be determined in such a way that it allows for a comprehensive discussion of matters preliminarily considered, taking into account various opinions.";

• Paragraph 23 shall be restated as follows:

"23. The Board of Directors of the bank determines the list of key employees of the bank - bank employees whose activities are directly related to the assumption and control of risks.

Key employees of the bank include members of the Management Board of the bank, heads of divisions (areas of activity) and other employees of divisions determined by the Board of Directors of the bank who take a significant part in the operations and transactions conducted by the bank. The appointment of key employees is carried out in accordance with the distribution of decision-making powers.";

• Paragraph 25 shall be recognized as having lost force;

• The second paragraph of paragraph 33 shall be restated as follows:

"The activities of the Committee must be aimed at strengthening control over the appointments and remuneration of the bank's key employees.";

• Paragraph 36 shall be restated as follows:

"36. The Committee must consist of at least three members of the Board of Directors, one of whom must be independent";

• Paragraph 37 shall be restated as follows:

"37. The Committee gives recommendations to the Board of Directors on candidates for inclusion in the composition of the bank's key employees, taking into account the requirements established by the National Bank.";

• Paragraph 39 shall be restated as follows:

"39. Payment of remuneration to members of the Board of Directors and key employees of the bank must be carried out in accordance with the internal regulatory act on remuneration adopted by the bank.";

• Paragraph 40 shall be restated as follows:

"40. The level of remuneration provided by the bank to members of the Board of Directors and key employees of the bank must create sufficient motivation for their effective work, allowing the bank to attract and retain competent and qualified specialists.

The amount of additional remuneration to members of the Board of Directors is established by a decision of the general meeting of shareholders, taking into account the results of the bank's work, based on the results of the financial year and the effective participation of the member of the Board of Directors in the activities of the Board of Directors.";

• The Regulation shall be supplemented with paragraph 40-1 as follows:

"40-1. The remuneration system must be determined in such a way as to ensure a reasonable level of ratio of remuneration to the results of the bank's work and the personal contribution of the bank's employees to achieving these results.

The bank must provide for remuneration limits. At the same time, the structure of the limits must provide for proportional equality of remuneration amounts for persons at different levels of positions in the bank.";

• The first sentence of paragraph 42 shall be restated as follows:

"The amount of remuneration must directly depend on the scope of the employee's duties, as well as on the risk-to-result ratio.";

• In paragraph 43:

in the third paragraph, before the words "system of criteria", add the word "transparent";

the fourth paragraph shall be restated as follows:

"- the amounts of bonuses, as well as their limits;";

the eighth paragraph shall be restated as follows:

"- the dependence of remuneration on the bank's profitability for the possibility of paying bonuses.";

• In the title of chapter 6, the word "committee" shall be replaced by the word "Committee";

• Paragraph 51 shall be restated as follows:

"51. The corporate secretary of the bank ensures and organizes the work (of meetings and record-keeping) and effective ongoing interaction between the general meeting of shareholders and the Board of Directors of the bank, as well as coordination of the bank's actions to protect the rights and interests of shareholders.";

• Paragraph 53 shall be supplemented with a second paragraph as follows:

"The corporate secretary must possess knowledge, experience and qualifications sufficient to perform the duties assigned to him and enjoy the trust of shareholders. The corporate secretary must have the necessary powers and resources to perform the tasks assigned to him.";

• Subparagraph 4 of paragraph 56 shall be restated as follows:

"4) comply with the requirements of the legislation of the Kyrgyz Republic.";

• The first paragraph of paragraph 61 shall be restated as follows:

"In the area of personnel policy, corporate governance presupposes the presence in the bank of a Committee on Appointments and Remuneration, as well as the presence and ensuring compliance with internal documents concerning:".

6. To introduce the following amendments to the resolution of the Board of the National Bank of the Kyrgyz Republic "On approval of the Regulation on minimum requirements for external audit of banks and other financial and credit organizations licensed by the National Bank of the Kyrgyz Republic" of 15 June 2017 No. 2017-P-12/25-2-(NPA):

In the Regulation on minimum requirements for external audit of banks and other financial and credit organizations licensed by the National Bank of the Kyrgyz Republic approved by the above-mentioned resolution:

• The second paragraph of paragraph 3 shall be restated as follows:

"External audit of a bank is an independent examination of the bank's activities in order to increase the degree of confidence of users in the reliability of financial statements in all material respects in accordance with international financial reporting standards and other information, in accordance with the legislation of the Kyrgyz Republic.";

• Paragraph 30 shall be restated as follows:

"30. The external auditor ensures an increase in the degree of confidence of users in the reliability of financial statements in all its material aspects in accordance with the applicable financial reporting frameworks (international financial reporting standards).".