Municipal income from bank shares

Abstract

The text deals with the possibility for municipalities to profit from bank shares. It analyzes the restrictions on the acquisition of bank shares that arise from the Banking Law and the possibility of paying dividends, which is regulated by the Commercial Code. It was shown that municipalities should engage cautiously in the acquisition of large blocks of bank shares, since in a situation of need for quick recovery of funds, their sale will be hampered by the need to obtain permission from the Financial Supervision Commission. In addition, despite the fact that the regulations allow it, municipalities should not create a municipal bank, as such a bank would operate on the same terms as other banks, without the ability to offer better banking products for municipalities.