Reports

MOLDOVAN SAVINGS BANK CASE SERVES AS GLARING EXAMPLE OF NATIONAL ECONOMY’S DYSFUNCTION

23 january, 2014
MOLDOVAN SAVINGS BANK CASE SERVES AS GLARING EXAMPLE OF NATIONAL ECONOMY’S DYSFUNCTION

The case of Banca de Economii (BEM) [Moldovan Savings Bank] is a glaring example of the malfunction of the national economy, think experts of the Independent Analytical Center Expert-Grup, who presented the research ‘Epopee of Banca de Economii, or the Collapse of a Giant’ at a news conference at Infotag today.  

The author of the research Alexandru Fala said that the BEM problems had been triggered by several key-factors, among which the inefficient judicial system, the poor management of the state property and the low level of transparency in the banking sector.     

“Moreover, other factors that have led to these problems are the raider attacks, the delayed and contradictory actions of the state institution, the unjustified crediting, and finally, the government’s refusal to obtain the controlling equity stake at the BEM. This way, over the past five years these factors have brought the national financial giant to the brink of collapse,” experts think.

In his opinion, before the 2009 crisis, the bank had a good financial situation, in spite of some drawbacks, related to the issuance of bad loans.

“Several fraudulent schemes of crediting were used, which have led to the worsening of the financial situation at BEM. Moreover, this situation aggravated when the state obliged the Savings Bank to pay off the debts and bonds of the Investprivatbank that had gone bankrupt and to return to its depositors over 600 million lei. This was followed by an increase of its authorized capital, through an additional issuance of shares in 2010. In the result of this issuance, the market price of the state’s parcel at BEM dropped by 131.7-197.6 million lei,” said Fala.

The expert said that the bank could have been rescued in 2012-2013 though its capitalization, efficient management and privatization.  

“It that period, about 100 million lei would be enough for the capitalization of the bank. This sum would not have been a problem for the state, which had the possibility to borrow this money on the internal market, under an interest rate of 7%. In this case, the state could have preserved its control over the bank,” said Fala.  

He said that the ill-considered political decisions and the disinterested activities of the state institutions in BEM’s case, had inflicted damages of at least 320 million lei to the state.

“Moreover, the things that happened at the BEM over the past years have distanced Moldova from its rapprochement with the EU,” he said.

The author of the research also said that in order to enhance the management of the state shares, the central authorities should change their approach towards the de-nationalization of the public property, to ensure transparency in the privatization process, to initiate investigations on judges and public officials’ involvement in raider attacks and to compile a ‘black list’ of judges and officials who had okayed any doubtful deals.   

Executive director of Expert-Group, Adrian Lupusor said that the situation of Moldovan Savings Bank may create a dangerous precedent for other banks, as this is a wide problem that covers the entire banking system of the country.

Infotag’s dossier: In early 2013, the overall cost of bad loans at the BEM was assessed at 1.3 billion lei. Former President of Banca de Economii, Grigore Gacichevici was charged with fraudulent issuance of credits. In the course of an additional issuance of BEM shares on August 29, 2013, in which the Government did not participate, the state’s equity stake at the bank shrunk from the controlling parcel of 56% to a blocking majority of 33.3%.  

 

Add comment

  • name
  • e-mail
  • message
Thanks!
Your comment will be published after administrator approval.