Sh.batkhuu: Contract With 'mongol Gazar' Was My Biggest Mistake

Sh.Batkhuu recently spoke to journalists regarding the latest financial headlines. He handed over Khadgalamj Bank to the government, gave up Just Group, and disembodied its subsidiaries. He said he became a citizen several days ago.

-Why did you resign your savings bank to the government? Please, tell us what the situation was when you first created the savings bank and its most recent situation?

-I want to emphasize three things. Khadgalamj Bank was the last state bank to be privatized. The reason the problem became difficult was because people who worked for this bank stole over 14 billion MNT. Considering that, it caused a dispute about privatization and the bank’s operations were stopped for two years. Our company received a request to buy Khadgalamj Bank in late 2008. At this time, the bank had 80 billion MNT in assets.

We bought the bank in March 31, 2009. Bank of Mongolia examined this bank in April, 2009. The bank didn’t have its own property and had over 200 employees and 40 branches. After we bought this bank, we put 200 billion in assets and 33 billion MNT towards its statutory fund. Then our company bought Mongol Post bank, which was broke down in 2010. Khadgalamj Bank received 170 billion MNT in assets. Ninety billion MNT of them were nonperforming assets.

It had 360 billion MNT assets after Khadgalamj Bank merged with Mongol Post, but 170 billion MNT in assets were nonperforming. Even if we didn’t merge those bank’s statutory funds, 300 billion MNT belonging to depositors and clients would be at risk. Just Group was responsible for handling this situation and didn’t take any support from the government. Mongol Post bank hadn’t any fixed capital. Therefore, we invested 27 billion MNT into the bank’s statutory fund. This is the real history of those two banks. We incurred heavy losses of 170 billion MNT owing to nonperforming assets. Khadgalamj Bank was in charge of uniting those two banks.

-Why did the Bank of Mongolia make this decision?

-The problem was very obvious and open. We took appropriate measures for re-establishing the bank’s operation in order to reduce the government’s burden. Khadgalamj Bank’s assets were increased by 12 times after we took on this bank. We were operating without a profit because we needed to increase our own capital. As a businessman, I invested and raised a high-risk statutory fund. Merging Khadgalamj Bank into State Bank is not because of bankruptcy. Eventually, if a bank cannot make any payments, they announce...

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