With highs and lows, 2017 is nearing its end. It is a good time for conclusions. On this occasion, IPN has gathered good thought from all over the globe, this time only good thoughts, from decision-makers and from those on the receiving end of these decisions. What good has come of 2017? This is the question we posed to the people who have accepted to join us in our pursuit of the good in our surroundings and in the events that affect us. Although many things do not follow our wishes, winners are the people and societies that learn to see challenges and lesser things as extra opportunities to get involved and make things better. For each of the topics we approach, we provide rankings that reflect the opinions of those who developed them. Read further for the good things 2017 has brought to the banking sector.
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Top 5 from the National Bank of Moldova (BNM):

1. The Law on banking activity has been adopted, a foundation for Basel III Capital Requirements.

“This document is only a first step in raising national banking legislation to international standards and principles, which is to be followed by multiple amendments in banking activity oversight and regulation, aiming to strengthen the local banking sector.”

2. The volume of new loans, in 11 months of 2017, has grown by 8,7% compared to the same period last year.

“This is especially due to a 21.9% increase in loans in national currency. Individual loans in lei have grown by 34.4%, and business loans have grown by 15.5%. This increase was determined by a decrease in interest rates for loans in lei, by an average of 4.1% (from 14.5% in 2016 to 10.4% in 2017).”

3. Approval of new regulations for the improvement of market conduct and the strengthening of banks’ internal management framework.

“These provisions will contribute to the optimization of corporate governance, of internal control mechanisms and risk management methods.”

4. Measures were taken to increase banks’ preparedness for crisis scenarios

“This happened as part of the implementation of the Law on bank recovery and resolution. Under these circumstances, all banks have prepared recovery plans, which will allow them to apply swift and proper methods towards extinguishing imminent risks.”

5. Further activities to assess the quality of bank shareholders, which was launched in 2016.

“This will ensure a solid and transparent structure for local bank owners, as well as strengthen corporate bank governance.

Top 5 from Independent Think Tank “Expert-Grup”:

1. New legislation framework on bank oversight.

“One of the most important actions in the banking reform is the implementation of Basel III requirements for the licensing, regulation, and oversight of banks. Throughout 2017, the Law on banking activity has been adopted - a legislative act that will completely substitute the provisions of the Law on financial institutions. It aims at strengthening the legislative framework that applies to banks, not only in capital oversight, risk management, or asset quality, but goes deeper into aspects of corporate governance, sanctions, and management and shareholder quality. Through instruments of oversight and accountability, the Law aims to prevent new banking fraud or manipulations. However, no matter how robust a Law is, there is no guarantee that the triggers of the 2014-2015 fraud and ulterior crisis will not occur again. There must be real willingness to respect and apply the law.”

2. Maintained financial stability

“Although commercial banks are still under the effects of the crisis, both in terms of image and financial situation, firm reform actions by the National Bank of Moldova have halted the downward trend, and have even managed to partially rehabilitate credibility in front of foreign investors. Furthermore, loan interest rates have fallen from 13% to 10% in lei, and from 5.6% to 4.8% in foreign currency, which can stimulate the economy towards new investment projects.”

3. A legal framework for the attraction of strategic foreign investors to local banks and insurance companies that are under special oversight or management.

“Taking into account the state of shareholders at several banks and insurance companies, and striving to unblock the process of separating the shares up for sale, a series of amendments to banking and insurance legislation have been developed and submitted to the Parliament. Additions to the Law on financial institutions, the Law on the capital market, or the Law on insurances, all aim at strengthening of National Financial Market Committee provisions concerning risk management in issuing and selling stocks without taking into account the quality of shareholders. Thus, a coherent procedure will be applied for new shares, which specifically determines the criteria for setting share prices, sale terms, and extension requirements, as well as compensation plans for ex-holders.”

4. Foreign banks have expressed interest in participating at the restructuring of the local banking sector.

“Even if the process of raising the transparency on certain banks’ property statuses is moving along slowly, a series of positive signals from strategic investors have come forward. Thus, at the end of November, the Romanian Transilvania Bank has publicly announced its intention to purchase 100% of Victoriabank’s shares. This transaction has been approved by the BNM, leaving only for the final legal and financial details to be drawn up, aspects typical to such a process. Strategic foreign investors’ entry to the national banking market is a positive aspect for the recovery of the public image of the banking sector, for the implementation of good practices and securing modern financial services, and access for consumers.”

5. Strengthening of oversight on the non-banking financial market.

“The current situation of the banking sector and the trend of switching to non-bank financial loans, especially toward micro-financing and leasing institutions, impose a new approach and vision towards this sector, especially when it comes to regulating excessive risks and consumer protection. In this sense, the role attributed to the National Financial Market Committee is not only to “monitor” the non-banking financial sector, but also to “oversee” it effectively. Hence, with the adoption of the Law on non-banking loan organizations helps standardize regulation and oversight of micro-financing companies and leasing societies, through strengthening certain aspects in corporate governance, liabilities management and risk assumption.”