Banks may own up to 100% in insurers

The stakes held by banks in insurance companies will be possible to reach as high as 100% of the latter’s capital, as long as they keep within 60% of the bank’s equity, according to the law draft for modifying the banking law pending endorsement by the Government. The legislation in force allows commercial banks to hold up to 20% in the capital of an insurer, but does not impose such restrictions for stakes held by banks in other financial institutions, i.e. securities firms and financial leasing companies. The law draft limits the rights of the banks to invest in companies that do not qualify as credit, financial, insurance or related institutions to 15% of a bank’s equity and to 20% of the capital of the company in question. The new normative act, however, stipulates the central bank (NBR) must endorse any stake a bank wants to hold in financial, credit and insurance institutions if this operation results in including that particular company in the bank’s consolidated balance sheet. NBR will also have to be sought for approval on investments in unlisted companies in excess of 10% of the bank’s equity, as well for those in companies listed on a regulated market and worth 10%-15% of the bank’s equity. ZF