Finances

BANKING AND ECONOMIC FORUM HELD IN CHISINAU

16 november, 2018

A representative banking forum on the topic "The Republic of Moldova: Bank Trends and Economy Development" has taken place in Chisinau on Thursday. It was organized by the Moldovan Bankers' League in partnership with the European Fund for Southeast Europe (EFSE) EU4Business.

Representatives of the Moldova's bank community, business circles and state institutions, as well as foreign financial experts discussed the evolution of bank development given the considerably increased demands of regulating bodies after the 2008 global financial crisis.

Statements were made at the forum that great help in overcoming the 2008 crisis came from countries, which in difficult time provided resources for capitalizing financial institutions and preserving their liquidity. In a whole number of large European banks there are talks about a new financial crisis, which most likely will show up already in 2020.

"However, we cannot talk about where it comes from and how it may affect banks and the banking sector in general", said Secretary General of the Central and Eastern Europe Bank Association Istvan Lengyel.

He maintains that not only financial institutions, but regulators are also responsible for crises in banks. This is why the central banks' regulations and policies for commercial banks have been considerably toughened lately.

According to him, banks are closely engaged in the fulfillment of recommendations of the Basel-3, which contains requirements on over 1 thousand pages. Besides, currently there are talks about new regulations, which will be reflected in Basel-4.

At the forum it was said that due to new requirements on observing the risks, the banks register a trend of considerable decline of profitability, including due to the fact that banks are forced to spend huge money to investments in IT, developing electronic sphere.

Researches show that 60-70% of bank investments for developing this sphere concern the fulfillment of new requirements of the regulated bodies and only 20-30% - to direct business development. Banks face an intractable dilemma: on one hand, they should raise the crediting to the real sector of economy, while on the other hand - to strictly meet the growing requirements to risks of such financing of regulators. In this situation, international experts recommend to bank managers and shareholders to choose such a model of business, which would first of all meet quality corporate management.

"Bank managers should finance only businesses they completely understand and agree with, but not the one they doubt", experts maintain.

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