Risks of bankrupt banks may be covered by Olon ovoot gold mine

Jan 6 • Banking, Politics • 1149 Views • 1 Comment on Risks of bankrupt banks may be covered by Olon ovoot gold mine

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Last Friday of 2009, the Parliament passed a resolution on issuing MNT 100 billion bonds to State Bank, formerly known as Zoos Bank. However, 16 Parliamentarians have opposite positions. Let’s get their comments.

MP D.Ganhuyag: Let’s stop state responsibility for bank losses

Q: You have rejected the issuing of bonds to the State Bank. Do you think it is wrong to issue bonds?

MP D.Ganhuyag: These bonds are not for supporting State Bank but for taking responsibility for losses of the commercial bank for guarantying savings of the people by the state. Bond is a debt to be returned with interest rate. Also it is linked with the fact that the bank lends loans several times bigger than its equity to companies of their relatives or those with political influences. Actually the Mongol Bank is obliged to control financial rationals of commercial banks and guard people’s savings on behalf of the state. But the state, on behalf of commercial banks, taking obligations of insurance organizations on people’s savings, resulting growing number of frauds.

The version, in which guarantor state takes minimum losses, is to take Zoos bank with its real estate and some performing loans under the name State Bank. Bonds of MNT 65 billion shall be issued and sold to Mongolbank to refill people’s savings. Clearly the bond and interest rates shall be taken from taxpayers’ money. Above mentioned non-performing guaranty is mineral licenses provided by the state to companies. Banks double guaranteed some licences. Therefore I supported the version to take Zoos as State Bank, but measures are not decided if such matters arise and I rejected because no charges were discussed regarding ruin of people’s savings. MNT 100 billion is not little money, which is money of taxpayers. There were many same issues before, compensating people with taxpayers’ money and budget and leaving those without punishment. State intervention in unnecessary things creates problems.

Q: What measures should be taken?

MP D.Ganhuyag: It is essential to determine who is guilty for Zoos bankruptcy. Zoos bank was a joint-stock company and bankruptcy and state bank issues have not been discussed during the shareholders’ meeting. It is same as state invasion into private property. The Parliament could have decreed who would be responsible for shareholders’ losses and who could repay the Government bond.

Q: How about the period and interest rate of MNT 100 billion bonds?

MP D.Ganhuyag: These bonds are long term and conditions may be agreed with the purchaser after getting the rights.

Q: It is said another MNT 170 billion bonds shall be issued for Anod, isn’t it?

MP D.Ganhuyag: Private banks, which gain profits by lending people’s savings, are obliged to have these savings insured. But this situation emerged as the state stands in the front line. The Mongolbanks must be in charge of it. The easiest way might be emission but as a result tugrug rate remain low.

Q: How effective would it be to cover losses of commercial banks with issuing bonds?
MP D.Ganhuyag: The bank takes its profits and the state takes its responsibility for losses. Is it possible? It is because the law that state takes the responsibility instead of having people’s savings insured by banks. In addition, the condition will not get better unless those guilty people are charged. Thus this law should be amended and state responsibility for bank lossess should be stopped.

MP Sh.Saihansambuu: Since they are corrupted they have no progress in charging those who bankrupted the bank

-The parliament passed a useless thing-the bond. Under the name of saving Zoos bank the money making idea of some people has been realized. 16 Parliamentarians rejected this issue but failed. People who were behind and who supported the idea had speeches at the session. Maybe you have seen them on TV and radio clearly. No bank can be established with bond money. But it is too late because it is already decided. Today no charges are imposed on those who bankrupted the bank. Nevertheless, taxpayers’ moneys are being used for useless things. Legal organizations acted as if they were investigating and Ts.Nyamdorj held a hearing. They provided lending to relatives and took bribes from them. Therefore they can do nothing because they are corrupted. What they know is there is no charging system in Mongolia. I think there are many banks to go bankruptcy except Anod and Zoos. If the state acts the same way Mongolia is ready to be destroyed. I think the minority will win some time because we are going for truth.

MP R.Bud: There was a proposal replacing Zoos management with foreign people for higher pay

-Bond is a returnable debt. It is being a burden on state budget. As I understand bond is being issued to protect the rights of savings holders with reference to Zoos being taken by state. Unless law on banking and legal regulations are amended, the state cannot give money to save when banks go bankruptcy. This should be done by shareholders, revealing what is hidden and what is secret. That much money could not be wasted. The Mongolbanks should consider the responsibility. Audit organizations get a lot of money saying they checked. They should work on this matter as well. Today it is said the state did wrong thing from the beginning. If the state dind’t guaranty savings holders’ money, all savings holders would withdraw their money and then the bank would go bankruptcy. Recently it is said Zoos bank management would be replaced with high-pay foreign people. It is important to see the examples of banks in same countries and have them work equal to the pay. Without knowing that we pay USD 1-20 thousand and they come and get the money away without doing anything. It would be irresponsible thing as well if that happens.

MP О.Chuluunbat: Olon ovoot gold mine is on the pledge of Anod and Zoos banks

-The Parliament supported the Government proposal to issue bonds. This would be a temporary one if it going to finance bank risks and temporary losses. The Government should not issue such bonds, instead it should offer bonds that support economic sectors, create work places and fund infrastructure projects. The Mongolbank must be responsible for and finance risks related to banks. Thus, I think the issuing of bond for covering Zoos bank losses is wrong one and focusing on Zoos bank may have another interest. State consideration of all bankruptcy must be same. It should show its iron face to companies that incur risks to banks. Olon ovoot gold mine is on pledge of both Anod and Zoos banks. Why it is not used today. According to laws, it should be withdrawn, equaling to MNT 100 -150 billion, covering risks of Mongolian 2-3 banks. The Mongolbank should do this. I wonder why it is taking money from the state. The Mongolbank should not hide anything from the state, if so that is illegal.

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