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Controls of bank mergers and unions
April 30, 2024
:diamonds: Controls for the merger and union of banks..For more, click here
https://cbi.iq/static/uploads/up/file-171447497983457.pdf
https://cbi.iq/news/view/2569
~~~~~
[incomplete and approximate translation of https://cbi.iq/static/uploads/up/file-171447497983457.pdf ]
DATE: 2024/4/29
All approved banks
M/ Merger controls (merger and union of banks)
Based on the decision of the Board of Directors of this bank No. (77) of 1941. It is recommended to amend the controls
(Merger and Union of Banks) issued pursuant to our Circular No. (5/4/171) on 05/05/519 in accordance with
The attached formula is linked.
with respect.
~~~~~
- Merger controls (merger and union of banks).
Central Bank of Iraq
Banking Supervision Department
Licensing, Controls and Instructions Section
Controls and Instructions Division
Merger controls (merger and union of banks)
(2024)
~~~~~
Based on the provisions of Article (4 10/1) of the Banking Law No. (54) of 1941 and in a manner consistent with Article
(91) of it. The Board of Directors of the Central Bank of Iraq decided to issue the following regulations:
First: terms and definitions
1. Bank: Central Bank of Iraq.
?. Merger: Merging one or more banks with another (merger) or merging two or more banks to form a new bank (union).
According to the cases described below:-
A- Merger: It is an agreement between two or more banks to merge to form one bank so that one of them leaves
About his independence and moral personality for the benefit of others.
B: Union: It is an agreement between two or more banks to merge into one bank so that the identity ends
The legal status of all banks entering the union is in favor of the new bank that has a legal personality
New and new brand name.
The bank resulting from the merger: is the bank that remains in existence after the merger process.
;. The merged bank: is the bank whose legal personality ends after it is annexed by the existing bank
Merger process.
Second: Requirements for the merger (merger or merger) of banks
1 Submit a request by banks wishing to merge or unify to this bank.
“The application must include all of the following:
5 Economic and technical feasibility study of the merger or union project (for each bank in Jeddah)
A unified feasibility study for the merger project (merger or union), which will be approved by the boards of directors
Banks submitting a merger request (merger or union).
5 General Assembly decision by absolute majority of each bank that wishes to merge (merger).
Or the union).
?,” The initial contract between banks wishing to merge (merger or union).
",4 In the event of a union of two or more banks, a carpenter name must be determined for the new bank after the union.
",* How the capital will be distributed in the new bank after the merger or union.
Appointing an officially authorized representative to follow up on the merger or union procedures for this bank and registered
Companies.
1
~~~~~
?/ Audited budgets of banks involved in the merger or union for (?) recent years.
7 Any other data or documents that this bank deems necessary to provide.
07 The advisory body that will be appointed to evaluate the financial situation of the banks involved in the merger
the Union.
7 Information mentioned in Appendix No. (1).
Third: Procedures for completing the merger (merger or union) of banks
1- Granting physical approval if the requirements mentioned in Paragraph (Second) above are completed.
“- Forming a higher committee and technical committees of the banks included in the merger (merger or union) under the supervision of this
The bank in order to provide technical assistance to the committees and monitor the stages of implementation of the merger project.
“- Develop a comprehensive plan of action to implement the merger (merger or union), taking into account the development of a programme
Accompanied by avoiding the negatives that the merger or union process imposes on employees.
4- One certified auditor of category (A) or an audit firm licensed and published in the
“The Auditors’ Bulletin for the relevant year for the group of merged or united banks” with the aim of:
Unifying the foundations and criteria for financial evaluation.
#- The financial statements must be prepared in accordance with the standard of presentation and disclosure for (?) recent years
For the purposes of standardization of comparison.
6- The bank evaluates the financial situation of the banks involved in the merger (merger or union) (provided that:
It includes, as a minimum, what is stated in Appendix No. ()) and with the assistance of an accredited consulting body; On that
The banks involved in the merger or union shall bear the advisory fees.
*- The bank issues its decision within (165) days from the date of receipt of the study by the consulting body
By final approval or disapproval of the merger agreement (merger or union), provided that it is accompanied by the decision
An adequate statement of the decision’s priorities and reasons.
Fourth: Validity of Damtam
This bank has the authority to direct the merger (merger or union) of banks based on the decision of its board of directors, which it resorts to
for the following considerations:
1 Purifying the banking system from faltering banks or those on the verge of bankruptcy and liquidation, and banks that...
It did not reach its specified capital (for Islamic banks).
?- Banks that did not fulfill their obligations with regard to public deposits, creditors, and others related to credit
The pledge that has not been paid to the beneficiary government agencies.
2
~~~~~
*"- In the event that the bank's net accrual ratio poses a threat to the stability of the banking sector.
Fifth: The benefits obtained by the bank resulting from the merger or the new bank in the event of a union
1- The bank resulting from the merger or the united banks will be granted the advantage of investing (09/00) from the mandatory reserve.
In financial instruments issued by this bank for a period of (1) year.
?- The bank resulting from the merger and the new bank in the event of a union are given an additional score within an element
“The bank resulting from the merger, or the new bank in the case of a union, is excluded from the restrictions that regulate the process
Sixth: General provisions
1- All parties negotiating the merger (banks wishing to merge or unify) are subject to confidentiality
Banking whether the merger takes place or not.
"- In the event of a merger (merger or union), all contracts concluded with customers of the merging banks will be amended."
the Union); With the liquidation of other obligations.
“Penalties are imposed on banks that provide false information for the purposes of consolidation (merger or union).
3
~~~~~
Appendix (1)
Information and data necessary for the purposes of merger or union
1- The articles of incorporation, internal regulations and complementary regulations.
>- Information about the organizational structure, jobs, their occupants, description of the work assigned to it and its duration
Their respective service.
?- Salary structure, wages and benefits.
4- The bank’s share of the total banking activity provided to the public inside Iraq:
A- The volume of internal and external financing according to financing formulas.
B- Local and foreign deposits, if any, according to their sectoral and qualitative classification.
A- Cash and pledge credit.
5-The financial position, income statement, cash flow statement, ownership rights, and the accompanying clarifications
These data must be prepared in accordance with Accounting Standard No. (1) related to disclosure for financial institutions
For the last 5 years.
5- Debts, mentioning the parties and any allocations for them, and a statement of bad debts with an explanatory note for each
Including the method of treatment, the guarantees granted, and the availability of the necessary allocations for this.
/- A statement of liabilities, including potential ones, capital pledges, and loss-making contracts that are not specialized
It has a reserve and statement of contingent liabilities and other financial commitments.
8- Statement of amounts and guarantees for long-term internal and external loans in local and foreign currency
All in Jeddah.
4- Statement of the bank’s tax position.
0 Local and foreign investments of various types.
11 Entities benefiting from loans granted by the bank.
7- Classification of fixed assets and their classification according to similar groups: owned lands and buildings
Registered in the name of the bank or (which is in the stages of registration in the real estate registration departments)
Its market value and its extinction.
1 Technology used in the bank.
4- Employee rights and post-service returns and allocations allocated to them in the budget.
:copyright:- The mechanism of the banking system for merged or united banks and an explanation of the possibility of integrating them into a banking system
One; Or acquire a new system and enhance it with inputs from the banks’ previous systems. To be
The mechanism is supported by the entity that prepares the banking system.
5- A trial balance for the merged or united banks based on the banking system at the date of submission
the demand.
71 A list of legal lawsuits filed against banks or by banks against their customers, with a specification
Its financial impact and the amount of potential profit/loss.
4
~~~~~
Appendix (2)
The minimum requirements that must be taken into account when preparing a study of the financial situation of a merger
Or the Union of Banks
1 Aggregate budget in accordance with international standards,
1- Reviewing the costs, products and services provided, the volume of loans and deposits, and the performance of investment portfolios
Profit and loss analysis.
“- Reviewing the bank’s operational processes, the organizational structure, and the distribution of human resources to it.
?- Reviewing liquidity and the extent of its coverage of potential cash flows based on the maturity of contracts and the extent of compliance with
Liquidity requirements of this bank.
5- Reviewing the quality of assets, their classification, and the status of loans and provisions related to non-performing loans.
1- A detailed review of investment portfolios, which includes identifying the main issues related to the ability to...
Collection (completed, registered and documented).
"- Evaluating the current status of the credit granted, which includes evaluating the accounting books, the documentary cycle, and the receipt."
Fair value and net realizable value (2/125).
A detailed review of capital adequacy ratios.
9- Reviewing the financial support provided by the government to government banks.
0 Review market risks, exchange rate risks, and interest rate risks.
1 Review the governance, compliance, risk management, internal flow and anti-laundering framework and system
Money.
1- Liquidation of suspended accounts in the banking system; Especially with regard to the bank’s mutual accounts
And its branches.
5
April 30, 2024
:diamonds: Controls for the merger and union of banks..For more, click here
https://cbi.iq/static/uploads/up/file-171447497983457.pdf
https://cbi.iq/news/view/2569
~~~~~
[incomplete and approximate translation of https://cbi.iq/static/uploads/up/file-171447497983457.pdf ]
DATE: 2024/4/29
All approved banks
M/ Merger controls (merger and union of banks)
Based on the decision of the Board of Directors of this bank No. (77) of 1941. It is recommended to amend the controls
(Merger and Union of Banks) issued pursuant to our Circular No. (5/4/171) on 05/05/519 in accordance with
The attached formula is linked.
with respect.
~~~~~
- Merger controls (merger and union of banks).
Central Bank of Iraq
Banking Supervision Department
Licensing, Controls and Instructions Section
Controls and Instructions Division
Merger controls (merger and union of banks)
(2024)
~~~~~
Based on the provisions of Article (4 10/1) of the Banking Law No. (54) of 1941 and in a manner consistent with Article
(91) of it. The Board of Directors of the Central Bank of Iraq decided to issue the following regulations:
First: terms and definitions
1. Bank: Central Bank of Iraq.
?. Merger: Merging one or more banks with another (merger) or merging two or more banks to form a new bank (union).
According to the cases described below:-
A- Merger: It is an agreement between two or more banks to merge to form one bank so that one of them leaves
About his independence and moral personality for the benefit of others.
B: Union: It is an agreement between two or more banks to merge into one bank so that the identity ends
The legal status of all banks entering the union is in favor of the new bank that has a legal personality
New and new brand name.
The bank resulting from the merger: is the bank that remains in existence after the merger process.
;. The merged bank: is the bank whose legal personality ends after it is annexed by the existing bank
Merger process.
Second: Requirements for the merger (merger or merger) of banks
1 Submit a request by banks wishing to merge or unify to this bank.
“The application must include all of the following:
5 Economic and technical feasibility study of the merger or union project (for each bank in Jeddah)
A unified feasibility study for the merger project (merger or union), which will be approved by the boards of directors
Banks submitting a merger request (merger or union).
5 General Assembly decision by absolute majority of each bank that wishes to merge (merger).
Or the union).
?,” The initial contract between banks wishing to merge (merger or union).
",4 In the event of a union of two or more banks, a carpenter name must be determined for the new bank after the union.
",* How the capital will be distributed in the new bank after the merger or union.
Appointing an officially authorized representative to follow up on the merger or union procedures for this bank and registered
Companies.
1
~~~~~
?/ Audited budgets of banks involved in the merger or union for (?) recent years.
7 Any other data or documents that this bank deems necessary to provide.
07 The advisory body that will be appointed to evaluate the financial situation of the banks involved in the merger
the Union.
7 Information mentioned in Appendix No. (1).
Third: Procedures for completing the merger (merger or union) of banks
1- Granting physical approval if the requirements mentioned in Paragraph (Second) above are completed.
“- Forming a higher committee and technical committees of the banks included in the merger (merger or union) under the supervision of this
The bank in order to provide technical assistance to the committees and monitor the stages of implementation of the merger project.
“- Develop a comprehensive plan of action to implement the merger (merger or union), taking into account the development of a programme
Accompanied by avoiding the negatives that the merger or union process imposes on employees.
4- One certified auditor of category (A) or an audit firm licensed and published in the
“The Auditors’ Bulletin for the relevant year for the group of merged or united banks” with the aim of:
Unifying the foundations and criteria for financial evaluation.
#- The financial statements must be prepared in accordance with the standard of presentation and disclosure for (?) recent years
For the purposes of standardization of comparison.
6- The bank evaluates the financial situation of the banks involved in the merger (merger or union) (provided that:
It includes, as a minimum, what is stated in Appendix No. ()) and with the assistance of an accredited consulting body; On that
The banks involved in the merger or union shall bear the advisory fees.
*- The bank issues its decision within (165) days from the date of receipt of the study by the consulting body
By final approval or disapproval of the merger agreement (merger or union), provided that it is accompanied by the decision
An adequate statement of the decision’s priorities and reasons.
Fourth: Validity of Damtam
This bank has the authority to direct the merger (merger or union) of banks based on the decision of its board of directors, which it resorts to
for the following considerations:
1 Purifying the banking system from faltering banks or those on the verge of bankruptcy and liquidation, and banks that...
It did not reach its specified capital (for Islamic banks).
?- Banks that did not fulfill their obligations with regard to public deposits, creditors, and others related to credit
The pledge that has not been paid to the beneficiary government agencies.
2
~~~~~
*"- In the event that the bank's net accrual ratio poses a threat to the stability of the banking sector.
Fifth: The benefits obtained by the bank resulting from the merger or the new bank in the event of a union
1- The bank resulting from the merger or the united banks will be granted the advantage of investing (09/00) from the mandatory reserve.
In financial instruments issued by this bank for a period of (1) year.
?- The bank resulting from the merger and the new bank in the event of a union are given an additional score within an element
“The bank resulting from the merger, or the new bank in the case of a union, is excluded from the restrictions that regulate the process
Sixth: General provisions
1- All parties negotiating the merger (banks wishing to merge or unify) are subject to confidentiality
Banking whether the merger takes place or not.
"- In the event of a merger (merger or union), all contracts concluded with customers of the merging banks will be amended."
the Union); With the liquidation of other obligations.
“Penalties are imposed on banks that provide false information for the purposes of consolidation (merger or union).
3
~~~~~
Appendix (1)
Information and data necessary for the purposes of merger or union
1- The articles of incorporation, internal regulations and complementary regulations.
>- Information about the organizational structure, jobs, their occupants, description of the work assigned to it and its duration
Their respective service.
?- Salary structure, wages and benefits.
4- The bank’s share of the total banking activity provided to the public inside Iraq:
A- The volume of internal and external financing according to financing formulas.
B- Local and foreign deposits, if any, according to their sectoral and qualitative classification.
A- Cash and pledge credit.
5-The financial position, income statement, cash flow statement, ownership rights, and the accompanying clarifications
These data must be prepared in accordance with Accounting Standard No. (1) related to disclosure for financial institutions
For the last 5 years.
5- Debts, mentioning the parties and any allocations for them, and a statement of bad debts with an explanatory note for each
Including the method of treatment, the guarantees granted, and the availability of the necessary allocations for this.
/- A statement of liabilities, including potential ones, capital pledges, and loss-making contracts that are not specialized
It has a reserve and statement of contingent liabilities and other financial commitments.
8- Statement of amounts and guarantees for long-term internal and external loans in local and foreign currency
All in Jeddah.
4- Statement of the bank’s tax position.
0 Local and foreign investments of various types.
11 Entities benefiting from loans granted by the bank.
7- Classification of fixed assets and their classification according to similar groups: owned lands and buildings
Registered in the name of the bank or (which is in the stages of registration in the real estate registration departments)
Its market value and its extinction.
1 Technology used in the bank.
4- Employee rights and post-service returns and allocations allocated to them in the budget.
:copyright:- The mechanism of the banking system for merged or united banks and an explanation of the possibility of integrating them into a banking system
One; Or acquire a new system and enhance it with inputs from the banks’ previous systems. To be
The mechanism is supported by the entity that prepares the banking system.
5- A trial balance for the merged or united banks based on the banking system at the date of submission
the demand.
71 A list of legal lawsuits filed against banks or by banks against their customers, with a specification
Its financial impact and the amount of potential profit/loss.
4
~~~~~
Appendix (2)
The minimum requirements that must be taken into account when preparing a study of the financial situation of a merger
Or the Union of Banks
1 Aggregate budget in accordance with international standards,
1- Reviewing the costs, products and services provided, the volume of loans and deposits, and the performance of investment portfolios
Profit and loss analysis.
“- Reviewing the bank’s operational processes, the organizational structure, and the distribution of human resources to it.
?- Reviewing liquidity and the extent of its coverage of potential cash flows based on the maturity of contracts and the extent of compliance with
Liquidity requirements of this bank.
5- Reviewing the quality of assets, their classification, and the status of loans and provisions related to non-performing loans.
1- A detailed review of investment portfolios, which includes identifying the main issues related to the ability to...
Collection (completed, registered and documented).
"- Evaluating the current status of the credit granted, which includes evaluating the accounting books, the documentary cycle, and the receipt."
Fair value and net realizable value (2/125).
A detailed review of capital adequacy ratios.
9- Reviewing the financial support provided by the government to government banks.
0 Review market risks, exchange rate risks, and interest rate risks.
1 Review the governance, compliance, risk management, internal flow and anti-laundering framework and system
Money.
1- Liquidation of suspended accounts in the banking system; Especially with regard to the bank’s mutual accounts
And its branches.
5
