Mongolian Banks Dashboard: March 2021 www.fitchratings.com
Fitch Ratings believes that the new amendments to Mongolia’s Banking Law, when fully implemented, will improve transparency and strengthen the banking system’s corporate governance in the medium-to-longer term, ultimately contributing to the banking system’s stability. Parliament approved the amendments in late January, which include requirements for the five domestic systemically important banks (D-SIB) to become public companies through IPOs in the stock market by June 2022 and a cap on a bank shareholder’s rights at 20%. The amendments are part of the continuous work of The Bank of Mongolia on banking-sector reform. We expect the banks, once listed, to provide more timely and detailed disclosure, not only in their financials but also their banking operations, allowing for more public market participants' oversight. Undue influence by a dominant shareholder is also likely to be checked under the new ownership structure. As D-SIBs, these banks are required to have at least nine members on their boards, with no less than one-third of the directors to be independent. In addition, all commercial banks are required to reduce shareholder concentration by end-2023 with a maximum of 20% of the banks’ total shares owned by each shareholder and its related parties.
Published Date:2021-03-02