New Regulation of NBS Executing sec 16 (1) of Banking Act

The Regulation of the National Bank of Slovakia No. 2/2001 stipulates prerequisites of the application for granting an approval and terms for granting the approval pursuant Sec. 16 (1) of the Act on Banks for the acquisition or increase in capital interest in a bank or voting rights, for the merger, amalgamation, division or dissolution of a bank, increase or decrease in the registered capital of a bank with the exception of decrease in the registered capital due to loss, for sale of a bank, a branch of a foreign bank or its part and for the granting the approval.

Pursuant to Sec. 16 of the Act No. 21/1992 Coll. on Banks, as amended (the ``Banking Act''), a prior approval of the National Bank of Slovakia ("NBS") granted after negotiations with the Ministry of Finance of the Slovak Republic is required in the following cases:

1. the acquisition or increase in the capital interest of a bank or voting rights exceeding 5%, 10%, 20%, 33% or 50% performed in one or more transactions by one or more persons acting in compliance (co-operation) (Sec. 16 (1) lett. a)),
2. the merger, amalgamation, division or dissolution of a bank, as well as for increase or decrease in the registered capital of a bank except for decrease in the registered capital due to loss (Sec. 16 (1) lett. b)), and
3. the sale of a bank, a branch of a foreign bank or its part (Sec. 16 (1) lett. c)).

Pursuant to Sec. 16 (4) of the Banking Act, each of the above mentioned acts is invalid, unless approved by NBS in advance.

According to Sec. 16 (3) of the Banking Act, NBS shall determine prerequisites of the application for granting the prior approval pursuant to Sec. 16 (1) of the Banking Act, as well as terms for granting such an approval by its regulation.

In accordance with the above mentioned, the prerequisites for granting the approval pursuant Sec. 16 (1) of the Banking Act, as well as terms for granting the prior approval were determined by the Regulation of NBS No. 7/1998.

On 8 December 2000, NBS cancelled the Regulation No. 7/1998 and issued the Regulation No. 2/2001 fully replacing this Regulation (the "Regulation").

The Regulation, in comparison to the Regulation No. 7/1998, specifies in more details and stipulates new prerequisites of the application for the approval for the acquisition or increase in the capital interest of a bank or voting rights, if the application is submitted by an individual being entrepreneur according to which provisions the individual being entrepreneur has to submit the following documents:

• extract from the Commercial Register,
• extract from the Trade Register,
• extract from the Criminal Register,
• annual financial statements for the last three years,
• business curriculum vitae, and
• general prerequisites of the application for the approval pursuant to Sec. 16 (1) lett. a) of the Banking Act.

The Regulation also stipulates the prerequisites of the application for granting the approval for dissolution of a bank which are as follows:

• business name, corporate seat, identification number of the bank which shall be dissoluted,
• economic reasons for dissolution of the bank,
• date of dissolution,
• timetable of organisational, legal and financial steps to be performed in the process of dissolution.

The application for granting the approval with the dissolution has to be accompanied with minutes from the meeting of the statutory body, agenda of which included convening of the general assembly meeting and proposal of a decision of the general assembly on dissolution of a bank, as well as powers of attorney authorising representative/s to act on behalf of principal/s, if the application is submitted by persons acting in compliance (co-operation).

The application for the approval pursuant to Sec. 16 (1) of the Banking Act has to contain a declaration of each petitioner, that the information and submitted documents are actual, complete and true, with officially verified signature of persons authorised to act on behalf of the petitioner.

In case, that pursuant to Sec. 16 (1) the application has to be accompanied also with any documents, a petitioner may replace them by a declaration with officially verified signatures of persons authorised to act on behalf of petitioner, if the petitioner already submitted such documents to NBS prior to the submission of the relevant application.

According to the Regulation, also a strategic plan of the bank's development and information, whether the petitioner has negotiated with the current shareholders of the bank and whether there exists compliance (co-operation) in approach of further development of the bank shall be the general prerequisite of the application for the approval for the acquisition or increase in capital interest of a bank or voting rights in case that such acquisition or such increase relate to 33% and more in the capital interest or voting rights, including personal changes in the statutory body and supervisory board.

If the application for the approval pursuant to Sec. 16 (1) lett. a) is submitted by a legal entity being a foreign bank, in accordance with the Regulation, the applicant is also obliged to submit a written opinion of the authority performing supervision over banks of its intention to acquire or increase capital interest in the bank.

According to the Regulation, as a newly introduced general prerequisite of the application for approval pursuant to Sec. 16 (1) lett. a) the application includes also reasons for acquisition of the capital interest, including a statement of the petitioner that it purchases shares on its own account and that it is not acting in compliance (co-operation) with other shareholders of the bank and that there is no written obligation of the petitioner to negotiate or perform shareholder's rights in favour of any third person.

According to the Regulation of NBS No. 7/1998, the mandatory statement of the purchaser, that the seller and the purchaser agreed on the purchase, provided that the approval is granted, was a prerequisite of the application for the approval pursuant Sec. 16 (1) lett. c). The Regulation replaced such a statement by the agreement on future agreement on sale of a bank. The petitioner shall be obliged to submit such an agreement together with the application.

Documents evidencing the source of financial means to be used to acquire the shares or voting rights are still the prerequisites of granting the approval for the acquisition or increase in the capital interest of a bank or voting rights.

This Regulation is in force from 1 February 2001.

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