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Monday, August 20, 2018

NATIONAL BANK OF MOLDOVA: The National Bank of Moldova has set the rates of capital dampers

National Bank of Moldova issued the following announcement on Aug. 2.

The Executive Board of the National Bank of Moldova (NBM) has established the rates for the application of the new macro-prudential instruments adopted by the NBM pursuant to Law No. 202 of 06.10.2017 on the activity of banks and of the Capital Bank Absorbency Regulation approved by the Decision Executive Board of the NBM no.110 of 24.05.2018.

Thus, in addition to the 10% minimum own funds requirement, banks are required to maintain core Tier 1 own funds required to meet the requirements for the capital buffer, the countercyclical buffer, the systemic risk absorber and, where appropriate, , the shock absorber for the company of systemic importance (the shock absorber O-SII) according to the shock absorber rates, approved by the Decisions of the Executive Committee of the NBM no.110 of 24.05.2018 and no.193 of 31.07.2018:

1. the capital conservation buffer shall be equal to 2,5% of the total amount of the bank's exposure to risk;

2. the countercyclical buffer rate for credit exposures located in the Republic of Moldova is equal to 0% of the banks' exposure to risk.

At the same time, banks should ensure adequate records of the rates of the countercyclical buffer applicable to countries where they may have credit exposures;

3.1. the systemic risk absorber rate for exposures located in the Republic of Moldova is equal to 1% of the banks' exposure to risk.

3.2. the rate of the systemic risk silencer for exposures located in the Republic of Moldova shall be increased by 2 percentage points in the case of banks whose capital is directly and / or indirectly owned by more than 50% cumulatively by persons meeting any of the following criteria:

a) they are not entities in the financial sector;

b) are residents of the States / are located in countries where prudential supervision and regulation requirements are not at least equivalent to those applied in the Republic of Moldova, determined by the normative acts of the National Bank of Moldova;

(c) are not subject to supervision by the banking or capital market supervisory authorities of the countries concerned.

For the direct and / or indirect holdings in the capital of the banks owned by the multilateral development banks, determined by the normative acts of the National Bank of Moldova, the criteria listed in point 3.2. will not apply.

4. The rate of the shock absorber for the systemic company (shock absorber O-SII) for banks identified as O-SII type companies in the Republic of Moldova is equal to:

a) 0,75% for BC "MOLDOVA-AGROINDBANK" SA,

b ) 0,50% for BC "VICTORIABANK" SA and BC "Moldindconbank" SA,

c) 0,25% for BC "MOBIASBANC─é - Groupe Societe Generale" SA

Therefore, the capital requirement for banks in the Republic of Moldova will vary between 13.5% and 16.25%, depending on the shareholder structure and the systemic importance of the bank. Previously, the 16% capital requirement applied to all banks.

The decision was made on the basis of analyzes and studies conducted by the Financial Stability Directorate of the NBM aiming at assessing the potential risks to the banking sector. The frequency of revisions to the amortization rate is quarterly - in the case of anticyclic shock absorber for the Republic of Moldova, annual - in the case of the O-SII damper and at least every two years - in the case of the systemic risk absorber.

Original source can be found here.

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National Bank of Moldova

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