Amendments to Banking Regulations in Moldova Enhance Stability and Soundness

Introduction

The National Bank of Moldova has introduced a series of amendments to various regulations in the banking sector. These updates aim to enhance the stability and soundness of the banking system by improving risk management, increasing transparency, and aligning regulations with international standards.

Key Amendments

1. Regulation on Investments in Real Estate of Banks

• Alignment with International Standards: The regulation has been updated to reflect changes in the law and align with international standards.
• Improved Governance: This update aims to ensure that banks invest in real estate in a responsible and transparent manner.

2. Regulation on Banks’ Transactions with Their Related Parties

• Clarified List of Transactions: The list of transactions with affiliated persons has been revised and clarified to ensure that banks are not considered related parties for certain transactions.
• Improved Risk Management: This update aims to prevent potential conflicts of interest and improve risk management in the banking sector.

3. Regulation on Treatment of Credit Risk for Banks Under the Standardised Approach

• Updated List of ECAIs: The regulation has been updated to reflect changes in the list of external credit assessment institutions (ECAIs) and countries with equivalent regulatory regimes.
• Improved Credit Risk Management: This update aims to enhance the accuracy of credit risk assessments and improve the overall stability of the banking sector.

4. Regulation on Requirements Regarding the Members of the Governing Body of the Bank, etc.

• Increased Transparency: The regulation has been amended to require the National Bank of Moldova to conduct an interview with members of the governing body and increase transparency in the evaluation process for key positions.
• Improved Governance: This update aims to ensure that banks have a well-qualified and experienced leadership team.

5. Regulation on Banking Activity Management Framework

• Secondary Regulatory Framework: The regulation has been updated to create a secondary regulatory framework for managing excessive leverage risk.
• Bank Recovery Plans: Provisions related to bank recovery plans have been included in the regulation.
• Improved Risk Management: This update aims to prevent potential financial instability and improve the overall stability of the banking sector.

6. Regulation on Audit of Financial Statements and Audit for other Purposes of Banks

• Exclusion of Limitation: The regulation has been amended to exclude the provision limiting audit companies that conduct annual financial statements audits from concluding other contracts with the bank.
• Improved Transparency: This update aims to increase transparency in the auditing process and ensure that banks have a robust internal control system.

Conclusion

The amendments to banking regulations in Moldova aim to enhance the stability and soundness of the banking sector by improving risk management, increasing transparency, and aligning regulations with international standards. These updates will help to prevent potential financial instability and promote a healthy and competitive banking sector.