IMF mission says BEM situation requires urgent attention

The International Monetary Fund's (IMF) assessment mission has found that, while the core of the banking sector in Moldova remains sound, there are problems related to declining asset quality and troubles at the majority state-owned Banca de Economii (BEM), which requires the authorities' urgent attention. As the IMF said in a press release, The mission recommends strengthening the BEM’s action plan and providing more active support by the Government and the Financial Stability Committee to facilitate the bank’s turnaround. Meanwhile, the National Bank should continue close monitoring of the banks with rising non-performing loans to ensure adequate provisioning and unwinding of large exposures. The mission also urges the authorities to overcome delays with improving the transparency of the banking system. Adoption of the legal amendments seeking full transparency and disclosure of ultimate controllers in banks is imperative in the face of emerging financial sector risks and recent non-transparent bank takeover attempts. The new requirements should be also applied to existing shareholders in the course of 2013-14 with a limited transition period. In the summer of 2011, a takeover attempt involving off-shore companies was carried out on Banca de Economii based on court decisions which were later appealed. Prior to the attempt, a number of companies, included state-owned, were requested to withdraw from BEM to weaken the bank.