Moldova’s legislation on rehabilitation of banks and banking resolution will be harmonized with the EU legislation
This is stipulated by a draft of the relevant law aimed at strengthening the stability of Moldova's financial system, passed by the parliament in the first reading. It refers to the amendment of some normative acts on aspects related to the banks' recovery and banking resolution. The draft law was elaborated by the National Bank of Moldova (NBM), with the participation of experts from the World Bank and consulted with the IMF. The document is aimed at strengthening the banks' capacity to act in case a banking institution experiences serious difficulties. The draft law refers to the instrument of internal recapitalization, which aims to ensure that banks have sufficient potential to absorb losses and recapitalize. At the same time, the legislative initiative specifies the conditions of financing within the framework of the application of resolution instruments - at the expense of the Bank Resolution Fund and the Deposit Guarantee Fund. Accordingly, the authors propose to supplement the legislation on bank rehabilitation and bank resolution with two separate concepts - “debts that may be subject to internal recapitalization” and “eligible debts”. In addition, the document grants a number of additional powers to the National Bank as a resolution authority. The institution will be able to prohibit banks from distributing their own funds under certain conditions. Thus, a new benchmark will be introduced - the maximum amount to be distributed. It will be calculated by the NBM. Another right is related to the suspension of payment or delivery obligations under any contract to which the bank is a party, under certain specific conditions, at a stage prior to the adoption of resolution measures. According to the authors, this will improve the effectiveness of the application of resolution instruments. // 15.11.2024 - InfoMarket.
