The Banking system of the Republic of Moldova consists of the National Bank of Moldova (National Bank) and commercial banks.
Banking activities are regulated by the Law of the Republic of Moldova “On the National Bank” and the Law of the Republic of Moldova “On Financial Institutions”.
The National Bank of Moldova (Moldavian: Banca Naţională a Moldovei) is the central bank of the Republic of Moldova.
The main objective of the National Bank is to achieve and maintain price stability, promote and maintain a market based financial system and support the general economic policy of the state.
The National Bank shall have the following general functions:
a. to formulate and to promote the state monetary and foreign exchange policy;
b. to act as banker and fiscal agent of the State;
c. to conduct economic and monetary analysis and submit proposals to the
Government on the basis of such analysis, and publish the results of such analysis;
d. to license, supervise and regulate the activity of financial institutions;
e. to provide credit facilities to banks;
f. to supervise the system of payments of the Republic and to facilitate efficient
functioning of inter-bank system of payments.
g. to act as the sole issuer of national currency in the Republic;
h) to establish the exchange rate regime of the national currency in consultation with the Government;
i) to hold and manage foreign exchange reserves of the state;
j) to undertake, in the name of the Republic of Moldova, obligations and perform transactions resulting from the participation of the Republic of Moldova in the activity of international public institutions in the banking, credit and monetary areas pursuant to conditions of international agreements;
k) to draw up the state’s balance of payments;
l) to perform foreign exchange regulation on the territory of the Republic of Moldova.
At the moment in the country are licensed and operate 14 banks.
Licensing of banks
Banking activities in Republic of Moldova are subject of licensing.
Banks may conduct the following activities within the issued authorization:
a) receiving deposits (in the form of demand or time deposits etc.) bearing interest or not;
b) extending credit (consumer and mortgage credit, factoring, with or without recourse, financing of commercial transactions, issue of warranties and collateral etc.);
c) borrowing funds, buying and selling for their own account or for account of
customers (excluding underwriting) of:
– money market instruments (checks, bills of exchange and certificate of deposit etc.);
– futures and options relating to debt securities or interest rates;
– interest rate instruments;
– debt securities;
d) providing payment and collection services;
e) issuing and administering means of payment (payment cards, travellers’ checks and bankers’ drafts etc.);
f) money (including foreign currency) broking;
g) financial leasing;
h) providing credit reference services;
i) providing services as a financial agent or consultant;
j) dealing in foreign currencies, including contracts for the future sale of foreign currencies;
k) providing trust services (investment and administration of funds received in trust), safekeeping and administration of securities and other valuables etc.;
l) providing services as an investment portfolio manager or investment adviser;
m) underwriting and distribution of debt and equity securities and dealing in equity securities.
The National Bank has the exclusive right for the issuance of licenses to banks.
Requirements for Banks of the Republic of Moldova
For issuance of licenses to commercial banks, National Bank establishes a number of specific requirements including, the minimum amount subscribed and paid in the bank’s capital are established in the quantum of 100 million lei and mandatory requirements for persons elected or appointed as bank administrator.
Especially, they must meet the criteria established by National Bank regarding qualifications, experience, reputation in business circles, must be free of any legal proceedings and evidence of financial and administrative problems at previous work, financial fraud, tax avoidance etc.
Such persons must receive the confirmation of the National Bank prior starting to act as administrators.
Banks with Foreign Participation
Foreign banks may open their representation offices and subsidiaries in the Republic of Moldova with consent of the National Bank. Branches of foreign banks must be licensed by the National Bank.
All the requirements for domestic banks are also applicable for banks with foreign participation. However, to obtain a license, a foreign bank must additionally meet the following conditions:
a) the foreign bank is authorized to engage in the business of receiving money deposits or other repayable funds in the foreign country where its head office is located;
b) the competent foreign authorities that supervise the financial activities at the head office of the foreign bank concerned have given their written consent to the granting of such license;
c) the National Bank determines that the foreign bank is adequately supervised on a consolidated basis by such foreign authorities.
The license concerning a branch office or subsidiary of a foreign bank shall be applied for by the foreign bank as shall be prescribed by the National Bank regulations.
Liquidation and Re-Organization of Banks
The bank may be liquidated voluntarily – on the basis of decisions taken by the shareholders and forced – in the case of revocation of the bank’s license.
The reorganization or sale of substantially all the assets of a bank shall require the prior written authorization of the National Bank. The bank or banks established following merging or decomposition shall start the activity only if having received the authorization of the National Bank.
Banking secrecy is any information about the person, goods, activity, business, personal or business relations of the bank, customers’ accounts, (balances, turnovers, performed operations), the customers transactions, and other information about the customers, which became known to the bank.
Information that is considered banking secrecy shall be provided by the bank only in accordance with the provisions of the law to the extent that providing such information is justified by the purpose for which is requested.
The above is intended to provide a brief guide only. It is essential that appropriate professional advice is obtained. Our office will be glad to assist you in this respect. Please do not hesitate to contact us.