The first quarter of 2017 can be characterized by the continuation of the implementation of reforms launched in 2016 in the financial sector. The memorandum with the IMF was a key factor that served as a catalyst. However, the financial system continues to face difficulties related to bank ownership, including lack of buyers for the shareholdings exhibited for sale and insufficient competition in the banking sector, with pronounced concentration tendencies. The conclusions were formulated by experts of the independent think tank “Expert-Grup”.

In a news conference at IPN, economist Eugen Giletski said that last February “Expert-Grup” presented a plan for strengthening the banking sector, which centered on seven reform directions. The monitoring of the implementation of the relevant recommendations by the authorities shows that moderate progress was made. Despite positive accomplishments in strengthening the independence of the National Bank of Moldova and in making bank managers more responsible and the attempts to improve corporate governance in banks, many of the recommendations concerning bank ownership and strengthening of surveillance capacities formulated over a year ago remain topical.

Eugen Giletski noted that the preparation of the sector for assuming the Basel III (main prudential indicators) principles is one of the important results achieved in the monitored period. Though the switchover to the Basel III standards is aimed at improving the activity and surveillance framework of the banking sector, this sector remains exposed to risks owing to numerous shortcomings, such as the poor regulation of the conditions of releasing loans under Government guarantee by the central bank to banks in difficulty, the possibility of dismissing members of the central bank’s administration bodies by a simple majority of votes of MP and the delay in reforming the National Committee for Financial Stability.

To avoid the issuing of guarantees without coverage or a clear plan for using the resources in the future, “Expert-Grup” recommends toughening up the conditions for issuing state guarantees for loans provided by the National Bank to banks in difficulty, finishing the reformation of the National Committee for Financial Stability, especially by clarifying the mandate of this entity, and ensuring the transparency of the whole banking sector, by closely following the plan of action worked out in coordination with the IMF. Thus, it is crucial for all the local banks to ensure ownership transparency by the end of this August. This implies the identification of the final beneficiaries of significant shareholdings and banning of shareholders that do not meet the central bank’s requirements from owning such holdings.