Savings Bank, Mongolia's former fifth-largest lending entity, will be taken over by its state-owned competitor, State Bank after being declared insolvent.
Danjilaa Ganbat, banking supervision department director at Mongol Bank said that State Bank will be operating Saving Bank's 503 branches from now on at a press conference in Ulaanbaatar the previous day.
Savings Bank was previously owned and managed by a holding company based in the capital, Just Group. Just Group has a number of assets including Just Oil LLC.
The takeover will be the first performed by the government in four years.
Savings Bank dealt with 1.7 million customers in a nation populated with 2.9 million, accounting for 55 percent of government-based financial services and 8 percent of active banking assets. Government financial services included payment of utility bills and disbursement of pensions, according to the central bank's statement.
"The central bank now has things in control," economist and commentator Dambadarjaa Jargalsaikhan said. "I don't think all the banks are like this but we should draw certain lessons. There was too much risk on one individual and there was a problem with poor corporate governance and conflicts of interest."
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