Mongol Bank announced the official closure of Capital Bank on Monday.
“In accordance with the Law on Central Bank and Banking Law, Mongol Bank took appropriate action for Capital Bank but due to poor performance and failure to meet bank prudential criteria, Capital Bank is unable to conduct normal operations. Therefore, Mongol Bank decided to close the bank and stopped its operations on April 8, 2019,” Mongol Bank says in a statement.
Capital Bank’s nonperforming loans amounted to 208 billion MNT, taking up 80 percent of its total credit portfolio and signaling insolvency, explained N.Batsaikhan, director general of Supervision Department of Mongol Bank. Reportedly, the accumulated loss of Capital Bank reached 380 billion MNT as of April 8.
According to Mongol Bank, Capital Bank held 256,000 savings accounts of entities and individuals and 99.5 percent of them were insured by the Deposit Insurance Corporation. Officials assured that as 421 billion MNT has been accumulated in the Deposit Insurance Corporation, account holders will be able to get back up to 20 million MNT in their savings through Khan Bank. But when and through which branch of Khan Bank Capital Bank account holders will be able to take back their money has not been determined.
Clients of the bank can receive more information from the Deposit Insurance Corporation via phone number 11-370000, which will be available from 6:00 a.m. to 12:00 a.m.
B.Undarmaa: Politics was involved in this closure
On Tuesday, Member of Parliament B.Undarmaa was asked to comment on Capital Bank’s closure, but she said, “I don’t own any shares of Capital Bank. However, I think this decision was made in connection with the political situation.”
The lawmaker refused to provide a clear explanation and said Mongol Bank should provide an explanation.
S.Chinzorig: Social Insurance Fund kept 101 billion MNT at Capital Bank
In relation to Mongol Bank’s latest decision to close Capital Bank, Minister of Labor and Social Protection S.Chinzorig clarified how much money from the Social Insurance Fund was kept at the bank.
How much money from the Social Insurance Fund did Capital Bank hold?
After discussing with Mongol Bank, we’ve agreed to first reimburse savings and fund money. We’re discussing in what amount of time the remainder of the Social Insurance Fund money will be compensated. Seven billion MNT of the Employment Support Fund was deposited at the bank in 2015. Currently, 1.2 billion MNT of this amount is still deposited.
When I took office as minister, around 280 billion MNT free residue of the Social Insurance Fund was deposited at Capital Bank. Since then, we took measures to take back the money, and at present, 101 billion MNT is remaining. We will cooperate with Mongol Bank to take back this money in the near future as scheduled. Accordingly, the money will be returned. Within this scope, the social insurance and state fund will not face any risks.
Are you saying that the fund money will be retrieved from clients of Capital Bank?
As Mongol Bank is its guarantor, it will repay the money. The guarantor will compensate for the loss through all types of measures such as selling Capital Bank’s assets. It’s unclear how Mongol Bank will raise the money.
Which banks are safekeeping state funds at the moment?
When I became the minister, the money was placed in small commercial banks. We changed it and worked to transfer the Social Insurance Fund money to Khan Bank and State Bank.
