current topics in jurisdictions of deposit insurers in ...• social insurancecontributionswill be...
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Current topics in jurisdictions of Deposit insurers in Asian countries ERDEMBILEG OCHIRKHUU DEPOSIT INSURANCE CORPORATION OF MONGOLIA
CHAIRMAN
10th DICJ Round Table 13-15 March 2018
Kyoto Japan
I
II CONTENTS
III
IV
Mongolian economic overview
Financial crises and blanket guarantee experience
Mongolian deposit insurance system
Future strategy
I Mongolian economic overview
Increased budget deficit Financed budget deficit Difficult conditions of foreign Overdependence in due to lack of budget through high interest and domestic economy mining sector
discipline government bonds
Significant increase in government debt and interest rate payment causing FISCAL IMBALANCE
IMF ldquoExtended Fund Facilityrdquo in 2017
I Mongolian economic overview
IMF Executive Board Approves Financial Arrangements for Mongolia
$440 $3 millio billion nExtended Fund
Facility for 3 years Other international partners
ADB World Bank
$55 Total external package will support the Mongolian Economic Stabilization Program billion
$21 billion
The Peoplersquos Bank of China to extend its RMB 15 billion swap line for at least 3 more years
(approx 21 billion USD)
I Mongolian economic overview
IMF Recommendations
bull Social insurance contributions will be raised by 2 1 and 2 in 2017 2018 and 2019 respectively
bull Savings interest income to be taxed at 10 (effective from April 1 2017)
bull Development Bank of Mongoliarsquos (state-guaranteed) bond maturing in March 2017 to be refinanced
bull Excise tax on cigarettes tobacco alcoholic beverages and vehicles to be progressively raised in the coming years
bull Law Amendment The Banking law and other related regulations to be updated
Actions taken
bull Law on Central Bank Jan 2018
bull The Banking Law Amendment Jan 2018
bull Bank Deposit Insurance Law Amendment Feb 2018
I Mongolian economic overview
Macroeconomic statistics 12312017
GDP
bull 58
INFLATION
bull 64
USDMNT EXCHANGE
RATE
bull MNT 24335
BUDGET DEFICIT
bull MNT 1741 billion
FOREIGN TRADE
bull SURPLUS
USD 1865 million
FOREIGH CURRENCY RESERVES
bull USD 30
billion
TOTAL DEPOSITS
bull MNT 175 trillion
TOTAL INSURED DEPOSITS
bull MNT 43 trillion
TOTAL ASSETS banking sector
bull USD 276 trillion
of NPL
bull 86
Source ldquoMonthly Macroeconomic Updaterdquo Wwwecrcmn Economic Policy and Competitiveness Research Center 29 Jan 2018 Monthly macroeconomic update Economic Policy and Competitiveness Research Center (2018 January 29)
II Financial crises and blanket guarantee experience
Banking crises timeline and blanket guarantee actions
lsquo96 lsquo01 lsquo00 lsquo99 lsquo98 lsquo97 lsquo08 lsquo09 rsquo02 lsquo03 rsquo04 rsquo05 rsquo06 lsquo07
CRISIS
RESOLUTION MNT 115 billion paid from state budget
SYSTEMIC BANKING CRISIS
Citizens and business entitiesrsquo 20-50 of total deposits were at risk
SAVINGS AND CREDIT COOPERATIVES CRISIS
MNT 70 billion paid from state budget
BANKING SECTOR CRISIS
MNT 225 billion paid from state budget
II Financial crises and blanket guarantee experience
Key facts
Blanket guarantee Deposit Guarantee Adoption of Bank widened Law revised Deposit Insurance Law
Nov 2008 Dec 2008 Mar 2009 Nov 2009 Jun 2010 Nov 2012 Jan 2013 Jul 2013
AnodBank failure Zoos Bank failure Expiry of Deposit Savings Bank failure Guarantee Law
DICOM resolved failure
of a SIFI
Without damage to citizens
Without government
involvement or any costs
Following the outbreak of the global financial and banking crisis and liquidity pressures on the Mongolian banking system a blanket guarantee
for all deposits in commercial banks was introduced by the Deposit Guarantee Law for a four-year term
II Financial crises and blanket guarantee experience
Financial assistance Capital injection MNT 85 billion MNT 85 billion
Loan with lower interest rate Financial assistance MNT 119 billion MNT 119 billion
State Bank Mongolia Loan repayment Bank of
Privatization income and (Assuming Bank) income from asset recovery
Asset recovery proceeds
Receivership
Savings Bank
III Mongolian Deposit Insurance System
Mongolian Deposit Insurance System
is managed by the Deposit Insurance Corporation of Mongolia (DICOM)
January 10th 2013 Bank Deposit Insurance Law passed by parliament
DICOM established with Within 5 years DICOM has incorporated PAYBOX PLUS mandate some LOSS MINIMIZER mandates
bull Collect insurance premiums bull Supervision rights bull Reimbursement of insured bull Financial assistance
depositors bull Least-cost resolution function bull Manage Deposit Insurance Fund bull Reporting by the banks bull Resolution functions bull Financial assistance
III Mongolian Deposit Insurance System
Past challenges
No information sharing between safety net members
Not a member of Financial Stability Council
Legal limitations no information sharing from banks except for collection of insurance premiums limited in holding banks accountable
IT system underdeveloped
III Mongolian Deposit Insurance System
Improvements
Signed MOU with Bank of Mongolia and Ministry of Finance
Member of Financial Stability Council
Upon amendments to the Bank Deposit Insurance Law report by banks to DICOM supervision rights to hold banks accountable
Implementation of IT blueprint
Improved governance
IV Future strategy
Revise regulations and bylaws due to amendments made to the Banking Law and Bank Deposit Insurance Law
Ensure optimal structure of the corporation
Transition plan for risk-based premium system
Development of reimbursement software system
To conform with IADI Core Principles for Effective Deposit Insurance Systems
THANK YOU
I
II CONTENTS
III
IV
Mongolian economic overview
Financial crises and blanket guarantee experience
Mongolian deposit insurance system
Future strategy
I Mongolian economic overview
Increased budget deficit Financed budget deficit Difficult conditions of foreign Overdependence in due to lack of budget through high interest and domestic economy mining sector
discipline government bonds
Significant increase in government debt and interest rate payment causing FISCAL IMBALANCE
IMF ldquoExtended Fund Facilityrdquo in 2017
I Mongolian economic overview
IMF Executive Board Approves Financial Arrangements for Mongolia
$440 $3 millio billion nExtended Fund
Facility for 3 years Other international partners
ADB World Bank
$55 Total external package will support the Mongolian Economic Stabilization Program billion
$21 billion
The Peoplersquos Bank of China to extend its RMB 15 billion swap line for at least 3 more years
(approx 21 billion USD)
I Mongolian economic overview
IMF Recommendations
bull Social insurance contributions will be raised by 2 1 and 2 in 2017 2018 and 2019 respectively
bull Savings interest income to be taxed at 10 (effective from April 1 2017)
bull Development Bank of Mongoliarsquos (state-guaranteed) bond maturing in March 2017 to be refinanced
bull Excise tax on cigarettes tobacco alcoholic beverages and vehicles to be progressively raised in the coming years
bull Law Amendment The Banking law and other related regulations to be updated
Actions taken
bull Law on Central Bank Jan 2018
bull The Banking Law Amendment Jan 2018
bull Bank Deposit Insurance Law Amendment Feb 2018
I Mongolian economic overview
Macroeconomic statistics 12312017
GDP
bull 58
INFLATION
bull 64
USDMNT EXCHANGE
RATE
bull MNT 24335
BUDGET DEFICIT
bull MNT 1741 billion
FOREIGN TRADE
bull SURPLUS
USD 1865 million
FOREIGH CURRENCY RESERVES
bull USD 30
billion
TOTAL DEPOSITS
bull MNT 175 trillion
TOTAL INSURED DEPOSITS
bull MNT 43 trillion
TOTAL ASSETS banking sector
bull USD 276 trillion
of NPL
bull 86
Source ldquoMonthly Macroeconomic Updaterdquo Wwwecrcmn Economic Policy and Competitiveness Research Center 29 Jan 2018 Monthly macroeconomic update Economic Policy and Competitiveness Research Center (2018 January 29)
II Financial crises and blanket guarantee experience
Banking crises timeline and blanket guarantee actions
lsquo96 lsquo01 lsquo00 lsquo99 lsquo98 lsquo97 lsquo08 lsquo09 rsquo02 lsquo03 rsquo04 rsquo05 rsquo06 lsquo07
CRISIS
RESOLUTION MNT 115 billion paid from state budget
SYSTEMIC BANKING CRISIS
Citizens and business entitiesrsquo 20-50 of total deposits were at risk
SAVINGS AND CREDIT COOPERATIVES CRISIS
MNT 70 billion paid from state budget
BANKING SECTOR CRISIS
MNT 225 billion paid from state budget
II Financial crises and blanket guarantee experience
Key facts
Blanket guarantee Deposit Guarantee Adoption of Bank widened Law revised Deposit Insurance Law
Nov 2008 Dec 2008 Mar 2009 Nov 2009 Jun 2010 Nov 2012 Jan 2013 Jul 2013
AnodBank failure Zoos Bank failure Expiry of Deposit Savings Bank failure Guarantee Law
DICOM resolved failure
of a SIFI
Without damage to citizens
Without government
involvement or any costs
Following the outbreak of the global financial and banking crisis and liquidity pressures on the Mongolian banking system a blanket guarantee
for all deposits in commercial banks was introduced by the Deposit Guarantee Law for a four-year term
II Financial crises and blanket guarantee experience
Financial assistance Capital injection MNT 85 billion MNT 85 billion
Loan with lower interest rate Financial assistance MNT 119 billion MNT 119 billion
State Bank Mongolia Loan repayment Bank of
Privatization income and (Assuming Bank) income from asset recovery
Asset recovery proceeds
Receivership
Savings Bank
III Mongolian Deposit Insurance System
Mongolian Deposit Insurance System
is managed by the Deposit Insurance Corporation of Mongolia (DICOM)
January 10th 2013 Bank Deposit Insurance Law passed by parliament
DICOM established with Within 5 years DICOM has incorporated PAYBOX PLUS mandate some LOSS MINIMIZER mandates
bull Collect insurance premiums bull Supervision rights bull Reimbursement of insured bull Financial assistance
depositors bull Least-cost resolution function bull Manage Deposit Insurance Fund bull Reporting by the banks bull Resolution functions bull Financial assistance
III Mongolian Deposit Insurance System
Past challenges
No information sharing between safety net members
Not a member of Financial Stability Council
Legal limitations no information sharing from banks except for collection of insurance premiums limited in holding banks accountable
IT system underdeveloped
III Mongolian Deposit Insurance System
Improvements
Signed MOU with Bank of Mongolia and Ministry of Finance
Member of Financial Stability Council
Upon amendments to the Bank Deposit Insurance Law report by banks to DICOM supervision rights to hold banks accountable
Implementation of IT blueprint
Improved governance
IV Future strategy
Revise regulations and bylaws due to amendments made to the Banking Law and Bank Deposit Insurance Law
Ensure optimal structure of the corporation
Transition plan for risk-based premium system
Development of reimbursement software system
To conform with IADI Core Principles for Effective Deposit Insurance Systems
THANK YOU
I Mongolian economic overview
Increased budget deficit Financed budget deficit Difficult conditions of foreign Overdependence in due to lack of budget through high interest and domestic economy mining sector
discipline government bonds
Significant increase in government debt and interest rate payment causing FISCAL IMBALANCE
IMF ldquoExtended Fund Facilityrdquo in 2017
I Mongolian economic overview
IMF Executive Board Approves Financial Arrangements for Mongolia
$440 $3 millio billion nExtended Fund
Facility for 3 years Other international partners
ADB World Bank
$55 Total external package will support the Mongolian Economic Stabilization Program billion
$21 billion
The Peoplersquos Bank of China to extend its RMB 15 billion swap line for at least 3 more years
(approx 21 billion USD)
I Mongolian economic overview
IMF Recommendations
bull Social insurance contributions will be raised by 2 1 and 2 in 2017 2018 and 2019 respectively
bull Savings interest income to be taxed at 10 (effective from April 1 2017)
bull Development Bank of Mongoliarsquos (state-guaranteed) bond maturing in March 2017 to be refinanced
bull Excise tax on cigarettes tobacco alcoholic beverages and vehicles to be progressively raised in the coming years
bull Law Amendment The Banking law and other related regulations to be updated
Actions taken
bull Law on Central Bank Jan 2018
bull The Banking Law Amendment Jan 2018
bull Bank Deposit Insurance Law Amendment Feb 2018
I Mongolian economic overview
Macroeconomic statistics 12312017
GDP
bull 58
INFLATION
bull 64
USDMNT EXCHANGE
RATE
bull MNT 24335
BUDGET DEFICIT
bull MNT 1741 billion
FOREIGN TRADE
bull SURPLUS
USD 1865 million
FOREIGH CURRENCY RESERVES
bull USD 30
billion
TOTAL DEPOSITS
bull MNT 175 trillion
TOTAL INSURED DEPOSITS
bull MNT 43 trillion
TOTAL ASSETS banking sector
bull USD 276 trillion
of NPL
bull 86
Source ldquoMonthly Macroeconomic Updaterdquo Wwwecrcmn Economic Policy and Competitiveness Research Center 29 Jan 2018 Monthly macroeconomic update Economic Policy and Competitiveness Research Center (2018 January 29)
II Financial crises and blanket guarantee experience
Banking crises timeline and blanket guarantee actions
lsquo96 lsquo01 lsquo00 lsquo99 lsquo98 lsquo97 lsquo08 lsquo09 rsquo02 lsquo03 rsquo04 rsquo05 rsquo06 lsquo07
CRISIS
RESOLUTION MNT 115 billion paid from state budget
SYSTEMIC BANKING CRISIS
Citizens and business entitiesrsquo 20-50 of total deposits were at risk
SAVINGS AND CREDIT COOPERATIVES CRISIS
MNT 70 billion paid from state budget
BANKING SECTOR CRISIS
MNT 225 billion paid from state budget
II Financial crises and blanket guarantee experience
Key facts
Blanket guarantee Deposit Guarantee Adoption of Bank widened Law revised Deposit Insurance Law
Nov 2008 Dec 2008 Mar 2009 Nov 2009 Jun 2010 Nov 2012 Jan 2013 Jul 2013
AnodBank failure Zoos Bank failure Expiry of Deposit Savings Bank failure Guarantee Law
DICOM resolved failure
of a SIFI
Without damage to citizens
Without government
involvement or any costs
Following the outbreak of the global financial and banking crisis and liquidity pressures on the Mongolian banking system a blanket guarantee
for all deposits in commercial banks was introduced by the Deposit Guarantee Law for a four-year term
II Financial crises and blanket guarantee experience
Financial assistance Capital injection MNT 85 billion MNT 85 billion
Loan with lower interest rate Financial assistance MNT 119 billion MNT 119 billion
State Bank Mongolia Loan repayment Bank of
Privatization income and (Assuming Bank) income from asset recovery
Asset recovery proceeds
Receivership
Savings Bank
III Mongolian Deposit Insurance System
Mongolian Deposit Insurance System
is managed by the Deposit Insurance Corporation of Mongolia (DICOM)
January 10th 2013 Bank Deposit Insurance Law passed by parliament
DICOM established with Within 5 years DICOM has incorporated PAYBOX PLUS mandate some LOSS MINIMIZER mandates
bull Collect insurance premiums bull Supervision rights bull Reimbursement of insured bull Financial assistance
depositors bull Least-cost resolution function bull Manage Deposit Insurance Fund bull Reporting by the banks bull Resolution functions bull Financial assistance
III Mongolian Deposit Insurance System
Past challenges
No information sharing between safety net members
Not a member of Financial Stability Council
Legal limitations no information sharing from banks except for collection of insurance premiums limited in holding banks accountable
IT system underdeveloped
III Mongolian Deposit Insurance System
Improvements
Signed MOU with Bank of Mongolia and Ministry of Finance
Member of Financial Stability Council
Upon amendments to the Bank Deposit Insurance Law report by banks to DICOM supervision rights to hold banks accountable
Implementation of IT blueprint
Improved governance
IV Future strategy
Revise regulations and bylaws due to amendments made to the Banking Law and Bank Deposit Insurance Law
Ensure optimal structure of the corporation
Transition plan for risk-based premium system
Development of reimbursement software system
To conform with IADI Core Principles for Effective Deposit Insurance Systems
THANK YOU
I Mongolian economic overview
IMF Executive Board Approves Financial Arrangements for Mongolia
$440 $3 millio billion nExtended Fund
Facility for 3 years Other international partners
ADB World Bank
$55 Total external package will support the Mongolian Economic Stabilization Program billion
$21 billion
The Peoplersquos Bank of China to extend its RMB 15 billion swap line for at least 3 more years
(approx 21 billion USD)
I Mongolian economic overview
IMF Recommendations
bull Social insurance contributions will be raised by 2 1 and 2 in 2017 2018 and 2019 respectively
bull Savings interest income to be taxed at 10 (effective from April 1 2017)
bull Development Bank of Mongoliarsquos (state-guaranteed) bond maturing in March 2017 to be refinanced
bull Excise tax on cigarettes tobacco alcoholic beverages and vehicles to be progressively raised in the coming years
bull Law Amendment The Banking law and other related regulations to be updated
Actions taken
bull Law on Central Bank Jan 2018
bull The Banking Law Amendment Jan 2018
bull Bank Deposit Insurance Law Amendment Feb 2018
I Mongolian economic overview
Macroeconomic statistics 12312017
GDP
bull 58
INFLATION
bull 64
USDMNT EXCHANGE
RATE
bull MNT 24335
BUDGET DEFICIT
bull MNT 1741 billion
FOREIGN TRADE
bull SURPLUS
USD 1865 million
FOREIGH CURRENCY RESERVES
bull USD 30
billion
TOTAL DEPOSITS
bull MNT 175 trillion
TOTAL INSURED DEPOSITS
bull MNT 43 trillion
TOTAL ASSETS banking sector
bull USD 276 trillion
of NPL
bull 86
Source ldquoMonthly Macroeconomic Updaterdquo Wwwecrcmn Economic Policy and Competitiveness Research Center 29 Jan 2018 Monthly macroeconomic update Economic Policy and Competitiveness Research Center (2018 January 29)
II Financial crises and blanket guarantee experience
Banking crises timeline and blanket guarantee actions
lsquo96 lsquo01 lsquo00 lsquo99 lsquo98 lsquo97 lsquo08 lsquo09 rsquo02 lsquo03 rsquo04 rsquo05 rsquo06 lsquo07
CRISIS
RESOLUTION MNT 115 billion paid from state budget
SYSTEMIC BANKING CRISIS
Citizens and business entitiesrsquo 20-50 of total deposits were at risk
SAVINGS AND CREDIT COOPERATIVES CRISIS
MNT 70 billion paid from state budget
BANKING SECTOR CRISIS
MNT 225 billion paid from state budget
II Financial crises and blanket guarantee experience
Key facts
Blanket guarantee Deposit Guarantee Adoption of Bank widened Law revised Deposit Insurance Law
Nov 2008 Dec 2008 Mar 2009 Nov 2009 Jun 2010 Nov 2012 Jan 2013 Jul 2013
AnodBank failure Zoos Bank failure Expiry of Deposit Savings Bank failure Guarantee Law
DICOM resolved failure
of a SIFI
Without damage to citizens
Without government
involvement or any costs
Following the outbreak of the global financial and banking crisis and liquidity pressures on the Mongolian banking system a blanket guarantee
for all deposits in commercial banks was introduced by the Deposit Guarantee Law for a four-year term
II Financial crises and blanket guarantee experience
Financial assistance Capital injection MNT 85 billion MNT 85 billion
Loan with lower interest rate Financial assistance MNT 119 billion MNT 119 billion
State Bank Mongolia Loan repayment Bank of
Privatization income and (Assuming Bank) income from asset recovery
Asset recovery proceeds
Receivership
Savings Bank
III Mongolian Deposit Insurance System
Mongolian Deposit Insurance System
is managed by the Deposit Insurance Corporation of Mongolia (DICOM)
January 10th 2013 Bank Deposit Insurance Law passed by parliament
DICOM established with Within 5 years DICOM has incorporated PAYBOX PLUS mandate some LOSS MINIMIZER mandates
bull Collect insurance premiums bull Supervision rights bull Reimbursement of insured bull Financial assistance
depositors bull Least-cost resolution function bull Manage Deposit Insurance Fund bull Reporting by the banks bull Resolution functions bull Financial assistance
III Mongolian Deposit Insurance System
Past challenges
No information sharing between safety net members
Not a member of Financial Stability Council
Legal limitations no information sharing from banks except for collection of insurance premiums limited in holding banks accountable
IT system underdeveloped
III Mongolian Deposit Insurance System
Improvements
Signed MOU with Bank of Mongolia and Ministry of Finance
Member of Financial Stability Council
Upon amendments to the Bank Deposit Insurance Law report by banks to DICOM supervision rights to hold banks accountable
Implementation of IT blueprint
Improved governance
IV Future strategy
Revise regulations and bylaws due to amendments made to the Banking Law and Bank Deposit Insurance Law
Ensure optimal structure of the corporation
Transition plan for risk-based premium system
Development of reimbursement software system
To conform with IADI Core Principles for Effective Deposit Insurance Systems
THANK YOU
I Mongolian economic overview
IMF Recommendations
bull Social insurance contributions will be raised by 2 1 and 2 in 2017 2018 and 2019 respectively
bull Savings interest income to be taxed at 10 (effective from April 1 2017)
bull Development Bank of Mongoliarsquos (state-guaranteed) bond maturing in March 2017 to be refinanced
bull Excise tax on cigarettes tobacco alcoholic beverages and vehicles to be progressively raised in the coming years
bull Law Amendment The Banking law and other related regulations to be updated
Actions taken
bull Law on Central Bank Jan 2018
bull The Banking Law Amendment Jan 2018
bull Bank Deposit Insurance Law Amendment Feb 2018
I Mongolian economic overview
Macroeconomic statistics 12312017
GDP
bull 58
INFLATION
bull 64
USDMNT EXCHANGE
RATE
bull MNT 24335
BUDGET DEFICIT
bull MNT 1741 billion
FOREIGN TRADE
bull SURPLUS
USD 1865 million
FOREIGH CURRENCY RESERVES
bull USD 30
billion
TOTAL DEPOSITS
bull MNT 175 trillion
TOTAL INSURED DEPOSITS
bull MNT 43 trillion
TOTAL ASSETS banking sector
bull USD 276 trillion
of NPL
bull 86
Source ldquoMonthly Macroeconomic Updaterdquo Wwwecrcmn Economic Policy and Competitiveness Research Center 29 Jan 2018 Monthly macroeconomic update Economic Policy and Competitiveness Research Center (2018 January 29)
II Financial crises and blanket guarantee experience
Banking crises timeline and blanket guarantee actions
lsquo96 lsquo01 lsquo00 lsquo99 lsquo98 lsquo97 lsquo08 lsquo09 rsquo02 lsquo03 rsquo04 rsquo05 rsquo06 lsquo07
CRISIS
RESOLUTION MNT 115 billion paid from state budget
SYSTEMIC BANKING CRISIS
Citizens and business entitiesrsquo 20-50 of total deposits were at risk
SAVINGS AND CREDIT COOPERATIVES CRISIS
MNT 70 billion paid from state budget
BANKING SECTOR CRISIS
MNT 225 billion paid from state budget
II Financial crises and blanket guarantee experience
Key facts
Blanket guarantee Deposit Guarantee Adoption of Bank widened Law revised Deposit Insurance Law
Nov 2008 Dec 2008 Mar 2009 Nov 2009 Jun 2010 Nov 2012 Jan 2013 Jul 2013
AnodBank failure Zoos Bank failure Expiry of Deposit Savings Bank failure Guarantee Law
DICOM resolved failure
of a SIFI
Without damage to citizens
Without government
involvement or any costs
Following the outbreak of the global financial and banking crisis and liquidity pressures on the Mongolian banking system a blanket guarantee
for all deposits in commercial banks was introduced by the Deposit Guarantee Law for a four-year term
II Financial crises and blanket guarantee experience
Financial assistance Capital injection MNT 85 billion MNT 85 billion
Loan with lower interest rate Financial assistance MNT 119 billion MNT 119 billion
State Bank Mongolia Loan repayment Bank of
Privatization income and (Assuming Bank) income from asset recovery
Asset recovery proceeds
Receivership
Savings Bank
III Mongolian Deposit Insurance System
Mongolian Deposit Insurance System
is managed by the Deposit Insurance Corporation of Mongolia (DICOM)
January 10th 2013 Bank Deposit Insurance Law passed by parliament
DICOM established with Within 5 years DICOM has incorporated PAYBOX PLUS mandate some LOSS MINIMIZER mandates
bull Collect insurance premiums bull Supervision rights bull Reimbursement of insured bull Financial assistance
depositors bull Least-cost resolution function bull Manage Deposit Insurance Fund bull Reporting by the banks bull Resolution functions bull Financial assistance
III Mongolian Deposit Insurance System
Past challenges
No information sharing between safety net members
Not a member of Financial Stability Council
Legal limitations no information sharing from banks except for collection of insurance premiums limited in holding banks accountable
IT system underdeveloped
III Mongolian Deposit Insurance System
Improvements
Signed MOU with Bank of Mongolia and Ministry of Finance
Member of Financial Stability Council
Upon amendments to the Bank Deposit Insurance Law report by banks to DICOM supervision rights to hold banks accountable
Implementation of IT blueprint
Improved governance
IV Future strategy
Revise regulations and bylaws due to amendments made to the Banking Law and Bank Deposit Insurance Law
Ensure optimal structure of the corporation
Transition plan for risk-based premium system
Development of reimbursement software system
To conform with IADI Core Principles for Effective Deposit Insurance Systems
THANK YOU
I Mongolian economic overview
Macroeconomic statistics 12312017
GDP
bull 58
INFLATION
bull 64
USDMNT EXCHANGE
RATE
bull MNT 24335
BUDGET DEFICIT
bull MNT 1741 billion
FOREIGN TRADE
bull SURPLUS
USD 1865 million
FOREIGH CURRENCY RESERVES
bull USD 30
billion
TOTAL DEPOSITS
bull MNT 175 trillion
TOTAL INSURED DEPOSITS
bull MNT 43 trillion
TOTAL ASSETS banking sector
bull USD 276 trillion
of NPL
bull 86
Source ldquoMonthly Macroeconomic Updaterdquo Wwwecrcmn Economic Policy and Competitiveness Research Center 29 Jan 2018 Monthly macroeconomic update Economic Policy and Competitiveness Research Center (2018 January 29)
II Financial crises and blanket guarantee experience
Banking crises timeline and blanket guarantee actions
lsquo96 lsquo01 lsquo00 lsquo99 lsquo98 lsquo97 lsquo08 lsquo09 rsquo02 lsquo03 rsquo04 rsquo05 rsquo06 lsquo07
CRISIS
RESOLUTION MNT 115 billion paid from state budget
SYSTEMIC BANKING CRISIS
Citizens and business entitiesrsquo 20-50 of total deposits were at risk
SAVINGS AND CREDIT COOPERATIVES CRISIS
MNT 70 billion paid from state budget
BANKING SECTOR CRISIS
MNT 225 billion paid from state budget
II Financial crises and blanket guarantee experience
Key facts
Blanket guarantee Deposit Guarantee Adoption of Bank widened Law revised Deposit Insurance Law
Nov 2008 Dec 2008 Mar 2009 Nov 2009 Jun 2010 Nov 2012 Jan 2013 Jul 2013
AnodBank failure Zoos Bank failure Expiry of Deposit Savings Bank failure Guarantee Law
DICOM resolved failure
of a SIFI
Without damage to citizens
Without government
involvement or any costs
Following the outbreak of the global financial and banking crisis and liquidity pressures on the Mongolian banking system a blanket guarantee
for all deposits in commercial banks was introduced by the Deposit Guarantee Law for a four-year term
II Financial crises and blanket guarantee experience
Financial assistance Capital injection MNT 85 billion MNT 85 billion
Loan with lower interest rate Financial assistance MNT 119 billion MNT 119 billion
State Bank Mongolia Loan repayment Bank of
Privatization income and (Assuming Bank) income from asset recovery
Asset recovery proceeds
Receivership
Savings Bank
III Mongolian Deposit Insurance System
Mongolian Deposit Insurance System
is managed by the Deposit Insurance Corporation of Mongolia (DICOM)
January 10th 2013 Bank Deposit Insurance Law passed by parliament
DICOM established with Within 5 years DICOM has incorporated PAYBOX PLUS mandate some LOSS MINIMIZER mandates
bull Collect insurance premiums bull Supervision rights bull Reimbursement of insured bull Financial assistance
depositors bull Least-cost resolution function bull Manage Deposit Insurance Fund bull Reporting by the banks bull Resolution functions bull Financial assistance
III Mongolian Deposit Insurance System
Past challenges
No information sharing between safety net members
Not a member of Financial Stability Council
Legal limitations no information sharing from banks except for collection of insurance premiums limited in holding banks accountable
IT system underdeveloped
III Mongolian Deposit Insurance System
Improvements
Signed MOU with Bank of Mongolia and Ministry of Finance
Member of Financial Stability Council
Upon amendments to the Bank Deposit Insurance Law report by banks to DICOM supervision rights to hold banks accountable
Implementation of IT blueprint
Improved governance
IV Future strategy
Revise regulations and bylaws due to amendments made to the Banking Law and Bank Deposit Insurance Law
Ensure optimal structure of the corporation
Transition plan for risk-based premium system
Development of reimbursement software system
To conform with IADI Core Principles for Effective Deposit Insurance Systems
THANK YOU
II Financial crises and blanket guarantee experience
Banking crises timeline and blanket guarantee actions
lsquo96 lsquo01 lsquo00 lsquo99 lsquo98 lsquo97 lsquo08 lsquo09 rsquo02 lsquo03 rsquo04 rsquo05 rsquo06 lsquo07
CRISIS
RESOLUTION MNT 115 billion paid from state budget
SYSTEMIC BANKING CRISIS
Citizens and business entitiesrsquo 20-50 of total deposits were at risk
SAVINGS AND CREDIT COOPERATIVES CRISIS
MNT 70 billion paid from state budget
BANKING SECTOR CRISIS
MNT 225 billion paid from state budget
II Financial crises and blanket guarantee experience
Key facts
Blanket guarantee Deposit Guarantee Adoption of Bank widened Law revised Deposit Insurance Law
Nov 2008 Dec 2008 Mar 2009 Nov 2009 Jun 2010 Nov 2012 Jan 2013 Jul 2013
AnodBank failure Zoos Bank failure Expiry of Deposit Savings Bank failure Guarantee Law
DICOM resolved failure
of a SIFI
Without damage to citizens
Without government
involvement or any costs
Following the outbreak of the global financial and banking crisis and liquidity pressures on the Mongolian banking system a blanket guarantee
for all deposits in commercial banks was introduced by the Deposit Guarantee Law for a four-year term
II Financial crises and blanket guarantee experience
Financial assistance Capital injection MNT 85 billion MNT 85 billion
Loan with lower interest rate Financial assistance MNT 119 billion MNT 119 billion
State Bank Mongolia Loan repayment Bank of
Privatization income and (Assuming Bank) income from asset recovery
Asset recovery proceeds
Receivership
Savings Bank
III Mongolian Deposit Insurance System
Mongolian Deposit Insurance System
is managed by the Deposit Insurance Corporation of Mongolia (DICOM)
January 10th 2013 Bank Deposit Insurance Law passed by parliament
DICOM established with Within 5 years DICOM has incorporated PAYBOX PLUS mandate some LOSS MINIMIZER mandates
bull Collect insurance premiums bull Supervision rights bull Reimbursement of insured bull Financial assistance
depositors bull Least-cost resolution function bull Manage Deposit Insurance Fund bull Reporting by the banks bull Resolution functions bull Financial assistance
III Mongolian Deposit Insurance System
Past challenges
No information sharing between safety net members
Not a member of Financial Stability Council
Legal limitations no information sharing from banks except for collection of insurance premiums limited in holding banks accountable
IT system underdeveloped
III Mongolian Deposit Insurance System
Improvements
Signed MOU with Bank of Mongolia and Ministry of Finance
Member of Financial Stability Council
Upon amendments to the Bank Deposit Insurance Law report by banks to DICOM supervision rights to hold banks accountable
Implementation of IT blueprint
Improved governance
IV Future strategy
Revise regulations and bylaws due to amendments made to the Banking Law and Bank Deposit Insurance Law
Ensure optimal structure of the corporation
Transition plan for risk-based premium system
Development of reimbursement software system
To conform with IADI Core Principles for Effective Deposit Insurance Systems
THANK YOU
II Financial crises and blanket guarantee experience
Key facts
Blanket guarantee Deposit Guarantee Adoption of Bank widened Law revised Deposit Insurance Law
Nov 2008 Dec 2008 Mar 2009 Nov 2009 Jun 2010 Nov 2012 Jan 2013 Jul 2013
AnodBank failure Zoos Bank failure Expiry of Deposit Savings Bank failure Guarantee Law
DICOM resolved failure
of a SIFI
Without damage to citizens
Without government
involvement or any costs
Following the outbreak of the global financial and banking crisis and liquidity pressures on the Mongolian banking system a blanket guarantee
for all deposits in commercial banks was introduced by the Deposit Guarantee Law for a four-year term
II Financial crises and blanket guarantee experience
Financial assistance Capital injection MNT 85 billion MNT 85 billion
Loan with lower interest rate Financial assistance MNT 119 billion MNT 119 billion
State Bank Mongolia Loan repayment Bank of
Privatization income and (Assuming Bank) income from asset recovery
Asset recovery proceeds
Receivership
Savings Bank
III Mongolian Deposit Insurance System
Mongolian Deposit Insurance System
is managed by the Deposit Insurance Corporation of Mongolia (DICOM)
January 10th 2013 Bank Deposit Insurance Law passed by parliament
DICOM established with Within 5 years DICOM has incorporated PAYBOX PLUS mandate some LOSS MINIMIZER mandates
bull Collect insurance premiums bull Supervision rights bull Reimbursement of insured bull Financial assistance
depositors bull Least-cost resolution function bull Manage Deposit Insurance Fund bull Reporting by the banks bull Resolution functions bull Financial assistance
III Mongolian Deposit Insurance System
Past challenges
No information sharing between safety net members
Not a member of Financial Stability Council
Legal limitations no information sharing from banks except for collection of insurance premiums limited in holding banks accountable
IT system underdeveloped
III Mongolian Deposit Insurance System
Improvements
Signed MOU with Bank of Mongolia and Ministry of Finance
Member of Financial Stability Council
Upon amendments to the Bank Deposit Insurance Law report by banks to DICOM supervision rights to hold banks accountable
Implementation of IT blueprint
Improved governance
IV Future strategy
Revise regulations and bylaws due to amendments made to the Banking Law and Bank Deposit Insurance Law
Ensure optimal structure of the corporation
Transition plan for risk-based premium system
Development of reimbursement software system
To conform with IADI Core Principles for Effective Deposit Insurance Systems
THANK YOU
II Financial crises and blanket guarantee experience
Financial assistance Capital injection MNT 85 billion MNT 85 billion
Loan with lower interest rate Financial assistance MNT 119 billion MNT 119 billion
State Bank Mongolia Loan repayment Bank of
Privatization income and (Assuming Bank) income from asset recovery
Asset recovery proceeds
Receivership
Savings Bank
III Mongolian Deposit Insurance System
Mongolian Deposit Insurance System
is managed by the Deposit Insurance Corporation of Mongolia (DICOM)
January 10th 2013 Bank Deposit Insurance Law passed by parliament
DICOM established with Within 5 years DICOM has incorporated PAYBOX PLUS mandate some LOSS MINIMIZER mandates
bull Collect insurance premiums bull Supervision rights bull Reimbursement of insured bull Financial assistance
depositors bull Least-cost resolution function bull Manage Deposit Insurance Fund bull Reporting by the banks bull Resolution functions bull Financial assistance
III Mongolian Deposit Insurance System
Past challenges
No information sharing between safety net members
Not a member of Financial Stability Council
Legal limitations no information sharing from banks except for collection of insurance premiums limited in holding banks accountable
IT system underdeveloped
III Mongolian Deposit Insurance System
Improvements
Signed MOU with Bank of Mongolia and Ministry of Finance
Member of Financial Stability Council
Upon amendments to the Bank Deposit Insurance Law report by banks to DICOM supervision rights to hold banks accountable
Implementation of IT blueprint
Improved governance
IV Future strategy
Revise regulations and bylaws due to amendments made to the Banking Law and Bank Deposit Insurance Law
Ensure optimal structure of the corporation
Transition plan for risk-based premium system
Development of reimbursement software system
To conform with IADI Core Principles for Effective Deposit Insurance Systems
THANK YOU
III Mongolian Deposit Insurance System
Mongolian Deposit Insurance System
is managed by the Deposit Insurance Corporation of Mongolia (DICOM)
January 10th 2013 Bank Deposit Insurance Law passed by parliament
DICOM established with Within 5 years DICOM has incorporated PAYBOX PLUS mandate some LOSS MINIMIZER mandates
bull Collect insurance premiums bull Supervision rights bull Reimbursement of insured bull Financial assistance
depositors bull Least-cost resolution function bull Manage Deposit Insurance Fund bull Reporting by the banks bull Resolution functions bull Financial assistance
III Mongolian Deposit Insurance System
Past challenges
No information sharing between safety net members
Not a member of Financial Stability Council
Legal limitations no information sharing from banks except for collection of insurance premiums limited in holding banks accountable
IT system underdeveloped
III Mongolian Deposit Insurance System
Improvements
Signed MOU with Bank of Mongolia and Ministry of Finance
Member of Financial Stability Council
Upon amendments to the Bank Deposit Insurance Law report by banks to DICOM supervision rights to hold banks accountable
Implementation of IT blueprint
Improved governance
IV Future strategy
Revise regulations and bylaws due to amendments made to the Banking Law and Bank Deposit Insurance Law
Ensure optimal structure of the corporation
Transition plan for risk-based premium system
Development of reimbursement software system
To conform with IADI Core Principles for Effective Deposit Insurance Systems
THANK YOU
III Mongolian Deposit Insurance System
Past challenges
No information sharing between safety net members
Not a member of Financial Stability Council
Legal limitations no information sharing from banks except for collection of insurance premiums limited in holding banks accountable
IT system underdeveloped
III Mongolian Deposit Insurance System
Improvements
Signed MOU with Bank of Mongolia and Ministry of Finance
Member of Financial Stability Council
Upon amendments to the Bank Deposit Insurance Law report by banks to DICOM supervision rights to hold banks accountable
Implementation of IT blueprint
Improved governance
IV Future strategy
Revise regulations and bylaws due to amendments made to the Banking Law and Bank Deposit Insurance Law
Ensure optimal structure of the corporation
Transition plan for risk-based premium system
Development of reimbursement software system
To conform with IADI Core Principles for Effective Deposit Insurance Systems
THANK YOU
III Mongolian Deposit Insurance System
Improvements
Signed MOU with Bank of Mongolia and Ministry of Finance
Member of Financial Stability Council
Upon amendments to the Bank Deposit Insurance Law report by banks to DICOM supervision rights to hold banks accountable
Implementation of IT blueprint
Improved governance
IV Future strategy
Revise regulations and bylaws due to amendments made to the Banking Law and Bank Deposit Insurance Law
Ensure optimal structure of the corporation
Transition plan for risk-based premium system
Development of reimbursement software system
To conform with IADI Core Principles for Effective Deposit Insurance Systems
THANK YOU
IV Future strategy
Revise regulations and bylaws due to amendments made to the Banking Law and Bank Deposit Insurance Law
Ensure optimal structure of the corporation
Transition plan for risk-based premium system
Development of reimbursement software system
To conform with IADI Core Principles for Effective Deposit Insurance Systems
THANK YOU
THANK YOU