Moldova aligns bank recovery rules with EU crisis management standards

Bank recovery legislation is being harmonized with European standards

Moldova will introduce new mechanisms for managing banking crises and establish a minimum requirement for own funds and eligible liabilities (MREL) that banks and certain investment companies must meet.

The new provisions have been incorporated into the amendments to the Law on Bank Resolution, which is intended to bring national legislation into line with the updated EU Directive 2014/59/EU (BRRD). The document was drafted by the Ministry of Finance and the National Bank of Moldova.

In addition to banks, the law will apply to investment companies, financial holding companies, mixed financial holding companies, financial institutions that are part of banking groups, as well as branches of credit institutions and investment companies from third countries operating in Moldova.

New Crisis Preparedness System

A new system for preparing for potential crises is being introduced. Thus, credit institutions and banking groups will be required to develop and continuously update recovery plans containing action scenarios in the event of a deterioration in their financial position.

At the same time, the National Bank is required to identify and remove obstacles to resolution, coordinate early intervention measures, appoint temporary administrators, and cooperate with European banking supervisory authorities.

Systemically important banks will prepare individual recovery and resolution plans, while banking groups will prepare consolidated plans. They will coordinate these plans with the supervisory authorities of other countries and the European Banking Authority.

In addition, the draft law allocates powers among national regulators. Currently, the National Bank of Moldova (NBM) serves as the resolution authority, but once the law is adopted, the National Commission for the Financial Market will also assume these functions. At the same time, the National Bank will retain its authority over banks and banking groups, while the National Commission for Financial Markets (NCFM) will become the resolution authority for investment firms, their branches, and groups.

The bill will take effect one year after its publication, but a transition period is provided for most of its provisions. Moldova is scheduled to fully comply with MREL requirements by December 31, 2035.