The terms and conditions of the open tender are always published on the DGF's website immediately after the provisional administration is introduced and the DGF takes control over the bank declared insolvent. All potential bidders also receive a letter from the DGF inviting them to participate in the tender. The DGF checks the interested parties for compliance with the terms of the open tender and admits only persons unrelated to the bank (shareholders and top management of the bank and their relatives are excluded from the tender).
After signing a non-disclosure agreement, interested parties get access to information about the insolvent bank to conduct due diligence, evaluate the bank's assets and prepare a tender offer.
Access to the data is provided in a secure virtual data room and in a special room in the bank's office. Potential bidders can review the insolvent institution's financial and operational data, transaction information, and underlying legal documents. The DGF also facilitates their ability to inspect property owned by the bank or pledged as collateral.
Investor associations
Legislation allows several persons to pool their resources to acquire insolvent institutions or bridge banks created from them. Such pre-qualified persons may submit a joint bid. This mechanism is intended to facilitate the resolution of banks requiring substantial capital investments. Each participant of the investor association, if it wins the tender, acquires a share in the share capital of the insolvent or bridge bank in accordance with the submitted tender offer. All members of the investors' association must be pre-qualified persons.
Evaluation of bids
Bids must be submitted and guarantee payment paid within the time limit established by the terms of the open tender. The DGF evaluates the bids received from the bidders by comparing the value of the bank's assets determined by the DGF with the price of the same assets offered by the bidder. The procedure for submitting bids and templates of documents shall be provided in the terms and conditions of the open tender for each bank. The DGF does not give any preference to certain resolution options or bidders.
To determine the winner of the open tender, the bids for the price for assets lots are evaluated and compared with each other and with the appraised value of these assets. The higher the price offered, the lower will be the DGF's net settlement costs and the more of the bank's liabilities will be repaid. In accordance with the Law, the winner's bid must be the least costly for the DGF, i.e., it must correspond to the largest amount of the bank's liabilities to be repaid.
Bidders may submit several bids for any of the proposed methods of market withdrawal, including several bids for the same assets on different terms. The DGF considers each bid separately and compares it with the expected net costs of the bank's liquidation.
If the DGF has not received any bids, the DGF initiates the revocation of the bank's license and the start of the bank's liquidation. Otherwise, the bidder who submitted the best bid is recognized as the winner of the tender. The DGF enters into relevant agreements with the winner of the tender and takes all measures to implement the proposed resolution tool.