The Institute for European Policies and Reforms suggests that the procedure for liquidating Banca de Economii, Banca Sociala and Unibank should be monitored by a creditors committee formed of representatives of the depositors, the Government and the National Bank of Moldova, which would meet monthly, IPN reports.

The recommendation is contained in the analysis “Risks and particularities of the bank liquidation process” that was carried out by the Institute’s experts. The experts say the liquidation of any company implies the calculation of debts and drawing up of a schedule for repaying them as well as the assessment of assets that are to be sold for repaying these debts. The Law on Financial Institutions provides that the selling price of assets is set based on assessment reports.

However, according to experts, there are gaps in the legislation that allow selling a bank’s property at derisory prices. “A conclusive example is the compilation of property assessment reports where the market value is intentionally diminished. Similar frauds were committed when other banks were liquidated. The most recent case is Investprivatbank,” it is said in the analysis.

When the banks are deprived of license, the order to repay the debts to creditors takes effect. First of all, there will be paid the debts to the National Bank and then to the Ministry of Finance, other banks and the Deposit Guarantee Fund. Given the size of debts to these creditors, there is the risk that the depositors will be unable to get back their money.

According to the experts, if the Government’s guarantees are converted into state debt, their share could rise to 40% of the GDP, which would be the highest level since 2004. “In the current conditions, this would mean additional costs of about 2.5 billion lei a year for the budget. For comparison, the interest paid on the state debt in 2014 came to about 590 million lei,” says the analysis.

The Government decided to liquidate the three banks after €1 billion was stolen through their agency.