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Uzbek banks introduce corporate management

19 August 2015

The Central Bank of Uzbekistan has approved the amendments to the regulations on corporate management in commercial banks.

The norm providing a requirement for each bank on the development and introduction of the internal document on effective corporate management has been included in the regulations, according to documents released by local media.

The document also provides for the possibility of creating a committee of minority shareholders in the bank to protect their rights and interests, protect the interests of the bank from the improper or illegal actions of shareholders, bank officials and other persons, the establishment of remuneration, rewards and incentives to employees (including the Board and the Management Board) taking into account the results of the bank's activity, compliance with safety and security requirements in lending to employees and officers of the bank, as well as the giving employees an opportunity to report illegal, unethical or questionable actions of management, ensuring their protection from the negative reaction from the above mentioned persons.

A necessary condition for effective corporate management should become its transparency to shareholders, investors, other stakeholders and market participants, the document said.

Uzbek banks must disclose information on the risk tolerance indexes (without breaking the necessary privacy) with a description of the procedure for their determination and degree of participation of the Board of the bank in this process.

Disclosing information must be accurate, clear and in an understandable way so that shareholders, investors, other stakeholders and market participants could easily take advantage of it. It must be promptly published on the corporate website in the annual and interim financial statements, or by other ways, the document said.

Effective corporate management of the bank also involves the disclosure of information, which includes the management bodies structure (composition, qualifications, experience, powers, duties, supervised field, work schedule and membership in the committees), ownership structure (large shareholders, the share of foreign investors in the share capital), organizational structure, types, conditions and amounts of transactions with affiliates and insiders, the bank's policy in relation to conflicts of interest.

Today, Uzbekistan’s banking system has 26 commercial banks, including three state-run banks, 11 joint banks, seven private banks, and five banks operating with the involvement of the foreign capital.

As previously reported, in 2014, the Uzbek banks’ total assets increased by 28.3 percent up to 56.2 trillion soums, the total loan portfolio of the banks rose by 31.3 percent up to 34.8 trillion soums, and the total equity bank capital increased over the year by 25.5 percent up to 6.9 trillion soums.