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Moldovan Banks: A Tale of Two Titans
A new report reveals that the largest two banks in Moldova hold over half of the country’s assets and deposits, while the smallest four banks account for less than 10% of both categories.
According to data from the National Bank of Moldova, the top two banks, which are foreign-owned, have amassed a significant share of the market. Meanwhile, the bottom four banks struggle to make an impact, with their combined assets and deposits totaling just 8%.
Market Dominance
- The largest two banks hold over half of the country’s assets and deposits
- The smallest four banks account for less than 10% of both categories
Growing Presence of Foreign Banks
Foreign shareholders from European countries such as Bulgaria, Romania, and Hungary now hold a significant stake in many local banks.
Savings and Credit Associations on the Rise
In contrast to the dominance of a few large banks, savings and credit associations (SCAs) are rapidly expanding their share of the market. While they account for just 1% of total assets, Category B SCAs have grown significantly over the past decade, with assets increasing from 0.4% to 5%.
Other Financial Corporations: A Small but Growing Presence
The sector of other financial corporations (OFCs), which includes microfinance and leasing companies, is relatively small in Moldova. However, NBCOs, a type of OFC, have seen rapid growth until recently, with the largest 15 institutions accounting for 80% of total assets.
Insurance Companies: A Low-Key Presence
Moldovan insurance companies are largely domestic-owned, with only two foreign-backed firms operating in the market. The product range and penetration rates of these companies are low compared to European standards.
Macrofinancial Vulnerabilities Abound
The Moldovan financial sector is exposed to several macrofinancial vulnerabilities, including real-financial, fiscal-financial, external-financial, and intra-financial sector linkages. These risks could pose a threat to the stability of the financial system, despite the strong capitalization of credit institutions.
Conclusion
While the largest two banks in Moldova hold a significant share of the market, the country’s banking sector is characterized by a high degree of concentration and vulnerability.