RESOLUTION OF NATIONAL BANK OF THE REPUBLIC OF MOLDOVA

of May 24, 2018 No. 109

About approval of Regulations about own means of banks and requirements of the capital

Based on the item d) parts (1) the Art. 5, parts (1) Art. 11 and the item c) parts (1) the Art. 27, the item and) Art. 44 of the Law on National Bank of Moldova No. 548-XIII of July 21, 1995 (pereopublikovan: The official monitor of the Republic of Moldova, 2015, Art. No. 297-300, 544), with subsequent changes and amendments, the Art. 60, 61 and 62 Laws on activities of banks No. 202 of October 6, 2017. (The official monitor of the Republic of Moldova, 2017, No. 434-439, of the Art. 727), with subsequent changes and amendments the Executive committee of National Bank of Moldova DECIDES:

1. Approve Regulations about own means of banks and requirements of the capital according to appendix.

2. Consider invalid the Regulations about capital adequacy taking into account risk approved by Administrative board of National Bank of Moldova No. 269 of October 17, 2001. (The official monitor of the Republic of Moldova, 2001, No. 130, the Art. 310) registered in the Ministry of Justice of the Republic of Moldova on May 4, 2010 at No. 749, with subsequent changes and amendments.

3. From the date of entry into force of this resolution, banks will provide compliance of the activities, including domestic policy and regulations to its requirements.

4. Own signed capital and the related accounts of share premium which were qualified as the capital of the 1st level according to requirements of the regulations specified in Item 2, are qualified as elements of the main own means of the first level even if conditions, stipulated in Item 16 specified in Item 1 of regulations, are not carried out.

5. Elements and the related accounts of share premiums which were qualified as the capital 2 levels according to requirements of the regulations specified in Item 2, are qualified as elements of own means of the second level even if conditions, stipulated in Item 97 specified in Item 1 of regulations, are not carried out.

6. The intermediate income gained by bank after entry into force of this resolution will be included in calculation of the main own means of the first level only in the conditions specified in Item 13 of the regulations specified in Item 1.

7. Banks will review elements of own means for the purpose of determination of their compliance to the eligibility criterions established by the regulations specified in Item 1, and, as necessary, within no more than 6 months from the date of entry into force of this resolution, will provide to National Bank of Moldova the plan of step-by-step adjustment of tools which do not correspond to eligibility criterions, approved by council of the bank, but which will not exceed 3 years from the date of entry into force of this resolution.

8. After 3 years from the date of entry into force of this resolution tools which will not correspond to eligibility criterions the established regulations specified in Item 1, will not be switched on in own means.

9. In departure from Item 3 non-compliance by bank, on condition of July 30, 2018 is not considered violation, for the period till July 30, 2019, prudential indicators if these non-compliance follow from determination of size of own means according to provisions of the regulations specified in Item 1. The bank which for date of the introduction of this resolution, does not observe prudential indicators owing to determination of the size of own means according to provisions of the regulations specified in Item 1, within no more than 3 months from the effective date of this resolution represents to National Bank of Moldova the action plan for the period till July 30, 2019 which will include measures for observance of limits of the corresponding prudential indicators.

10. Banks to which as of July 30, 2018 creation of plans of observance of the certain limits carried to the capital which term exceeds on July 30, 2019 was offered will review the conforming plans for their adjustment to the new requirements connected with the limits carried to own means without change of term of implementation of these plans.

11. The situation of Item 9 and 10 is not affected by powers of National Bank of Moldova to apply supervising measures, sanctions and the authorizing measures to the violations registered by bank.

12. Any reference in the regulations of National Bank of Moldova existing on the date of entry into force of this resolution to determination "the aggregate normative capital" or SNK will be considered as the reference to determination "own means", and the reference to determination "the capital of 1 level", "the capital of the first level" will be considered as the reference to determination "the main own means of 1 level".

13. This resolution becomes effective on July 30, 2018.

Approved by the Resolution of Executive committee of National Bank of Moldova of May 24, 2018 No. 109

Regulations about own means of banks and requirements of the capital

These regulations are transposition of provisions:

- Articles 4 (1) the item (102) - (104), the item (107) - (114), the item (117) - (120), the item (122), the item (126), the item (128), the item 25, Art. 26 (1) - (3), the Art. 28, the Art. 30, the Art. 31, Art. 33-39, of Art. 41-48, of Art. 50-75, of Art. 77-79, of the Art. 81, the Art. 82, Art. 84 (1) and (5), Art. 85 (1), the Art. 86, Art. 87 (1), the Art. 88, Art. 92-94 and Art. 99 (1) Regulations No. 575/2013 of the European Parliament and Council of the June 26, 2013 about prudential requirements to credit institutions and investment firms making changes to Regulations (EU) No. 648/2012, of the European Union No. L published in the Official magazine 176 of June 27 2013, changed and added with the delegated Regulations of the Commission (EU) 2015/62 of October 10, 2014;

- Art. 2 - 3, the Art. 7a, the Art. 7b (1), the Art. 8, Art. 9 (1) - (4), Art. 13 - 15a (1) - (2), the Art. 15b - 16 (1), Art. 20-23, the Art. 24a (1), Art. 27 - 31, Art. 33 and the Art. 34a (1), (3), (4), (6) and (7) the delegated Regulations (EU) No. 241/2014 of the Commission of January 7, 2014 about amendment of Regulations (EU) No. 575/2013 of the European Parliament and Council about technical standards of the regulation for own funds in case of organizations published in the Official magazine of the European Union No. L 148/4 of May 20, 2014; the delegated Regulations (EU) No. 2015/923 of the Commission of March 11, 2015 No. 241/2014 making changes to the delegated Regulations (EU) and amendments in Regulations (EU) No. 575/2013 of the European Parliament and Council about technical standards of the regulation for own means in case of organizations published in the Official magazine of the European Union No. L 135 of June 2, 2015.

Chapter I General provisions

1. These regulations regulate methodology of calculation of own means and establish requirements to own means and elements entering calculation of own means, deductions from elements of own means, decrease in levels of own means and other requirements for their determination. These regulations are applied both at the individual level, and at the consolidated level.

2. These regulations are applied to banks with the location in the Republic of Moldova, including to departments of foreign banks in the Republic of Moldova which are licensed by National Bank of Moldova (further - banks).

3. These regulations do not interfere with banks to have own means and their components which exceed requirements of these regulations, or to apply more severe measures, others, than provided by these regulations.

4. In this provision the concepts provided by the Law on activities of banks No. 202 of October 6, 2017 are used. The concepts used in these regulations mean also following:

assets of the pension fund with the established remunerations - assets of the plan or the pension fund with the established remunerations, on circumstances, calculated after deduction of the size of the obligations following from the same fund or the plan;

debts on the deferred tax which is based on future profitability - debts on the deferred tax which future cost can be executed only if the bank generates taxable profit in the future;

distribution - dividend payout or percent in any kind;

indirect possession - any exposure before the intermediary subject who owns exposure concerning the tools of the capital issued by the subject of the financial sector where if the cost of the tools of the capital issued by the subject of the financial sector constantly decreased, the losses registered as a result by the relevant bank would not be considerably distinguishable from losses which the bank would register as a result of immediate possession of these tools of the capital issued by the subject of the financial sector;

mutual participation - ownership of bank of tools of own means or other tools of the capital issued by subjects of the financial sector when they possess own means issued by the relevant bank;

synthetic ownership - investment of bank into the financial instrument, whose cost is directly connected with the cost of the tools of the capital issued by the subject of the financial sector;

tools of own means - the capital tools issued by bank which are qualified as tools of the main own means of the first level, tools of additional own resources of the first level or tools of own means of the second level;

minority interest - the size of the main own means of the first level of bank branch which can be carried to physical persons or legal entities, except those which are included in scope of prudential consolidation of bank;

elements which can be distributed, - the size of profit of the end of the last financial period plus possible reporting profit and reserves available for this purpose before distribution to owners of tools of own means, minus reporting losses, profits which cannot be distributed based on provisions of the legislation or constituent document of bank and the amount, placed in reserves which cannot be distributed based on provisions of the legislation or its constituent document while these losses and reserves are determined based on individual financial statements of bank, but not based on consolidated financial statements.

Chapter II Own means and elements of own means

5. Own means of bank are constituted from the amount of own means of the first level and own means of the second level.

6. Own means of the first level consist of the amount of the main own means of the first level and additional resources of the first level of bank.

7. Own means of the first level of bank consist of the main own means of the first level after application of the adjustments provided by Items 26-29, of deductions based on Item 30 and departures and alternatives provided by Items 63-67 and Item 126.

8. Additional own resources of the first level of bank consist of elements of additional own resources of the first level after deduction of the elements specified in Item 87 and after application of Item 126.

9. Own means of the second level of bank consist of elements of own means of the second level of bank after the deductions specified in Item 100 and after application of Item 126.

Chapter III Main own means of the first level

Part 1 Elements and tools of the main own means of the first level

Subpart 1 Elements of the main own means of the first level

10. Elements of the main own means of the first level of bank consist from:

1) capital tools, including the common shares issued by bank on condition of fulfillment of requirements, provided by subpart 2 of this Chapter, or, as necessary, the subsidiary capital provided to department in the Republic of Moldova by bank of foreign state which completely covers losses in the conditions of going concern and which in case of its liquidation has the last queue of repayment in relation to all other requirements. The corresponding amounts are considered in process of their actual payment.

2) awards from issue on the tools specified in the subitem 1);

3) reporting result;

4) other cumulative elements of comprehensive income;

5) other reserves.

11. According to the subitem 5) of Item 10 other reserves are implied as reserves which are subject of obligations of publication based on relevant international standard of the financial reporting, except for the amounts which are already included in other cumulative elements of comprehensive income or reporting result.

12. The elements specified in subitems of 3)-5) of Item 10 are considered as elements of fixed assets of the first level only if are available to bank to immediate and unrestricted use for the purpose of covering of risks or losses as soon as they appear.

13. According to the subitem 3) of Item 10 banks can include intermediate profits or profits of the end of financial year in the main own means of the first level before consideration, at general shareholder meeting, the annual financial report of bank, only with preliminary permission of National Bank of Moldova. The National Bank of Moldova issues the specified permission if the following conditions are satisfied:

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