Page 8 These five countries have tollowed two very different banking m.dels (see Table 3). Hlungary nas opted for the Anglo-Saxon model **of** separating commercial and investmenit banking functions. **The**

**Table 3. Regul&tory Frameworks**

||||a...s.t..|..||
|---|---|---|---|---|---|
|Date of enactment by<br>Parliament of new<br>banking regulation|November<br>1991|April 1992<br>(tAmendn-<br>itsto<br>existing L|December<br>1991|March 1992|March 1991<br>(Arendrenta<br>being<br>considered)|
|Separation<br>between<br>commercialand<br>binking investment<br>activities?|Yes|No, univeral<br>banking|No, universal<br>banking|No, univerul<br>banking|No, universal<br>banking|
|Limitson the volume<br>of equity ban,acan<br>hold|I Commercial<br>and<br>specialized<br>banks arc<br>allowed to hold 15 %<br>and 100% of adjusted<br>capita!in long term<br>investments,<br>respectively;<br>and<br>excludes collaterals<br>taken posse.sion<br>by<br>banks which must be<br>sold within 3 years.|Up to 2S % of total<br>capital and reserves<br>and is planning to<br>increase it to 50_%._|Up to 25zof total<br>capital and<br>reserves and<br>excludes<br>collaterals taket,<br>possession by<br>banks which must<br>be sold within 2<br>years.|Up to 100% of<br>to.'lcapitalin<br>long-term<br>investments<br>ar.J<br>excludes<br>collaterals taken<br>porsesion<br>by<br>banks which must<br>be sold within 3<br>yeaq.|Up to 20% of<br>totalcapitsland<br>reserves and<br>N3R pLans to<br>increase it to<br>100%|
|Capital adequacy|opercent<br>of<br>risk-weighted<br>assets to<br>be met in January<br>1993|8 percent of<br>risk-weighted<br>assets|8 percent<br>of<br>risk-weightcd<br>assets to be met<br>end-1995|8 percent<br>of<br>risk-weighted<br>assets, transitional<br>period to be<br>determined|Propowed to be 8<br>percent<br>ot<br>rii-weighted<br>**assets**by<br>end-1994|
|Limits on lending to<br>a singlecustomer|Up to 25% of<br>adjusted capital|Up to 15% of<br>assets.|Up to 25% af<br>capital|Up to 25% of<br>capital|Up to20%of<br>capital|
|Limits on lending to<br>shareholders|Up to 5% of adjusted<br>capital|Up to 15% of<br>capital.|Determrined by the<br>bank statutory<br>body|Up to1%of<br>paid-in capital|Up to 15% of<br>the banki capital<br>andremerveh|
|Deposit insurance|Banks should have a<br>mandatory deposit<br>protection by<br>end-1992|A new deposit<br>insurance should be<br>in effect since<br>March 1993.|State-owned bakas<br>and governments<br>deposits|By law banks<br>shouldoffer<br>deposit inaurance<br>up toanamount<br>to be specified|Onlystte<br>savings bank'a<br>deposits|
|Minimumcapitalfor<br>new banks|USS 13.3m for<br> <br>commercialandUS$ 6.6mfor specialized<br>bank|INo explicit limit<br>except that it should<br>be proportional to<br>the size of<br>anticipated<br>activities.|Determined by the<br>central bank|USS 10.0m|USS 3.Sm|
|Limits on ownership|State anda single<br>individual rmy hold<br>more than 25_%_of<br>equity. No restriction<br>oaforeign banks|Maximum<br>ownership is 50%<br>by a single<br>individual or firm.|Nolimiut|Authorization<br>from central bank|No limnits|
|Institution<br>responsible for<br>supervision|State Banking<br>Supervision Agency<br>(SBA) and NBH|National Bank of<br>Poland|State Bank of<br>Czechos!ovakia|National Bank of<br>Bulgaria|National Bank of<br>Rom**a**n ia|
|Standards<br>for loan<br>classification and<br>provisioning|_No,_in preparation|No, in preparation|_No,_in preparation|No, in<br>prepartion|No, in<br>preparmtion|

Source: **Countrica** central bank and banking law acts and World Bank (1992).