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Ensuring Prudent Management: Assessing Suitability of Acquirers and Financial Soundness of Proposed Acquisitions
The National Bank of Moldova (NBM) has established measures to ensure that banks are managed in a sound and prudent manner, particularly when it comes to proposed acquisitions. To achieve this goal, the NBM assesses the suitability of proposed acquirers and the financial soundness of proposed acquisitions based on several key criteria.
Reputation of Proposed Acquirer
The first criterion is the reputation of the proposed acquirer, including their ultimate beneficial owners. The acquirer must demonstrate an impeccable reputation, professional competence, and compliance with applicable standards. This assessment takes into account the influence the acquirer will have over the target undertaking and applies regardless of the size of the qualifying holding.
Financial Soundness
The second criterion is the financial soundness of the proposed acquirer. The NBM evaluates whether the acquirer has sufficient financial resources to ensure the prudent management of the target undertaking for at least three years.
Liquidity Requirements
In addition to these criteria, the NBM also assesses the liquidity requirements of the proposed acquisition. Banks must maintain adequate liquidity provisions to tackle eventual imbalances between liquidity inflows and outflows in case of crisis for a 30-day period.
Implementation of Basel III Framework
Moldova has implemented the Basel III framework, leapfrogging Basel II after having put Basel I in place. The country’s Banking Law transposes the Basel III regulations, aligning with international principles and standards. The NBM has approved several regulations related to bank’s own funds and capital requirements, as well as credit risk treatment.
Conclusion
The National Bank of Moldova is committed to ensuring that banks are managed in a sound and prudent manner, particularly when it comes to proposed acquisitions. By assessing the suitability of proposed acquirers and the financial soundness of proposed acquisitions, the NBM aims to maintain stability in the banking sector and protect the interests of depositors.