The National Bank of Moldova (NBM) has pointed out the Bank Supervision Priorities for 2021.
The NBM draws attention to the fact that the unpredictability of the economic consequences of the COVID-19 pandemic for banks, as well as risk-based supervision, led the National Bank to revise its actions taken in the process of supervising the activities of banks in order to focus mainly on those areas where the biggest risks might arise. After assessing the main risks and problems associated with the activities of banks, the most important areas on which the National Bank will focus in the process of bank supervision for 2021 were identified, both in the field of supervision from the office and in the field of local control. The NBM priorities for 2021 are: I. Credit risk; II. Information and Communication Technology (ICT) Risk; III. Internal Governance, Risk Management and Internal Capital Adequacy Assessment Process (ICAAP); IV. Combating money laundering and terrorist financing; V. Payment systems. The National Bank of Moldova stressed that in the context of the COVID-19 pandemic, credit risk remains a key area of the supervisory process, given the direct impact of the quality of the loan portfolio on the capital of banks. Supervisors will pay particular attention to banking lending practices to ensure that they remain sound and consistent with current regulations and risk profiles. At the same time, taking into account the decisions of the National Bank regarding the benefits provided to banks during the state of emergency in the field of lending, namely the flexibility of payment obligations, without reclassifying loans into more severe risk categories, the supervision process will check the correctness of the application of the provisions of the NBM decisions in the lending process and prudential reporting. The National Bank notes that in 2018-2020, banks have significantly reduced the share of bad loans. However, during the economic crisis, the negative impact on borrowers spreads; therefore the NBM will pay increased attention to assessing banks' practices in identifying, managing, measuring and mitigating credit risk. With regard to the risks associated with information and communication technologies (ICT), the NBM clarified that in the context of the pandemic crisis and the increase in the use of online services, there is a potential for increasing cyber risks for banks or their clients. Taking this into account, in 2021 the National Bank will assess the situation in the ICT sector in banks, how they manage risks in this area. In addition, external ICT oversight will be carried out through a comprehensive set of monitoring and evaluation tools to assess the ICT risks to which licensed banks are exposed. Talking about another priority for this year, related to internal governance, risk management and the internal capital adequacy assessment process (ICAAP), the NBM recalled that, starting from 2019, the supervision and assessment process (SREP) is the main instrument of prudential banking supervision of the NBM, representing a complex process based on the use of professional judgment, risk analysis and anticipatin of problems. It is planned that in 2021 the NBM will continue a more detailed analysis of anti-crisis management and capital planning activities, as well as the use of this process by the Bank's management in decision-making. With regard to another priority - combating money laundering and financing of terrorism - the NBM clarified that in 2021 the necessary measures will be taken to assess the risks of money laundering and terrorist financing and to improve the application of a risk-based approach in the monitoring process for effective compliance with the requirements in the field of prevention and combating money laundering and terrorist financing. In addition, serious efforts will be made to develop the regulatory framework in this area, including to assess the process of establishing business relations remotely, as well as to take the necessary measures to implement the provisions of the new law on the procedure for detecting violations in the field of money laundering and financing of terrorism and the application of sanctions. With regard to the last priority - payment systems - the NBM clarified that monitoring of payment systems and payment services in 2021 will be aimed at improving their security and efficiency in order to increase user confidence in the payment services and payment instruments used. In addition, the NBM will pay special attention to the assessment of existing automated remote maintenance systems; analysis of data provided by payment service providers on the use of payment services and instruments; consideration and settlement of petitions related to the use of payment services and instruments. Monitoring of the emergence of new technologies in the field of payment systems and verification of the introduction of new products and services by payment service providers will also be a priority. The National Bank will ensure the implementation of all measures to comply with the priorities of banking supervision at the expense of its own budget. // 03.03.2021 - InfoMarket.
