The State Duma Property Committee on February 22 advised the lower house of parliament to pass in the first reading a bill that will allow banks partly or fully owned by the state to acquire privatized state or municipal property for their branches.

The State Duma Property Committee on February 22, 2011 advised the lower house of parliament to pass in the first reading a bill that will allow banks partly or fully owned by the state to acquire privatized state or municipal property for their branches.

Corresponding amendments to Article 5 of the law “On the privatization of state and municipal property” were proposed by the head of the Duma Financial Market Committee, Vladislav Reznik.

The amendments provide that the restriction on the acquisition rights for privatized office premises shall not apply to the acquisition of such premises by state-owned banks with the purpose of using these premises in their core business operations.

A memo to the bill says that the bill is meant to simplify access to financial services to broad sections of the population, especially in small towns and rural areas.

“One of the serious problems in setting up branches of banks in small towns and rural communities is the shortage of available premises fit for banking transactions, specifically meeting the requirements of a cash center,” the memo says.

In such towns and communities most of the banking services are rendered by lending institutions fully or partly owned by the state or the Central Bank. A significant share of the premises that they use are owned by municipalities or territories and are leased by banks, Reznik said.

“In practice, banks have been denied further use of these premises under rent agreements because these buildings are subject to privatization,” the memo says.

Pursuant to current laws, privatized property may be bought by individuals and legal entities, with the exception of government and municipal institutions and also legal entities in which the stake of the state or municipality exceeds 25 percent.

Due to this restriction banks fully or partly owned by the state cannot acquire privatized premises. This situation can result in the closure of a bank office. Sometimes, a bank is forced to acquire the premises via mediators, which increases costs and risks related to the deal, Reznik says.

He also pointed out to numerous complaints from the public about the closure of the small offices of Sberbank, among others.

He says that the courts recognize the involvement of the Central Bank in the charter capital of Sberbank as the owner of controlling shares as the involvement of the state in the charter capital of a legal entity with a stake exceeding 25 percent.

The memo also says that the bill takes into account the fact that the privatization program for 2011-2013 provides for the privatization of major stakes in several banks, including Sberbank.

“This does not contradict the logic of the legislation on privatization because the privatized premises stop being municipal property and become the property of joint stock companies, the shares of which are subsequently privatized,” the memo says.