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Banks in Moldova Meet Basel III Lending Standards

Chisinau, March 2023 - The banks in Moldova have successfully met the requirements of the Basel III framework regarding lending standards, according to data from the National Bank of Moldova (BNM).

Capital Adequacy

In 2022, the indicator of capital adequacy at risk exceeded 12%, with OTP Bank reporting a rate of 18.87%. The highest rate of total own funds was recorded by Eximbank in 2018, at 62.24%.

Basel III Framework

The Basel III framework introduces significant changes to the way liquidity needs are determined, involving two measurement models:

  • Liquidity Coverage Ratio (LCR): requires banks to hold adequate reserves of liquid assets to enable them to face potential imbalances between inflows and outflows of liquidity in times of crisis within a 30-day interval.
  • Net Stable Funding Ratio (NSFR): monitors credit risk on various time horizons, including daily, and limits excessive dependence on short-term interbank funding, encouraging a better assessment of financing risks.

Liquidity Requirements

According to the data, banks in Moldova have consistently met the regulatory limits for liquidity requirements (Principles I and II) since 2008.

  • Current liquidity varied between 20-40% from 2008 to 2013.
  • In 2014, due to three problematic banks, the current liquidity indicator decreased to 22.5%, but starting from 2015, it surpassed 40% and peaked at 55.5% in 2017, maintaining a level of around 50% until 2021.

Implementation of Basel III

Starting from January 2022, Principle II was replaced by the Liquidity Coverage Ratio (LCR) ≥ 100%, which reached 267.85% in 2022.

  • To harmonize Moldovan legislation with European standards, Principle III - Liquidity on maturity bands (>1) was implemented from 2016 onwards.
  • This principle aimed to fill the gaps in BNM’s normative acts regarding liquidity indicators, as operations had different maturities and were often uncertain, making it difficult to correlate liabilities and assets.

Data Source

The data is based on statistics from the official website of the National Bank of Moldova (www.bnm.md, 2023).