REGULATION NO. 1999/21
UNMIK/REG/1999/21
15
November 1999
The
Special Representative of the Secretary-General,
Pursuant
to the authority given to him under United Nations Security Council Resolution 1244 (1999) of 10 June 1999,
Taking
into account United Nations Interim Administration Mission in Kosovo (UNMIK)
Regulation No. 1999/1 of 25 July 1999 on the Authority of the Interim
Administration in Kosovo,
For the purpose of establishing rules for the licensing, supervision and regulation of banks by the Banking and Payments Authority of Kosovo (BPK),
Hereby
promulgates the following:
Section
1
The present regulation shall apply to banks and financial institutions, their shareholders, administrators, employees, agents and affiliated entities.
Section
2
Wherever
used in the present regulation, the following terms shall have the following
meanings:
“administrator” means any person who is
an officer of a bank, or other juridical person, including any member of its
Governing Board or Audit Committee and any person who alone or together with
one or more others has the authority to enter into commitments for the account
of such bank or juridical person;
“affiliate” of a bank or other juridical
person means a subsidiary of such bank or juridical person or a company of
which such bank or juridical person is a subsidiary or a company that is under
common control with such bank or juridical person;
“bank” means a juridical person engaged
in the business of accepting deposits in Kosovo as a local entity or as a
branch of a foreign bank and of employing such funds either in whole or in part
for the purpose of granting extensions
of credit or making investments at its own risk;
“branch office” means a place of business
which forms a legally dependent arm of a bank, not separately incorporated and
which conducts directly all or some of the bank’s financial activities;
“capital” means the net worth or funds of
a bank that is the difference between its assets and liabilities in accordance
with balance sheet accounts that reflect international accounting standards or
other sound accounting principles acceptable to the Banking and Payments
Authority of Kosovo (the “BPK”);
“capital distribution” means a
distribution of cash or other property by a bank to its owners made on account
of that ownership, but not including any dividend consisting only of shares of
the institution or rights to purchase such shares or any amount paid on
deposits of a cooperative bank that the BPK determines is not a distribution
for purposes of section 27.3;
“credit” means any loan or direct or
indirect commitment to disburse money in exchange for a right to repayment of
the amount disbursed and outstanding and to the payment of interest or other
charges on such amount, any extension of the due date of a debt, any guarantee
or letter of credit issued, and any commitment to acquire a right to payment of
a sum of money; the term “credit” shall not include bank deposits and the
purchase of debt securities in the secondary market;
“credit documentation” means a loan
agreement entered into by a bank and its supporting documents, including but not
limited to reasonably current financial statements of the borrower or of any
guarantor of the borrower's indebtedness; a document of assignment or similar grant of charge in any
collateral over which the lender is given any mortgage, security interest or
lien as security for the due payment of the loan and an appraisal of the value
of such collateral; and a term sheet setting forth the principal terms of the
loan, such as its principal amount, its rate of interest, its schedule of
repayments and the borrower's use of the proceeds and purpose of borrowing;
“debt security” means any negotiable
instrument of indebtedness and any other instrument equivalent to such
instrument whether or not in certificated or in book-entry form;
“deposit” means a sum of money paid to a
bank on condition that it is to be repaid in full by the bank, with or without
interest or premium either on demand or at an agreed time and not referable to
the provision of property or services or the giving of security whether or not
evidenced by any entry in a record of the bank, or by any receipt, certificate,
note or other document;
“equity interest” means any ownership
right or voting right with respect to a juridical person or enterprise;
“financial activity” means any of the activities
that are listed in section 25;
“financial institution” means a juridical
person that is not a bank that is licensed by the BPK to engage in one or more
of the following activities: extending credit; underwriting, dealing in,
brokering, or distributing securities; acting as investment company manager or
investment advisor or providing other financial services such as equipment
leasing finance services, micro-finance services or foreign exchange or other
financial informational, advisory or transactional services;
“guidelines” means non-obligatory
recommendations issued to banks, financial institutions or to a particular bank
or financial institution;
“license” means an authorization issued
by the BPK granting the right to engage in banking or financial activities
specified by that license;
“order” means an obligatory directive of
the BPK issued to a bank, financial institution or any particular group thereof
in implementation of the present regulation or of a rule;
“person” includes an individual, a
company, enterprise, partnership, association and any group of persons acting
in concert, whether or not incorporated;
“principal shareholder” means a person
that owns directly or indirectly ten percent or more of any class of voting
shares of a bank or company;
“regulatory capital” means capital
defined by the BPK from time to time for regulatory purposes;
“remedial action” means measures to
correct the infractions described in section 37;
“rule” means an obligatory directive in
implementation of the present regulation issued by the BPK to all banks and or
all financial institutions;
“significant interest” means a direct or
indirect holding of an interest in a juridical person or enterprise that
represents twenty percent or more of its outstanding voting shares, or that, in the opinion of the BPK, makes it
possible to exercise a controlling influence over its management or policies;
“subsidiary” means any juridical person
in which another person or group of persons acting in concert holds directly or
indirectly the equivalent of fifty percent or more of any class of voting
shares or a significant interest that permits such other person or group of
persons to exercise a controlling influence over the management or policies of
the subsidiary; and
“voting shares” means common shares in
the capital of the issuer and any other shares of any designation or
description that carry the right to vote on any resolution at a general or
special meeting of the issuer.
Section
3
3.1 No person shall engage in the business of a
bank or financial institution without an effective license issued by BPK.
3.2 No person shall use the word “bank” or
derivatives of the word “bank” in respect of a business, product, or service
without a license issued by the BPK, unless such usage is established or
recognized by the present regulation, an international agreement or where the
context in which the word “bank” is used does not concern financial activities.
3.3 No bank or financial institution shall use
words in its title that are misleading concerning its financial condition,
legal status or connection with government or international institutions.
3.4 No bank or financial institution organized
outside Kosovo shall be permitted to engage directly in any financial activity
in Kosovo unless the activity is undertaken through a branch office or
subsidiary for which a license has been issued by the BPK.
3.5 No person shall make a misstatement of
material fact or a false or misleading representation or do anything to create
a false or misleading appearance or engage in any manipulative device or
practice in relation to taking deposits.
3.6 The BPK may exempt, in whole or in part
from the application of the present regulation, banks whose deposit taking is
intended to promote financial savings by identified classes of persons and
whose total deposit liabilities remain less than Deutsche Marks 250,000;
provided, however, that any such banks shall not use the word “bank” in their
name.
Section
4
The
BPK shall have sole responsibility for the issuance of licenses to banks and
financial institutions.
Section
5
The
BPK shall have sole responsibility for establishing the required amounts of
minimum paid-in capital to be maintained by banks, which required amounts may
never be less than one million Deutsche Marks. The BPK may increase such
required amounts from time to time by rule or order.
Section
6
6.1 Applications for licenses shall be in such
form as prescribed by the BPK and shall be accompanied by the following
information:
(a) The qualifications and experience of
the administrators of an existing or proposed bank, including business and
professional history for the past ten years;
(b) The amount of the actual or proposed capital of the bank and, for proposed banks, the amount that may have previously been paid in or subscribed provided that no more than ten percent of bank capital may be contributed in kind;
(c) A business plan setting out, inter alia, the organizational
structure, the types of financial activities envisaged, projected financial
statements for three years and, for existing banks, financial statements and
annual reports for the past two years;
(d) The name, residence, business and
professional history for the past ten years, and financial statements for the
past three years, of each person who is or proposes to be a principal
shareholder of or has or proposes to have a significant interest in the bank,
and the amount and percentage thereof; the proposed ownership interests of
affiliated or related persons shall be aggregated to determine the amount of
such interest; and
(e) Such additional information as an
applicant deems appropriate.
6.2 The BPK may require an applicant to submit
additional or supplemental information.
6.3 A license application for a branch office
of a foreign bank with its head office in a jurisdiction other than Kosovo
(hereinafter referred to as “foreign bank”) shall be submitted by the foreign
bank and accompanied by such information as the BPK shall require.
Section
7
7.1 Within three months from the date of its
receipt of a complete application for a bank license, the BPK shall preliminarily
approve or deny it, and notify the applicant of its decision in writing;
notifications of the denial of a license shall state the grounds on which the
license was denied.
7.2 The BPK shall grant a license only if it is
satisfied that:
(a)
The business
plan is based on sound analysis under reasonable assumptions;
(b)
The bank
will comply with all provisions of the present regulation; and
(c)
The
qualifications, experience and integrity of its administrators, principal
shareholders and those who propose to have or have significant interests are
appropriate for the bank’s business plan and financial activities.
7.3 In the case of preliminary approval of an
application for a bank license the BPK shall enumerate the conditions for the
bank to receive the license to commence its operations. Such conditions shall
relate only to:
(a)
The payment
by shareholders to the bank of its initial capital funds;
(b)
The hiring
and training of the staff of the bank;
(c)
The lease
or purchase of operations equipment and the establishment of operations
systems, including internal audit and controls;
(d)
The lease,
purchase or occupancy of bank premises; and
(e)
The
engagement of an external auditor in accordance with section 33.
7.4 If a bank fails to comply within one year with the conditions to receive the license to commence operations, the preliminary approval of the application shall be revoked.
7.5 If the BPK determines that the conditions
in this section have been satisfied, it shall issue a license.
7.6 Licenses concerning a subsidiary or one or
more branch offices of a foreign bank shall be granted only if:
(a)
The foreign
bank is authorized to engage in the business of receiving deposits or
deposit-like funds in the jurisdiction or foreign country where its head office
is located;
(b) The competent authorities that supervise the foreign bank at its headquarters have given their written consent to the granting of such license; and
(c)
The BPK
determines that the bank is adequately supervised on a consolidated basis by
its supervisory authorities.
Section
8
8.1 A license shall be granted for an
indefinite period of time and shall not be transferable. Subsequent to initial licensing, banks
properly entitled may apply to the BPK to engage in additional activities. The
BPK may approve such application or provide reasons in writing for denying
it.
8.2 The BPK may charge fees for the processing
of a license application, the issuance of a license and for the possession of a
license. All such fees shall be non-refundable.
Section
9
A
central register shall be kept by the BPK for inspection by the public that
shall record for each licensed bank the name, the head office and branch office
addresses, and current copies of its charter or equivalent establishing
documentation and by-laws. A list of
banks, the licenses of which have been revoked, shall be maintained in the
register, but their chartering documentation shall be removed.
Section
10
10.1 The license of a bank may be revoked only by
decision of the BPK upon a request of the bank; following an infraction,
pursuant to section 37 below; or on one or more of the following grounds:
(a)
The license
has been obtained on the basis of false information submitted by or concerning
the applicant;
(b) The bank has not commenced operations within ninety days after the receipt of the license, or such further period as may be determined by the BPK, or has ceased for more than eight months to engage in the business of receiving deposits;
(c)
Another
bank that holds a significant interest in the bank has had its license revoked;
(d)
A merger,
amalgamation or sale of substantially all of the assets of the bank has
occurred;
(e)
The owner
or owners of the bank have decided to dissolve or to liquidate the bank, or the
bank has ceased to exist as a legally or operationally independent entity;
(f)
The
activities of the bank during its first three years of operation differ
substantially from those presented in the application for a license and, in the
opinion of the BPK, such difference is not justified; or
(g)
A foreign
bank does not have the authority, or has lost the authority, to engage in the
business of receiving deposits in the country of its head office.
10.2 A decision by the BPK to revoke or not to
revoke a license shall be communicated in writing to each bank or branch office
concerned and shall give the grounds for the decision and shall be effective on
the date of such communication.
Section
11
A
decision to revoke a license shall be published in one or more newspapers of
general circulation wherever the offices of the bank are located.
Section
12
12.1 Banks shall be organized as joint stock companies with limited liability under applicable law, with all shares registered in the name of their beneficial owners.
12.2 The provisions of the applicable law on
enterprises or company law shall apply to banks to the extent not inconsistent
with the present regulation. However,
registration with a court is not a condition precedent to commencing banking
operations after a license has been received by a bank.
12.3 Each bank shall enjoy legal, operational,
financial and administrative autonomy from any other person, including the BPK
and any agency, instrumentality or political subdivision of the government,
unless the law, the present regulation or rules or orders issued pursuant
thereto specifically provide otherwise. This autonomy shall be respected and no
person shall seek improperly to influence any administrator of a bank in the
discharge of his or her duties or to interfere in the activities of any bank,
except in the execution of a specific directive or duty under law.
12.4 Each bank shall have legal status including
the right to contract, to own and dispose of movable and immovable property,
and may be a party to legal proceedings.
Section
13
The
minimum amounts that banks must maintain as regulatory capital, and the minimum
absolute amount of capital, shall be prescribed from time to time by rule or
order.
Section
14
14.1 The transfer of an equity interest in a bank
shall require the prior written authorization of the BPK if, as a result of
such transfer, any one person or number of persons acting in concert would,
directly or indirectly, become a significant shareholder in such bank or would
own more than twenty percent of any class of voting shares of the bank. Determinations by the BPK shall be based
upon the criteria described in section 7 and upon such further factors as the
BPK may reasonably consider.
14.2 No bank shall, alone or in concert with one
or more other persons, without prior written authorization of the BPK, directly
or indirectly hold an equity interest in a juridical person or undertaking that
is engaged in other than financial activities that either represents a
significant interest or exceeds as to its net current value the equivalent of
fifteen percent of the bank's regulatory capital or permit the aggregate net
current value of all such equity interests to exceed the equivalent of one
hundred percent of the bank's regulatory capital.
14.3 Notwithstanding section 14.2 no
authorization shall be required for:
(a) Equity interests that have been acquired by a bank in foreclosure on or in lieu of repayment of a loan granted by the bank, in which case the bank shall dispose of such equity interests within one year from the date they are acquired or within such longer period as the BPK may permit; or
(b)
Equity
interests held by a bank as an agent or trustee.
Section
15
Merger, amalgamation or sale of substantially all
the assets of a bank shall require the prior written authorization of the
BPK. Determinations shall be based upon
whether the proposed transaction would result in the substantial lessening of
competition in any market served by the bank and on the criteria described in
section 7.
Section
16
16.1 Each bank shall have a charter or equivalent
establishing documentation that shall specify its corporate name and address;
its purposes; the jurisdiction and authority of its Governing Board; and the
amount of its capital, the classes, numbers and nominal values of its shares,
and the voting rights attaching to its shares.
No amendment of the charter or equivalent establishing documentation of
a bank shall take effect without the prior written approval of the BPK.
16.2 Each bank shall be governed by by-laws,
approved by its Governing Board, which in compliance with its charter shall
establish:
(a)
The
structure of the organization and administration of the bank, including its
operational and administrative units, their sub-units and functions,
supervisory positions, and reporting relationships;
(b)
The duties
of each departmental director and the units under his or her supervision;
(c)
The functions
of: the Audit Committee, the Credit Risk Management Committee, the Asset and
Liability Management Committee and other permanent committees of the Governing
Board; and
(d)
The limits
of the authority of the administrators and other employees of the bank to bind
the bank in contract.
16.3 Each bank shall maintain on file with the
BPK a duly certified copy of its charter or equivalent establishing
documentation, its by-laws, and a list of the officials of the bank who are
currently authorized to obligate the bank, together with their specimen
signatures and a description of the limits of their authority.
Section
17
17.1 Each bank shall be administered by a
Governing Board consisting of an uneven number of not less than five members,
of which two shall be non-executive directors, and shall have an Audit
Committee, a Credit Risk Management Committee, and an Asset and Liability
Management Committee.
17.2 The Governing Board shall be elected by the
bank’s shareholders and shall be responsible for establishing its policies and
for supervision of their implementation.
17.3 The Governing Board shall be appointed by
the general meeting of its shareholders for terms of not more than two years;
and may be reappointed for subsequent similar periods. The general meeting of
shareholders may establish remuneration for Board members; provided, however,
that remuneration of the Governing Board and senior management of a bank shall
be subject to approval of the BPK for the first three years of a bank’s
operations, and thereafter, if necessary, in the judgement of the BPK.
17.4
The Governing Board shall operate in
accordance with the bank’s by-laws.
17.5 The Governing Board and its members may not
delegate their responsibilities to others.
Section
18
All
persons elected or appointed as administrators of a bank must be fit and proper
and of good repute and must meet the criteria established by the BPK regarding
qualifications, experience and integrity. Prior to their assuming office,
members of the Governing Board must be approved by the BPK.
Section
19
19.1 A person shall not be eligible to become a member
of a bank’s Governing Board or shall by decision of the general or special
meeting of shareholders of the bank be relieved of his or her membership on the
Governing Board or, if it fails to act within 30 days of notice of the
disqualification, by the BPK, in the event that such person:
(a)
Has by law
been deprived of the right to sit on the governing board of a juridical person;
(b) Serves, or has served at any time during the immediately preceding twelve-months with the BPK;
(c)
Has been
convicted of a crime;
(d)
Has, in the
judgement of BPK, been a party to a transaction that violates the present
regulation or any rule or order; or
(e)
Has been
subject to an insolvency proceeding as debtor.
19.2 Members of the Governing Board, except those who have filed a written objection against the granting of such credits, shall be jointly and severally liable for losses sustained by a bank from credit extended in violation of sections 23, 27 or 30. Such liabilities may not be paid directly or indirectly by the bank or any of its affiliates which they serve or by the proceeds of any professional liability insurance or other indemnity policy of the bank.
19.3 A natural person who is a principal
shareholder of a bank or a principal shareholder of an affiliate of a bank shall
promptly after disqualification divest his or her interest in voting shares of
such bank or affiliate to a level below that of a principal shareholder. If he or she fails to do so within 60 days
of becoming disqualified, such shares shall lose the right to vote and shall
receive a capital distribution. After
such period, if the divestiture is not accomplished within 60 days, the BPK may
order that all the shares in the bank held directly or indirectly by such
principal shareholder be transferred to a trustee for sale at auction and the
net proceeds, less expenses of sale, will be remitted to the disqualified
shareholder.
Section
20
20.1 Each bank shall establish an Audit Committee
that shall consist of at least two non-executive members of the Governing
Board. The Audit Committee shall:
(a)
Establish
appropriate accounting, operational and administrative internal controls,
supervise compliance with policies and procedures, commission audits at the
expense of the bank of the bank's records;
(b) Monitor compliance with the present regulation and applicable rules or orders and report to the Governing Board thereon;
(c)
Engage
experts at the expense of the bank to assist in the fulfillment of the
Committee’s responsibilities; and
(d)
Deliver opinions
on any matters submitted to it by the Governing Board or that it wishes to
address.
20.2 The Audit Committee shall meet once per
quarter and when convened by the Governing Board or by two of its members. Decisions shall be taken by a majority of
the members present and voting. Minutes of meetings shall be recorded in such
manner as prescribed by the BPK.
20.3 Each bank shall establish a Credit Risk
Management Committee and an Asset and Liability Management Committee each to be
chosen from among respectively qualified senior officers by the Governing
Board.
20.4 The Credit Risk Management Committee
shall:
(a)
Meet weekly
or whenever business so requires under procedures pursuant to the by-laws;
(b)
Establish
and monitor implementation of policies and procedures for credit underwriting,
loan administration, and loan collection;
(c)
Monitor
compliance with the present regulation and other rules and orders applicable to
credit and report to the Governing Board thereon; and
(d)
Deliver
opinions on any matters submitted to it by the Governing Board or that the
Committee wishes to address.
20.5 The Asset and Liability Management Committee
shall:
(a)
Meet once
per month or when convened by the Governing Board or by two of its members
pursuant to the by-laws;
(b)
Take
decisions by a majority of the members present and voting; and
(c)
Establish
and monitor the implementation of policies and procedures for funding needs
projections and proper matching of maturities and rates of assets and
liabilities.
Section
21
Present
and past administrators, employees, and agents of a bank or financial
institution shall keep secret, and not use for personal gain or gain by other
than the bank that they serve or have served, or permit to be examined by
others, any non-public information that they obtained in the course of their
services to the bank. Such information may be disclosed only to the BPK,
including its inspectors and the auditors appointed by it, to external auditors
of the bank, to judicial authorities as the law shall provide, to foreign bank
supervisory authorities, and when the protection of the bank's own interest in
legal proceedings requires disclosure.
Section
22
22.1 No bank or financial institution shall
conceal, convert, or transfer cash or other property, if it knew or ought to
have known that such cash or other property is derived from criminal activity,
or aid or abet any person in concealing or disguising the illicit origin of any
cash or property.
22.2 Banks and financial institutions shall
inform the BPK of any evidence which suggests that property may be derived from
criminal activity and provide any additional information to the appropriate
authorities, in accordance with applicable law.
Section
23
23.1 An administrator of a bank or of a financial
institution who is a party to a material contract or a proposed material
contract with the bank or is an administrator of, or has a material interest in
or a material relationship to any person who is a party to a material contract
or a proposed material contract with the bank, shall disclose in writing to the
bank the nature and extent of the material interest or relation. Such
disclosure shall be made by the administrator when the contract or proposed
contract comes or ought reasonably to come to the attention of the
administrator.
23.2 A notice in writing to the Governing Board
of the bank by an administrator annually disclosing the names, addresses and
particulars of such administrator's material commercial, financial,
agricultural, industrial or other business or family interests that such person
has at the time shall be a sufficient declaration of conflict of interest in
any contract for purposes of section 23.1.
23.3 An administrator who has a material interest
or a material relationship within the scope of this section shall leave any
meeting at which the contract or proposed contract is discussed, and shall
refrain from voting on any matter related thereto that comes before the
Governing Board of the bank.
23.4 An interest shall be material if it is
significant with reference to the financial, business or family (any person who
is related by marriage or to the second degree of consanguinity) interests of
the person having the interest, and a person has a material interest in any
company if the person owns, directly or indirectly, a significant interest in
the company, or is an administrator of the company and has a significant
interest in any partnership if the person is a partner.
23.5 Where an administrator fails to disclose a
material conflict of interest in accordance with this section a court of
competent jurisdiction may, on the application of the bank, a bank shareholder,
or the BPK, set aside the contract on such terms as it thinks fit. In addition, the BPK may, by written order,
suspend the administrator from office for any period not exceeding one year, or
remove the administrator from office permanently.
23.6 Banks shall introduce suitable arrangements
and procedures so that they and their administrators and employees are not
placed in a situation where their duty to one customer conflicts with their
duty to another, or where their own interest conflicts with their duty to a
customer.
23.7 Administrators and employees of banks have a
fiduciary duty of independence, loyalty and diligence to the bank that they
serve and to the bank's depositors to place the bank's interests before their
own interests.
23.8 No bank shall extend credit to its affiliate
on preferential terms as to credit quality, interest rate, fee, maturity or
valuation of collateral nor shall any bank purchase an asset from an affiliate
in the form of a loan which is not performing.
23.9 No bank shall extend unsecured credit to any
one of its affiliates in amounts exceeding 10% of its total minimum regulatory
capital except with the prior permission of the BPK.
23.10 No bank shall have outstanding in the
aggregate at any one time extensions of credit to all affiliates exceeding 25%
of its total minimum regulatory capital except with the prior written
permission of the BPK.
Section
24
24.1 Banks shall conduct their administration and
operations in accordance with sound policies and procedures, the requirements
of the present regulation and of applicable rules and orders.
24.2 Banks shall maintain such risk-based capital
and shall hold such liquid assets as shall be prescribed by rule.
24.3 Banks shall ensure diversity of risk assets as
prescribed by rule.
Section
25
25.1 Banks shall be authorized in their licenses
to engage in the financial activities described in this section.
25.2 Banks with the minimum amounts of required
capital in accordance with section 5, as adjusted from time to time, may engage
in the following financial activities:
(a)
Receiving
deposits (in the form of demand deposits, time deposits, or other forms of
deposit) bearing interest or not in one currency;
(b) Buying and selling for a bank’s own account debt securities issued or guaranteed by governments or central banks of the European Union that are denominated and payable in the currency of the bank’s deposits and that have a term to maturity not exceeding one year;
(c)
Providing
payment and collection services;
(d)
Issuing and
administering means of payment (including payment cards, travelers' checks and
bankers' drafts);
(e)
Buying and
selling foreign exchange for cash for the account of a customer;
(f)
Providing
for safekeeping of securities and other valuables; and
(g)
Such other
financial activities as the BPK shall determine by rule.
25.3 Banks that have Deutsche Marks three million
in capital or such further amount as may be determined by rule or order from
time to time, may engage in the financial activities described in section 25.2
and in addition the following financial activities:
(a)
Receiving
deposits whether bearing interest or not in more than one currency;
(b) Extending credit, including: consumer and mortgage credit; factoring with or without recourse; and financing of commercial transactions;
(c)
Borrowing
funds and buying and selling for a bank’s own account or for the account of
customers (excluding underwriting) of money market instruments (including
notes, bills of exchange and certificates of deposit); debt securities; futures
and options relating to debt securities or interest rates; or interest rate
instruments;
(d)
Money
brokering;
(e)
Financial
leasing;
(f)
Providing
credit information services;
(g)
Providing
services as a financial agent or consultant (not including services described
in sections 25.4(a) and (b)); and
(h)
Dealing in
one or more currencies other than the currency in which the bank’s balance
sheet is denominated, including contracts for the future purchase or sale of
foreign currencies.
25.4 Banks that have Deutsche Marks five million
in capital or such further amount as may be determined by rule or order from
time to time, may engage in the financial activities described in sections 25.2
and 25.3, and in addition the following financial activities:
(a)
Providing
trust services, including, the investment and administration of funds received
in trust and administration of securities;
(b)
Providing
services as an investment portfolio manager or investment adviser;
(c)
Underwriting
and distribution of debt and equity securities and dealing in equity
securities; and
(d)
Such other
financial activities related to securities transactions, as the BPK shall
determine by rule.
25.5 No bank or financial institution shall
engage in financial activities that exceed those specifically authorized by its
license.
Section
26
26.1 Banks and financial institutions shall
refrain from entering into transactions or engaging in practices of any kind
that would provide them, alone or together with others, a position of dominance
in the money, capital or foreign exchange markets, and from engaging in
manipulative devices or predatory pricing practices that could result in an
unfair advantage for themselves or for third parties.
26.2 No bank shall require any person to contract
to receive any financial service or any goods or other service from an
affiliate as a condition of being permitted to contract with the bank to
receive any other financial service from the bank or an affiliate.
26.3 No bank shall provide credit enhancement
for, or extend credit to facilitate, the purchase of securities underwritten,
placed or distributed by its affiliate.
Section
27
27.1 Banks shall observe the following maximum
limits as prescribed by the BPK:
(a)
The maximum
ratios and exposures to be maintained by a bank concerning its assets,
risk-weighted assets, and off-balance sheet items and various categories of
capital and reserves;
(b) The maximum aggregate amount of credits, expressed as a percentage of its regulatory capital, that a bank shall be permitted to have committed or outstanding to or for the benefit of any single person or group of interrelated persons; and
(c)
The maximum
aggregate amount of credits, expressed as a percentage of the aggregate amount
of all its credits, that a bank shall be permitted to have committed or
outstanding to or for the benefit of the ten borrowers (including groups of interrelated
persons) with respect to whom the bank's exposure on account of credit
transactions is the greatest.
27.2 Banks shall observe the following requirements as prescribed by the BPK:
(a) Requirements concerning the minimum aggregate amount of liquid assets or specific categories of such assets in relation to the value or change in value of assets (including guarantees and collateral received) or specific categories thereof, or in relation to the amount or change in amount of liabilities or specific categories of liabilities, provided, however, that banks shall be permitted to meet their liquidity requirements by maintaining with the BPK money deposits of an equivalent value;
(b)
Requirements
concerning the maximum aggregate amount of real estate and fixed assets held,
or specific categories thereof;
(c)
Requirements
concerning the classification and evaluation of assets and provisions to be
made on the basis of such classifications and evaluations against substandard
and non-performing loans, and the time when earnings on non-performing loans
may no longer be accounted for as income except as received in cash; and
(d)
Prohibitions,
restrictions or conditions concerning the types or forms of credits and
investments made; matching as to maturity and interest rate in respect of
assets and liabilities (contingent or otherwise); and unhedged positions in
foreign currencies, precious metals or precious stones, exceeding limits
prescribed by the BPK.
27.3 No bank shall make a capital distribution or
pay a dividend if, in the opinion of the BPK, after making such distribution,
the bank would have less than the minimum regulatory capital required by the
present regulation or by rule or order.
27.4 No bank may engage directly in industry,
commerce, or activities other than financial activities.
27.5 No bank shall extend credit secured by its
own equity securities.
27.6 No bank shall purchase its own equity
securities without prior authorization from the BPK.
Section
28
28.1 Every bank shall prepare and maintain at its
head office written records containing:
(a)
Its charter
or equivalent establishing documentation, its by-laws and all amendments
thereto;
(b) A register of its beneficial shareholders, including the number of shares registered in the name of each;
(c)
Minutes of
meetings and resolutions of its Governing Board;
(d)
Minutes of
meetings and resolutions of shareholders meetings and Committee meetings;
(e)
Accounting
records exhibiting clearly and accurately the state of its business affairs,
explaining its transactions and financial position so as to enable the BPK to
determine whether the institution has complied with all the provisions of the
present regulation and with applicable rules and orders;
(f)
Records
showing, for each customer of the bank, on a daily basis, particulars of its
transactions with or for the account of that customer, and all balances owing
to or by that customer; and
(g)
Such other
records as are required by the BPK.
28.2 Every bank shall create and maintain at the head office of the bank in Kosovo, proper credit documentation and any other information concerning its business relations with its customers and other persons that the BPK may prescribe by rule.
Section
29
Each
bank shall regularly notify its customers of the current policies and
procedures regarding the business of the bank, and of the terms and conditions,
and methods of calculation associated with deposits made and credits received
by them, including the compound annual rates of interest and such other
information as may be prescribed by the BPK.
Section
30
30.1 Banks and financial institutions shall not enter
into a transaction with or for the benefit of a person who is related to them,
if such transaction would be entered into on less favorable terms and
conditions, or not at all, with or for the benefit of persons who are not so
related. For the purposes of this
section, persons who are related shall include without limitation any
administrator of the bank; any principal shareholder or holder of significant
interest in the bank; any person who is related to such administrator,
principal shareholders or holders by marriage, consanguinity to the second
degree, or business interest; any person that has a significant interest in a
juridical person in which the bank has a significant interest. Notwithstanding the foregoing, no bank shall
extend credit to or for the benefit of a person so related to the bank if as a
result thereof the aggregate amount outstanding on all credits extended by the
bank to persons so related to the bank would exceed an amount in relation to
the bank's regulatory capital as prescribed by the BPK.
30.2 Credit extended by any bank to any related
bank or financial institution shall be subject to such additional conditions or
restrictions as shall be prescribed by rule.
For the purposes of this paragraph, a related bank or financial institution
shall include, without limitation: any private or governmental person or
institution, or any number of such persons or institutions acting in concert,
that has a direct or indirect significant interest in the bank extending the
credit and any juridical person or undertaking in which the bank holds a
significant interest.
Section
31
A bank shall not provide financial assistance to any of its employees, or for their benefit, in excess of limits established by the BPK.
Section
32
32.1 Banks shall maintain accounts and records
and prepare annual financial statements adequate to reflect their operations
and financial condition in accordance with international accounting standards
and shall also reflect the operations and financial condition of its
subsidiaries and branch offices, both on an individual and on a consolidated
basis.
32.2 Accounts and financial statements shall be in
such form and detail and in accordance with international accounting standards
or such other accounting standards as shall be prescribed by the BPK.
Section
33
33.1 Each bank shall appoint, upon the
recommendation of its Audit Committee, an independent and qualified external
auditor approved by the BPK who shall:
(a)
Assist in
maintaining proper accounts and records;
(b) Prepare an annual report together with an audit opinion as to whether the financial statements present a full and fair view of the financial condition of the bank in accordance with the provisions of the present regulation;
(c)
Review the
adequacy of internal audit and control practices and procedures and make
recommendations for remediation; and
(d)
Inform the
BPK about any fraudulent act by an employee of the bank or any of its
subsidiaries or any irregularity or deficiency in its administration or
operations that may reasonably be expected to result in a material loss for the
bank or such subsidiary.
33.2 For banks whose assets do not exceed the
amount established by the BPK, the functions described in section 33.1 may be
performed by the bank’s internal auditor provided that such auditor shall have
had no less than ten years of professional experience in auditing.
33.3 A bank whose assets or activities so warrant
in the judgment of the BPK shall employ, with the advice and consent of its
Audit Committee, a fit and proper internal auditor.
33.4 The internal auditor shall report to the
Audit Committee which shall set his or her compensation.
33.5 The internal auditor shall be given
meaningful access to management and members of management to discuss matters
relevant to their functions and shall have the right, upon request, to obtain
from them any information or documentation which he or she shall require.
33.6 The internal auditor shall have no authority
to bind or represent any bank in contracts or other transactions.
33.7 The internal auditor shall operate
independently of management and shall be possessed of a special fiduciary duty
of care and loyalty to the bank.
33.8 The internal auditor shall:
(a)
Establish
systems of internal controls, satisfactory to the Audit Committee, to monitor
and critique policies and procedures with respect to accounting, administration,
operations and the safeguarding of assets;
(b)
Establish
and implement internal programs, satisfactory to the Audit Committee, to
surprise test for non-compliance and irregularities in selected departments
based on the internal auditor’s risk assessments of such departments;
(c)
Report
non-compliance and irregularities to the Audit Committee at such intervals and
pursuant to such procedures as shall be set by the Audit Committee and where
exigent circumstances so dictate, to the BPK;
(d)
Assist,
cooperate with and monitor the external auditor in the performance of his or
her duties; and
(e)
Perform
such other duties as may be provided in the bank’s by-laws.
Section
34
34.1 Each bank shall within thirty days of each
calendar quarter, publish in a national newspaper a fair and true summary of
its quarterly balance sheet as at the end of the previous calendar
quarter. Each bank shall also, within
four months of the end of its financial year, publish in a national newspaper a
fair and true summary of its balance sheet and its auditor's opinion for the
preceding financial year.
34.2 Each bank shall also publish its annual
report and provide copies to the public on request without charge.
Section
35
Branch
offices of foreign banks shall publish balance sheets and income statements on
a consolidated basis and shall submit them to BPK on a quarterly basis and at
such other times as the BPK shall require.
All such financial reporting shall be in accordance with international
accounting standards.
Section
36
36.1 Each bank shall prepare and submit to the
BPK reports concerning its administration and operations, liquidity, solvency,
and profitability, and those of its subsidiaries on an individual and a
consolidated basis. The reports shall
be prepared in such form and detail and shall be submitted at such intervals as
shall be prescribed by the BPK.
36.2 Each bank and each of its subsidiaries shall
be subject to examinations by examiners of the BPK or by auditors appointed by
the BPK. Such examiners may include officials of the authority of another
country that is charged with the monetary or prudential supervision of
financial activities in that country if it concerns the examination of a bank
that is a branch or subsidiary of a foreign bank that has its head office in
that country or has a significant interest in a foreign bank that is located in
that country.
36.3 In their examinations of banks and their
subsidiaries, the BPK and auditors appointed by it may:
(a)
Examine the
accounts, books, documents and other records of the bank or subsidiary; and
(b) Require administrators, employees and agents of the bank or subsidiary to provide all such information on any matter relating to its administration and operations as they shall reasonably request.
36.4 Each bank and each of its subsidiaries shall admit and cooperate fully with the examiners of the BPK and the auditors appointed by the BPK. No one shall attempt to harass, hinder, delay, impede, intimidate or exert undue influence on an inspector of the BPK or the auditors appointed by it.
36.5 Each affiliate of a bank and providers of
professional or operations services to banks shall provide information to the
BPK as the BPK may reasonably request concerning the bank’s operations and
relations with such persons.
Section
37
37.1 The BPK shall determine the remedial
measures and penalties provided for infractions described in this section.
37.2 The BPK may take the following actions, or
impose the following penalties, with respect to a bank or financial institution
if it determines that the bank, financial institution or any of its
administrators, principal shareholders and or those holding significant
interests in it has violated a provision of the present regulation or of any
rule or order of the BPK, has violated any condition or restriction attached to
an authorization issued by the BPK or has engaged in unsafe or unsound
practices in the judgement of the BPK:
(a)
Issue
written warnings;
(b) Conclude a written agreement with the Governing Board providing for a program of remedial action;
(c)
Issue
written orders to cease and desist from such infractions and to undertake
remedial action;
(d)
Impose
fines on the bank, financial institution or on its administrators, principal
shareholders and those holding significant interests in it, in amounts of from
DM 500 to DM 5,000 for each day that the infraction continues provided that
fines shall be of similar amount for entities with comparable total assets for
the same type of infraction;
(e)
Suspend
temporarily or dismiss management or a member or members thereof, the Board of
Governors or a member or members thereof; and
(f)
Revoke the
license of the bank or financial institution and appoint a receiver.
37.3 For banks whose regulatory capital is
determined by the BPK to be less than two-thirds of the required minimum
regulatory capital, in addition to the measures described in section 37.2, the
BPK may take one or more of the following actions:
(a)
Require
that the average total assets of the bank during any calendar quarter not
exceed its average total assets during the preceding calendar quarter;
(b) Require that the bank not acquire any equity interest in any juridical person or undertaking, establish or acquire any additional branch office, or engage in any new line of business;
(c)
Require
that the bank not grant any extension of credit to an affiliate unless such
credit is collateralised by marketable securities issued or guaranteed by a
government of the European Union, held in custody by an escrow agent, whose
market value exceeds at all times 125% of the amount of the credit; and
(d)
Require
that the interest rates the bank pays on deposits not exceed the prevailing
rates of interest on deposits of comparable amounts and maturities in the
region where the bank is located, as determined by the BPK.
37.4 For banks whose regulatory capital is
determined by the BPK to be less than one-half of the required minimum
regulatory capital, in addition to the measures that may be taken that are described
in sections 37.2 and 37.3, the BPK may take one or more of the following
actions or impose the following penalties:
(a)
Require the
bank or any of its subsidiaries to alter, reduce or terminate any activity that
the BPK determines has caused material losses to the bank;
(b) Require the bank to dismiss one or more administrators who had held office for more than 180 days immediately before the bank became undercapitalized, as determined by the BPK;
(c)
Require that
the bank divest itself of or liquidate any subsidiary if the BPK determines
that the subsidiary is in danger of becoming insolvent or has caused material
losses to the bank; and
(d)
Require
that no administrator receive any bonus or receive compensation at a rate
exceeding that person's average rate of compensation (excluding bonuses, stock
options and profit sharing) during the twelve calendar months preceding the
month in which, in the determination of the BPK, the bank became
undercapitalized.
37.5 For banks whose regulatory capital is
determined by the BPK to be less than one-quarter of the required minimum
regulatory capital, in addition to the measures that may be taken that are
described in sections 37.2, 37.3 and 37.4, the BPK shall appoint a receiver for
the bank.
37.6 The measures and penalties provided in this
section shall not preclude application of other civil penalties or criminal
penalties as provided under applicable law.
37.7 Any fines or revenue imposed in accordance
with this section shall be paid to the Kosovo Consolidated Budget.
37.8 Penalties described in section 37.2 may be
applied to any person who violates any of the provisions of section 3 and the
BPK shall also, notwithstanding any other provision of law, be empowered to
seek the liquidation of the business of such person under the provisions of
applicable law.
Section
38
38.1 If the BPK determines that any
administrator, employee or holder of a significant interest in a bank has
willfully or repeatedly committed any violation of the present regulation or
any rule or order that has resulted in a material loss to the bank or financial
gain to such person or has engaged in unsafe or unsound practices and has
persisted in such violations or practices following a written warning from the
BPK, the BPK may issue an order containing any or all of the following
provisions:
(a)
Requiring
the dismissal of the person from his or her position in the bank;
(b) Prohibiting such person from serving in or engaging in the banking or financial business for a stated period or for life;
(c)
Prohibiting
the person from direct or indirect exercise of voting rights attached to shares
of the bank;
(d)
Requiring the
person to dispose of all or any part of his or her direct or indirect ownership
interest in the bank or cease to hold a significant interest in it; and
(e)
Requiring
the person to reimburse the bank for losses caused by such violations.
38.2 If any such person is charged with any
criminal offense, the BPK may issue an order temporarily suspending such person
from his or her position in the bank and, if applicable, suspending the
exercise of voting rights of shares in the bank by such person pending the determination
of the criminal case. A dismissal of the criminal case or decision of not
guilty on the merits shall not preclude the BPK from taking any enforcement
action with respect to a person authorized by the present regulation.
38.3 No person may hold any position in, or
participate in any manner in the conduct of the activity of, any affiliate of a
bank that is engaged in financial services, without the prior written approval
of the BPK, if such person is subject to an order of the BPK suspending or removing
him or her from a position in a bank,
prohibiting the exercise of his or her voting rights in shares of a bank, or
requiring him or her to dispose of his
or her ownership interest in a bank.
38.4 In the event that any person does not sell
or dispose of voting shares of a bank pursuant to an order issued under this
section within the prescribed period of time, the BPK may order that all the
shares in the bank held by such person be transferred to a trustee for sale at
auction and the net proceeds, less expenses of sale, will be remitted to that
person.
Section
39
39.1 If the BPK determines that a bank is insolvent
or has revoked its license or that it may reasonably be expected to become
insolvent within the next ninety days the BPK shall revoke the license of that
bank and shall forthwith take possession and control of that bank through a
receiver appointed by the BPK. This proceeding shall be known as Receivership.
39.2 For the purposes of the present regulation:
(a)
A bank
shall be deemed to be insolvent if it is not paying its obligations in full as
they fall due or the value of its liabilities exceeds the value of its assets;
(b) The value of a bank’s assets, liabilities and regulatory capital shall be determined in accordance with valuation standards and procedures prescribed by the BPK; and
(c)
In
determining the value of a bank’s assets and liabilities for a future date, the
bank’s reasonably anticipated future income and expenses until that date shall
be taken into account.
39.3 A receiver may be a person from the private
sector or an official of the BPK who meets the qualifications prescribed by the
BPK. The BPK may, for good cause, dismiss a receiver. The terms of the
receiver’s compensation may include incentives for meeting the objectives
described in section 41.1 and may include penalties for failure to meet such
objectives.
39.4 The compensation of the receiver and experts
that he or she engages, reimbursement of their expenses and expenses of the BPK
in execution of the present regulation with respect to a bank shall be paid
from the assets of the bank. Payments to the receiver shall be made on a
current basis if in the judgment of the receiver there are sufficient liquid
assets; provided, however, that the receiver and agents of the receiver shall
not receive in any calendar month a larger pro
rata share in payment of their claims for fees and expenses than depositors
described in section 43.1(b) receive in payment of their claims. Any moneys
owing to the receiver at the end of the term of receivership shall be paid from
the proceeds from the sales of the bank’s assets with the priority described in
section 43.
Section
40
40.1 The receiver shall within two days of his or
her appointment post in each office of the bank a notice announcing such action
pursuant to the present regulation, specifying the effective date and time of
possession by the receiver and specifying that:
(a)
Authorizations
of persons to engage the financial responsibility of the bank have been
cancelled;
(b) Persons who previously had authorization to give instructions on behalf of the bank with respect to payment or transfer of the bank's assets or assets managed by the bank are no longer so authorized; and
(c)
The bank’s
license has been revoked.
40.2 The receiver shall publish a notice specifying the actions taken in one or more newspapers of general circulation in the communities in which the bank maintains offices and arrange for the publication of such notice each week for the next four weeks and shall inform as necessary the competent authorities and shall transmit copies of such actions to the BPK within two days of such action.
Section
41
41.1 A receiver shall have all the powers of the
administrators and shareholders of the bank concerned and, notwithstanding that
the bank’s license has been revoked, may, subject to section 41.2, operate the
bank in its own name, and shall take any action in selling the bank or its
assets that, in the receiver’s opinion, is likely to result in satisfying more
of the bank’s liabilities to depositors and other creditors within one year
from the date of appointment than would any alternative action; the BPK may
extend the receivership for a further period of up to six months if, in its
opinion, such extension will result in a material increase in the satisfaction
of the bank’s liabilities. Subject to the primary objective of maximum
satisfaction of the bank’s liabilities to creditors, the receiver shall
expedite the sale of the bank or its assets and payments to creditors.
41.2 A receiver may continue any operations other
than the taking of new deposits and extending credit to other than existing
customers in relation to outstanding assets; and may borrow money on a secured
or unsecured basis. The receiver may
stop or limit the payment of any obligation, employ or dismiss any officer,
employee or advisor, execute any instrument in the name of the bank and
initiate or defend and conduct in the bank’s
name any action or legal proceeding.
41.3 The receiver shall have unrestricted access
to and control over the offices, books of account and other records, and other
assets of the bank and its subsidiaries. At the request of the receiver, a law
enforcement officer or officers shall assist the receiver to gain access to
bank premises or control over bank records.
41.4 Any person who willfully interferes with a
receiver’s access to or control over the offices, books of account and other
records, and other assets of a bank for which he or she has been appointed
shall be imprisoned for a period of not less than one year nor more than five
years or fined in an amount of not less than DM 1000 per day nor more than DM
5000 per day for each day that the infraction continues, or both.
41.5 The BPK shall approve or deny a merger of
the bank with another bank, or sale of substantially all the bank’s assets to
any one bank, based upon the criteria in section 15.
41.6 The receiver shall have the same rights and
privileges and be subject to the same duties, penalties, conditions and
limitations as apply to administrators or other employees of a bank licensed
under the present regulation.
41.7 The powers of the administrators and
shareholders of the bank shall be suspended during a receivership; provided,
however, that administrators may be instructed by the receiver to exercise
specified functions for the bank; and further provided, that such persons shall
be subject to dismissal by the receiver from their positions at the bank and
shall thereupon cease to receive compensation from the bank.
41.8 The receiver shall secure the assets of the
bank to seek to prevent their dissipation by theft or other improper action, by
taking actions including, but not limited to, the following:
(a)
Changing
the locks and limiting access to the new keys on external entrances to the
bank's offices and on doors to internal offices which contain financial assets
or information or equipment which could enable a person to gain unlawful access
to financial assets;
(b) Changing or establishing access codes to the bank's computers and granting access only to a limited number of trustworthy employees;
(c)
Issuing new
photo identification passes for entrance of authorized employees to the bank's
premises and controlling the access of others to the bank's premises;
(d)
Canceling
authorizations of persons to engage the financial responsibility of the bank
and issuing new authorizations, as appropriate, and notifying third parties;
(e)
Informing
correspondent banks, registrars and transfer agents of securities, and external
asset managers of the bank's assets that persons who previously had
uthorization to give instructions on behalf of the bank with respect to dealing
in the bank's assets or assets held in trust by the bank are no longer so
authorized and that only the receiver, and persons authorized by the receiver
have such authority; and
(f)
Suspending
the payment of capital distributions in general and payment of any kind to
administrators and principal shareholders; provided, however, that base
compensation may be paid to administrators for services rendered in their
capacity as administrators of the bank.
41.9 The receiver shall establish a new balance
sheet for the bank, based on his or her determination of liquidation values of
the bank’s assets with a corresponding reduction in the value of the bank’s
liabilities in the reverse order of priority in payment of distributions in a
liquidation of a bank’s assets. Liabilities
shall be deemed due and payable and interest shall cease to accrue as of the
date of the appointment of the receiver. Unmatured liabilities shall be
discounted to present value at the rate of interest determined by the BPK.
41.10 Within one month of taking possession of a
bank, the receiver shall make an inventory of the assets and property of the
bank and transmit a copy thereof to the BPK, which shall make a copy available
for examination by the public.
41.11 After fifteen days from the date of
appointment, the receiver may make available for withdrawal by depositors or
payment to other creditors such amounts as in his or her opinion may
appropriately be used for that purpose; provided, however, that all depositors
or other creditors who are similarly situated shall be treated in the same
manner; and further provided, that before a general distribution of payments to
creditors of the bank or the assumption of the bank’s liabilities by another
bank, creditors other than those described in section 43.1(b) shall receive no
more than fifty percent of the amount of their allowed claims as determined by
the receiver.
41.12 When a receiver has taken possession of a
bank:
(a)
Any term,
statutory, contractual or otherwise, on the expiration of which a claim or
right of the bank would expire or be extinguished, shall be extended by six
months from the date of such expiration or extinction;
(b) Any attachment or security interest (except one existing six months prior to the effective date of the receivership) shall be vacated, and no attachment or security interest, except one created by the receiver in the application of this section shall attach to any of the assets or property of the bank so long as such receivership continues;
(c)
Shareholders'
rights shall be extinguished except for the right to receive proceeds, if any,
under section 43.3 and the right to receive any net payment received from the
sale of the bank or substantially all its assets if the receiver determines
that the bank had positive net worth at the time of sale; and
(d)
The
receiver may issue new shares in the bank, sell the assets of the bank or
arrange for the assumption of liabilities of the bank on terms he or she considers fair.
41.13 The procedures for determinations of the
validity and priority of claims and for liquidation of bank assets and return
of bank customers’ property shall be prescribed by the BPK; provided, however,
that the sale of bank assets shall be accomplished in a transparent and
commercially reasonable manner.
41.14 Any assets of the bank that have not been sold
at the end of the term of the receivership may be abandoned by the receiver or
given to a charitable institution that promotes public health or
education. Creditors of the bank shall
have no claim against any such assets.
41.15 The receiver shall report each month to the
BPK on the progress of the receivership in such form as may be prescribed by
the BPK.
Section
42
42.1 The receiver may bring an action in court to
set aside a transaction based on a forged or fraudulent document that the bank
has executed to the detriment of creditors within five years of the effective
date of the receivership.
42.2 The receiver may bring an action in court to
set aside the following transactions affecting the assets of the bank or to
recover from third parties the transfers by the bank:
(a)
Gratuitous
transfers to, or to persons related to, administrators and principal
shareholders of or holders of significant interests in the bank made within
five years prior to the effective date of the receivership;
(b)
Gratuitous
transfers to third parties made within three years prior to the effective date
of the receivership;
(c)
Transactions
in which the consideration given by the bank considerably exceeded the received
consideration, made within three years prior to the effective date of the
receivership;
(d)
Any act
done with the intention of all parties involved to withhold assets from bank
creditors, or otherwise impair their rights, within five years prior to the
effective date of the receivership; and
(e)
Transfers
of property of the bank to, or for the benefit of, a creditor on account of a
debt incurred within six months prior to the effective date of the receivership
which has the effect of increasing the amount that the creditor would receive
in a liquidation of the bank; provided, however, that payment of deposits in an
amount not exceeding DM 1000 per depositor shall not be subject to this
provision.
42.3 Transactions with persons related to the
bank conducted within one year prior to the effective date of the receivership,
if detrimental to the interest of depositors and other creditors, may be set
aside and recovered from such persons.
42.4 An action to set aside a transfer may be
brought by the receiver within one year following the effective date of the
receivership.
42.5 Notwithstanding the provisions of sections
42.1 to 42.4, the receiver may not set aside a payment or transfer by the bank
if it was made in the ordinary course of the bank's business, or if it was part
of a contemporaneous exchange for reasonably equivalent value, or to the extent
that following the transfer the recipient extended new unsecured credit to the
bank which had not been satisfied by the bank as of the effective date of the
receivership.
42.6 The receiver may recover property or the
value of property transferred by the bank from a transferee of an initial
transferee only if the second transferee did not give fair value for the
property and knew that the initial transfer could be set aside under the
present regulation.
42.7 The receiver may order that notice of the
filing of an action to set aside a transfer be recorded in the public records
for real estate ownership and any other rights in property and a person taking
title to or acquiring any security interest or other interest in such property
after the filing of such a notice takes his or her title or interest subject to
the rights of the bank to recover the property.
42.8 A lessor of bank premises or a utility
company or other provider of utility services including, without limitation, a
company that supplies electricity, natural gas, water or telephone services,
may not alter, refuse or discontinue such services to a bank because of its
receivership or because the debtor has failed to pay for services prior to its
receivership; provided, however, that upon request of a lessor of bank premises
or a utility company, the bank shall place a security deposit in a commercial
bank as a condition to the lessor's or utility company's duty to continue to
provide services during the receivership, and any such deposit shall not be
required in an amount greater than the cost of services provided to the bank
during the month immediately prior to the effective date of the receivership.
Section
43
43.1 In any liquidation of a bank’s assets,
allowed secured claims shall be paid to the extent of the realization of the
security or the security shall be delivered to the secured creditor. Other allowed claims shall be paid in
relation to all other debts, in the order described below:
(a)
Necessary
and reasonable expenses incurred by the receiver and the BPK, including
professional fees, in application of the provisions of the receivership
sections hereof;
(b) Deposits of each depositor up to an amount not exceeding ten times the prevailing average monthly wage;
(c)
The amount
not paid on deposits; and
(d)
Other
claims of creditors against the bank.
43.2 If the amount available for payment for any
class of claims is insufficient to provide payment in full, such claims shall
be reduced in equal proportions.
43.3 After payment of all claims filed, any
remaining allowable claims that were not filed within the time specified by
rule for the filing shall not be paid.
Any proceeds remaining after all claims of depositors and other
creditors have been paid shall be distributed among the shareholders of the
bank in accordance with their rights.
Section
44
Once
the proceeds for the sale of assets of a bank have been distributed, the
receiver shall provide a report to the BPK that includes a statement of income
and expense and sources and uses of funds during the period of receivership. Upon approval by the BPK of the report, the
BPK and the receiver shall be relieved of any further responsibility in
connection with the receivership of a bank.
Section
45
45.1 Professional employees appointed to
represent or assist a receiver or the BPK in connection with a receivership
shall not be paid amounts greater than are payable to employees or agents of
banks for similar services, except that the BPK may authorize payment at higher
rates, if the BPK determines that paying such higher rates is necessary in
order to recruit and retain necessary personnel.
45.2 The BPK shall have authority to indemnify a
receiver and his or her agents for their actions on such terms as the BPK deems
proper.
45.3 All claims arising out of or in connection
with the insolvency of a bank or a bank in receivership against a bank receiver
or the BPK in relation to a bank licensed under the present regulation shall be
settled in accordance with its provisions.
No appeals from the acts of a receiver or the BPK may be taken except
that the bank’s shareholders holding not less than ten percent of any class of
shares with the right to vote may appeal against the appointment of a receiver
for a bank.
45.4 Any court or administrative proceeding
arising out of or in connection with a bank insolvency or a bank in
receivership against a bank administrator, receiver or the BPK in relation to a
bank licensed under the present regulation shall be brought before the
appellate court or appropriate administrative body.
45.5 If the owners of a bank wish to voluntarily
liquidate the bank under the Company Law, the Law on Enterprises, or any
insolvency or bankruptcy code or other appropriate statute, they shall submit a
request for approval of the voluntary liquidation to the BPK accompanied by
such information as the BPK may prescribe. The BPK shall make due inquiry into
the affairs of the bank and may approve the voluntary liquidation under other
applicable law or determine that the present regulation applies and appoint a receiver
pursuant to section 39.
Section
46
The
BPK shall be empowered to issue such rules, orders or guidelines, to visit such
offices of banks and financial institutions at such reasonable times as it
deems appropriate, to examine such accounts, books, documents and other
records, and to take such other action as it shall deem necessary or advisable
to give effect to the intent of the present regulation or rules or orders
issued thereunder.
Section
47
47.1 The BPK shall publish its rules and orders
which shall take effect on the date of such publication or on such later date
as such order or rule shall specify.
47.2 The BPK shall charge fees to banks and
financial institutions for its
supervisory and regulatory services in order to defray its direct and
indirect costs incurred in providing such services. Fees shall be assessed
against banks in relation to the amount of their assets or based on any
extraordinary expenses incurred by the BPK or its agents in relation to its
supervisory activities with respect to a particular bank. Banks shall pay fees
within ten days of presentation of a statement by the BPK.
Section
48
In
any proceeding in any court, arbitration court or administrative body in any
jurisdiction brought against the BPK for any action taken in its capacity as
supervisor or receiver, or against any of its officials, employees or agents:
(a)
The sole
question before the court or body in determining whether a defendant acted
unlawfully, wrongfully or negligently shall be whether a defendant exceeded
clear authority or acted in an arbitrary or capricious manner in light of all
the facts and circumstances, the provisions and intent of the present
regulation, rules, orders and applicable law;
(b)
No actual
or former official, employee, or agent of the BPK shall be liable for damages
or otherwise liable for acts or omissions performed in good faith in the course
of his or her duties; and
(c)
The action
taken which is the subject of any such proceeding shall continue without
restriction during the proceeding and any appeals or judicial review unless
enjoined by a court of competent jurisdiction.
Section
49
49.1 The headings of the sections in the present
regulation are to be used solely for convenience of reference and are not a
part of and are not intended to govern, limit or aid in the construction of any
term or provision hereof.
49.2 Terms used in the conjunctive or disjunctive
in the present regulation may be read vice versa whenever the change is
necessary to effectuate the obvious intention of the provision in question.
49.3 Words in the singular in the present
regulation may be construed as plural and vice versa whenever the change is
necessary to effectuate the obvious intention of the provision in question.
Section
50
The
Special Representative of the Secretary-General may promulgate administrative
directions to implement the present regulation.
Section
51
The
provisions of applicable law shall apply subject to the provisions of the
present regulation.
Section
52
This
regulation shall enter into force on 15 November 1999.
Section
53
53.1 Entities conducting the business of a bank
in Kosovo on the effective date of the present regulation that wish to operate
as a bank in Kosovo must submit an application in accordance with section 7
within 30 days of that date. Entities that have not submitted an application by
such date or whose application has been denied pursuant to the provisions of
section 7 shall cease within 30 days to conduct the business of a bank or wind
up their affairs. The BPK may appoint a receiver to liquidate the businesses of
entities compelled to wind-up their affairs in accordance with the provisions
of this section.
53.2 Within the period specified by the BPK
(which shall not be later than 31 December 2000) by order to a bank that its
organization, administration, financial condition or operations do not conform
in one or more material respects with the requirements of the present
regulation or with any rule or order, such bank shall promptly undertake to
conform to said requirements within as short a time as possible.
53.3 Licensed banks which have registered with
the central register as required under section 9 and are operating as banks
shall be deemed for all purposes to be organized as joint stock companies with
limited liability or as cooperative societies under the applicable law of
Kosovo until such time as an effective law on enterprises or company law or on
cooperatives, as the case may be, is in effect, at which time formal
organization under said law shall be immediately undertaken and effected,
subject to approval by the BPK.
53.4 If no effective law on enterprises or
company law is enacted within five (5) years from the effective date of the
present regulation, the BPK shall have the power to review the status of all
licenses granted and to take such remedial actions as it shall deem
appropriate.
Bernard
Kouchner
Special
Representative of the Secretary-General