RESOLUTION OF NATIONAL BANK OF THE REPUBLIC OF MOLDOVA

of May 24, 2018 No. 116

About approval of Regulations about calculation with banks of specific adjustments and general adjustments for credit risk

Based on the item d) parts (1) the Art. 5, parts (1) the Art. 11, the item c) parts (1) the Art. 27, the item and) the Art. 44, the item b) Art. 46 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, No. 297-300, the Art. 544), with subsequent changes and amendments, Art. 64 of the Law on activities of banks No. 202 of 6.10.2017 (The official monitor of the Republic of Moldova, 2017, No. 434-439, the Art. 727), with subsequent changes and amendments, the Executive committee of National Bank of Moldova DECIDES:

1. Approve Regulations about calculation with banks of specific adjustments and general adjustments for credit risk as it is specified in appendix.

2. The regulations specified in Item 1 of this resolution become effective on July 30, 2018.

3. Co of day of entry into force of these regulations mentioned in Item 1 of this decision banks 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. 116

Regulations about calculation with banks of specific adjustments and general adjustments for credit risk

These regulations:

a) shifts Art. 4 (1) (95) and Art. 110 (1) Regulations (EU) 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) the No. 648/2012 (The text with relevance of EEA) published in the Official magazine of the European Union No. L 176 of the June 27 2013, changed and added with 2015/62 European Parliament delegated by Regulations of the Commission (EU) and Council (EU) of October 10, 2014;

b) partially delegated Regulations (EU) shift No. 183/2014 of the Commission of December 20, 2013 about amendment of Regulations (EU) No. 575/2013 of the European Parliament and Council about prudential requirements for credit institutions and investment firms, rather technical standards of regulation for refining of procedure of payments of specific adjustments and general adjustments for the credit risk (The text with relevance of EEA) published in the Official magazine of the European Union No. L 57 of February 27, 2014.

Chapter I. General provisions

1. The terms and expressions used in the regulations provided by the Law on activities of banks No. 202 of 6:10. 2017, with subsequent changes and amendments, and other regulations of National Bank of Moldova issued according to the above-stated law.

For the purpose of these regulations of adjustment of credit risk represent the amount of specific and general adjustments (reserves) of the credit losses connected with credit risk which were acknowledged in financial statements of bank according to the applied system of financial accounting.

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

3. These regulations establish rules which banks shall apply to determination and calculation of general adjustments and specific adjustments for credit risk for the purpose of:

1) cost determinations of the exposure provided by regulations about the relation to credit risk for banks according to the standardized approach;

2) determinations of condition of default according to regulations about the relation to credit risk for banks according to the standardized approach.

4. Banks which apply the standardized approach shall consider general adjustments for credit risk according to regulations about own means of bank and requirements of the capital.

5. Banks shall document in the internal procedures (regulations) results of determination and calculation of general adjustments for credit risk and specific adjustments for credit risk.

Chapter II. Determination of general adjustments and specific adjustments for credit risk

6. For the purpose of these regulations of the amount which the bank shall include in calculation of general adjustments and specific adjustments for credit risk shall be equal to all amounts by which the fixed own assets of bank of the first level were reduced for reflection of the losses connected only with credit risk according to the applied system of financial accounting and recognized by those in the report on profits or losses irrespective of if they come from impairment, from regulation of cost or from reserves for off-balance elements.

7. Any amount received according to Item 6, which was acknowledged within financial year can be included in calculation of general adjustments and specific adjustments for credit risk only if this amount was subtracted from own means of bank of the first level, or according to regulations about own funds of bank and requirements of the capital, or in case of temporary profits or profits of the end of financial year which were not approved according to regulations on own means of banks and requirements of the capital, by immediate corresponding decrease in own means of the first level for determination of own means.

8. The amounts to which Items 6 refer and 7, join bank in calculation of general adjustments for credit risk if they in total carry out the following criteria:

1) they are available completely and freely concerning time and the amount to covering of the losses connected with credit risk which did not materialize yet;

2) they reflect the losses connected with credit risk for group of podverzhennost in connection with which the bank has no evidence now there came the event forming losses.

9. All other amounts to which Items 6 refer and 7, join in calculation of specific adjustments for credit risk.

10. The bank includes in calculation of general adjustments for credit risk the following losses on condition that they carry out criteria of Item 8:

1) the losses recognized for covering of average historical loss which was in recent years the biggest though now there are no proofs about availability of some events forming losses which will confirm the wastage rate, noticed in the past;

2) losses in connection with which the bank is not acquainted with quality degradation of the credit for group of podverzhennost, but in case of which some level of non-payment is possible from the statistical point of view based on the previous experience.

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