RESOLUTION OF NATIONAL BANK OF THE REPUBLIC OF MOLDOVA

of May 24, 2018 No. 111

About approval of Regulations about approach to credit risk for banks it agrees standardized approach

Based on Item d) parts (1) Articles 5, parts (1) Articles 11, Item c) parts (1) Articles 27, Item and) Articles 44, Item b) article 46 of the Law on National Bank of Moldova No. 548-XIII of July 21, 1995 (переопубликован: The official monitor of the Republic of Moldova, 2015, No. 297-300, Article 544), with subsequent changes and amendments, Art. 64 and 65 of the Law on activities of banks No. 202 of October 6, 2017 (The official monitor of the Republic of Moldova, 2017, No. 434-439, Article 727), with subsequent changes and amendments, DECIDES: Executive committee of National Bank of Moldova

1. Approve Regulations about approach to credit risk for banks according to the standardized approach according to appendix.

2. The regulations specified in Item 1, become effective 30.07.2018.

3. From the date of entry into force of the regulations specified in Item 1, banks will provide compliance of their activities, including domestic policy and regulations, to its requirements.

Appendix

to the Resolution of Executive committee of National Bank of Moldova of May 24, 2018 No. 111

Regulations about approach to credit risk for banks according to the standardized approach

These regulations are transposition of Article (1) (a), Article 4 (1), (8), (34), (61), (62), (75), (76), (79) - (81), (98), (99), Article 107 (3), Article 111-113 (1) - (3), (6), Article 114 (1), (2), (4), (7), Article 115 (1), (5), Article 116 (1) - (4), Article 117 (1) - (2), Article 118-124 (1), Article 125 (1), (2), Article 126 (1), (2), articles 127, of article 128 (1), (2), Article 130-132 (1), (2), Article 133-135 (1), article 137-141, of article 148 (1) - (3), (5), Article 162 (3) the paragraph 2 (b), Article 178 (1) - (3), (5), articles 208, of article 501 (1) - (3) and appendix I to Regulations No. 575/2013 of the European Parliament and Council of June 26, 2013 about prudential requirements to credit institutions and investment firms, the making change in Regulations (EU) No. 648/2012 (the text with relevance of EEA) published in the Official magazine of the European Union by L 176 of June 27 2013, and with the last amendments made No. 2015/62 delegated by Regulations of the Commission (EU) of October 10, 2014.

Chapter I. Subject, scope

1. These regulations are applied to banks with the location in the Republic of Moldova, to departments of other states in the Republic of Moldova which are licensed by National Bank of Moldova according to the Law on activities of banks No. 202 of October 6, 2017 (further – banks). These regulations are applied both on individual, and at the consolidated level.

2. These regulations determine methodology and conditions which banks shall apply based on the standardized approach, for cost determination taking into account risk of podverzhennost for the purpose of calculation of requirements of own means according to the Regulations about own means of banks and requirements of the capital approved by the Resolution of Executive committee of National Bank of Moldova No. 109/2018 (further - Regulations No. 109/2018).

Chapter II. Concepts and general provisions

3. The concepts used in regulations and determinations matter, provided by the Law on activities of banks No. 202 of October 6, 2017 and other regulations of National Bank of Moldova published for its application. Also for the purpose of these regulations the following concepts are used:

the real estate unit of residential appointment - housing which is occupied by the owner or the resident of its housing, including the site on which it is placed if plot owner is the mortgage debtor;

the real estate unit of commercial appointment – the building, including the site on which it is placed if plot owner is the mortgage debtor, or the isolated room which main destination is implementation of economic activity;

the credits for export supported officially – export financing credits of goods and services for which the official credit agency provides guarantees, insurance or direct financing;

the subject of the public sector – or financed by the central, regional or local authorities and which have accurate warranty agreements and the autonomous organizations managed by the law and which are under public supervision can include the administrative authority of non-commercial nature subordinated to the central, regional, local authorities or those who carries out the same powers, as regional and local authorities, or the non-profit organization, in ownership created;

exposure – asset or off-balance element;

trade financing – the financing (including guarantees) connected with exchange of goods and services by means of financial with exact repayment period generally less than one year without automatic refinancing;

Trade financing as it is stated above, is usually performed without firm commitments and requires that documentation of the transaction proved each requirement of borrowing, in case of the existing possibility of refusal in financing in case of the doubt connected with solvency or truthfulness of documentation confirming the transaction. In case of trade financing return of the corresponding podverzhennost in general is independent of the debtor, and funds in exchange come from the amounts received at importers or come from sales of goods, being subject of the transaction;

speculative financing of real estate – the credits issued for the purpose of receipt of the parcels of land in connection with real estate or developments or constructions on them, or in connection with this property, with intention of resale with profit;

the organization of collective investment (OCI) – the organization of collective investment into securities (OKITsB) of the Republic of Moldova and foreign state according to article 6 of the Law on the capital market No. 171 of July 11, 2012 (The official monitor of the Republic of Moldova, 2012, No. 193-197, Article 665); the fund of alternate investments (FAI) of foreign state according to Item 78 of these regulations;

line item from securitization – exposure before securitization;

securitization – the transaction or the scheme through which the credit risk connected with exposure or portfolio of podverzhennost is divided into tranches, having the following characteristics:

1) payments within the transaction or the scheme depend on effectiveness of exposure or portfolio of podverzhennost;

2) the subordinirovaniye of trenches determines procedure for distribution of losses during life of the transaction or the scheme;

society of external credit evaluation (ECAI) - external credit assesment institution:

1) the legal entity, whose activities includes assignment on professional basis of credit ratings (the agency of credit rating) which is registered or certified according to the national legal system of the corresponding foreign state or

2) the Central bank of foreign state which based on the national legal system assigns credit scores;

the appointed ECAI – the society of external credit evaluation appointed by bank;

tranche – for the purpose of securitization segment of the credit risk established on contractual basis, connected with exposure or number of podverzhennost in which the line item of segment attracts risk of loss from the credit more or less line item in equal amount of any other such segment, without the protection of the credit provided by the third parties directly to owners of line items of segment or other segments;

the transaction of marginal crediting – the transaction in which the bank issues the credit in connection with acquisition, sale or the biddings of securities. Transactions of marginal crediting do not include other credits which are covered with real guarantees in the form of securities;

market value – for the purpose of real estate means estimated value which can be paid instead of goods on the date of assessment between the interested buyer and the seller within the bargain concluded in objective conditions and conditions of the normal competition in which each party is effective with consciousness of case is careful also without oppressions.

4. According to these regulations of exposure, expressed and financed in the same currency, mean exposure, expressed in certain currency for which the bank also has the corresponding liabilities in the same currency.

Chapter III. General principles

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