Moldova Financial Sector Assessment Program : Corporate Governance Review of the Moldovan Banking Sector

The banking sector in Moldova is in the midst of structural changes with worrisome corporate governance issues at the core. Corporate governance is at the center of a stable and profitable banking sector which is essential to support economic growt...

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Bibliographic Details
Main Author:	World Bank
Format:	Report
Language:	English en_US
Published:	Washington, DC 2015
Subjects:	EXTERNAL AUDITORS CAPITAL MARKETS DEPOSIT REGULATORY FRAMEWORK OPERATIONAL RISK BORROWER ACCOUNTING CUSTOMER DEPOSITS LIQUIDATION MONEY LAUNDERING EXPOSURES FINANCIAL SECTORS CONFLICT OF INTEREST FLOW OF FUNDS BANKING INDUSTRY BANK OFFICE INTEREST LAWS GOVERNANCE PRACTICE INDUSTRY INTEREST RATE PROPERTY RIGHTS EXCHANGE BANKING SYSTEM STRATEGIES LIQUIDITY SERVICES DISCLOSURE REQUIREMENTS PORTFOLIO CREDIT RISK MANAGEMENT REGULATOR CREDIT EXPOSURES CONNECTED LENDING BORROWERS ACCRUALS TAX SAVING PRIVATE PENSION PENSION AUDITS MARKET PARTICIPANTS JURISDICTIONS DEPOSIT RATES INTERNATIONAL FINANCE PUBLIC POLICY SAVINGS LOCAL BANKS CONFLICT OF INTERESTS FINANCIAL INSTITUTION CLIENT COUNTRIES OWNERSHIP STRUCTURES ECONOMIC CRISES COMMERCIAL BANK DEBTS PRODUCTIVITY CREDIT RISKS TRANSFERS CRITERIA DOMESTIC BANKS FINANCIAL INSTITUTIONS MARKETS DEBT FINANCIAL CRISES LEGISLATION CORPORATE GOVERNANCE FRAMEWORK PRIVATE SECTOR DEVELOPMENT MANAGEMENT OVERSIGHT SHAREHOLDERS’ RIGHTS LOANS ENTERPRISES GROSS DOMESTIC PRODUCT PENSION FUNDS FINANCIAL SYSTEM LEGAL FRAMEWORK FINANCE INTEREST RATE RISKS INFRASTRUCTURE BANKING SECTOR BANKS JUDICIAL SYSTEM RATING AGENCIES MARKET ECONOMY EMERGING MARKETS OPERATIONAL RISKS EQUITY INVESTORS FOREIGN NATIONALS DEPOSITORY SYSTEMIC RISK ACCOUNTABILITY BAD DEBTS BANK OPERATIONS WAGES INTERNATIONAL BANKING OWNERSHIP STRUCTURE AUDITORS TRANSPARENCY FINANCIAL STABILITY MARKET CONDITIONS CREDIT CONTROL CORPORATE GOVERNANCE REFORMS VALUE BANK CREDIT CONFLICTS OF INTEREST GOVERNANCE PRACTICES FINANCIAL PERFORMANCE INTERNAL CONTROLS PROPERTY FOREIGN BANKS SHARES SUPERVISORY AGENCIES RAPID EXPANSION REGULATORY BODIES FOREIGN EXCHANGE MINORITY SHAREHOLDERS SMALL COUNTRY SECURITIES SUBSIDIARY ASSET GROWTH BANK ACCOUNTS RISK FACTORS PROFITABILITY CREDIT RISK GOVERNANCE SHAREHOLDERS ENFORCEMENT INSURANCE MICROFINANCE INCENTIVE STRUCTURES THE NATIONAL BANK OF MOLDOVA INTERESTS FINANCIAL MARKET STOCK EXCHANGE NATIONAL BANK INVESTMENT RISK COMMERCIAL BANKS SHARE OVERSIGHT PROCESSES AFFILIATE NONBANK FINANCIAL INSTITUTIONS COLLATERAL BALANCE SHEETS CREDIT QUALITY FINANCE CORPORATION FINANCIAL MARKETS INTERNAL CONTROL ACCOUNTING PROCEDURES BANK CUSTOMERS RISK TAKING BANKING REGULATORS REVENUE INVESTMENTS RISK MANAGEMENT LENDING COMMUNICATION SHAREHOLDER ACTIONS SHAREHOLDER AUDIT BANKING SUPERVISION CUSTOMERS STRONG GOVERNANCE FINANCIAL SECTOR LIQUID ASSETS AUDITING CONSOLIDATION CORPORATE GOVERNANCE COMPETITION
Online Access:	http://documents.worldbank.org/curated/en/2015/10/25218534/moldova-financial-sector-assessment-program http://hdl.handle.net/10986/22910

Description
Summary:	The banking sector in Moldova is in the midst of structural changes with worrisome corporate governance issues at the core. Corporate governance is at the center of a stable and profitable banking sector which is essential to support economic growth and productivity. However, the banking system in Moldova suffers from critical governance weaknesses which the National Bank of Moldova (NBM) has been unable to effectively address. The illicit schemes used to gain control of the majority of the banking sector’s assets have involved raider attacks by unidentified individuals whose subsequent, de facto, related party transactions have caused the deterioration of bank balance sheets. The recent changes in controlling ownership have resulted in nontransparent appointments of board members and Chief Executive Officers (CEOs). This has led to substantial blurring of the roles and responsibilities of ownership, oversight (board), and management, resulting in no clear accountability. The legal and institutional corporate governance framework in Moldova is weak. Sound corporate governance is first and foremost dependent upon the motivations of owners and the resultant business culture they instill through their selection and appointment of board members. In Moldova, a few actors control the majority of the banking system. They demonstrate dubious motives by acting obscurely through others and through companies to own and control important banks. These actions create a system that is held captive to serve the needs and pleasures of a few at the expense of many: the depositors, general public, and ultimately, the taxpayer.

Moldova Financial Sector Assessment Program : Corporate Governance Review of the Moldovan Banking Sector

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