It is registered
Ministry of Justice
Republic of Moldova
On December 28, 2018 No. 1400
of December 20, 2018 No. 322
About approval of Regulations about bases of management of activities of banks
This resolution is transposition of the Art. 76, of the item and) the Art. 79, of part (1) and the first paragraph, part (3), the Art. 83, of part (1) the Art. 85, of the Art. 86, of part (2) the Art. 88, of the item d) - g) parts (2) the Art. 92, of the item e) and h) parts (1) the Art. 94, parts (2) Art. 95 of the Directive No. 2013/36/EU of June 26, 2013 the European Parliament and Council about access to the activities of credit institutes and prudential supervision of the activities of credit institutes and investment firms changing the Directive No. 2002/87/EU and canceling Directives No. 2006/48/EU and No. 2006/49/EU, published in the Official magazine of the European Union by L 176 of June 26, 2013 with the last changes made by the Directive (EU) 2018/843 European Parliament and Council of May 30, 2018.
Based on the item c) parts (1) Art. 27 of the Law on National Bank of Moldova No. 548/1995 (The official monitor of the Republic of Moldova, 1955, No. 56-57, the Art. 624), with subsequent changes, and the Art. 38, 39, 43 and parts (5) Art. 44 of the Law on activities of banks No. 202/2017 (The official monitor of the Republic of Moldova, 2017, No. 434-439, the Art. 727), with subsequent changes, the Executive committee of National Bank of Moldova DECIDES:
1. Approve Regulations about bases of management of activities of banks according to appendix.
2. Recognize invalid the Regulations about bases of management of activities of bank approved by the Resolution on approval and recognition voided some regulations of National Bank of Moldova No. 146/2017 (The official monitor of the Republic of Moldova, 2017, No. 201-213, to the Art. 1183) registered in the Ministry of Justice at No. 1229 of June 14, 2017.
3. On the date of entry into force of this resolution banks will have the bases of management of activities corresponding to provisions of the regulations specified in Item 1.
5. Till April 30, 2019 to provide to banks the first reporting on process of assessment of conformity of domestic capital (ICAAP) as of December 31, 2018.
6. To banks within 9 months from the date of entry into force of this resolution to estimate compliance at the collective level of members of council of bank according to the requirement provided in Item 15 of the regulations specified in Item 1, using the criteria for evaluation of independence of the member of council of bank provided in Items 16 and 17 of the regulations specified in Item 1, and to take necessary measures for compliance of bank to the requirement provided in Item 15 of the regulations specified in Item 1.
Chairman of Executive committee of National Bank of Moldova
Octavian to Armash
to the Resolution of Executive committee of National Bank of Moldova of December 20, 2018 No. 322
1. These regulations are applied to banks of the Republic of Moldova and departments of banks of the foreign states opened in the territory of the Republic of Moldova and establish bases of management of their activities for ensuring effective and provident risk management.
2. The bank department of foreign state opened in the territory of the Republic of Moldova can be guided by politicians about bases of management of activities which regulate activities of parent society with condition of observance of the requirements established by the legislation of the Republic of Moldova and these regulations. Otherwise, the management of bank department of foreign state shall establish own politicians and estimate any decisions or practicians at the level of group to be convinced that they do not lead to violation of provisions of the legislation of the Republic of Moldova by department or the prudential rules applied in the territory of the Republic of Moldova.
3. The concepts and expressions used in these regulations have the values provided in the Law on activities of banks No. 202/2017 (further: Law No. 202/2017), Law on National Bank of Moldova No. 548/1995 (further: The law No. 548/1995) and the regulations of National Bank published for their accomplishment.
4. In these regulations the following terms and concepts designate:
the risk appetite - absolute level is risk also types of risks which the bank is ready to accept within the capability of risk, according to the business model for accomplishment of the strategic tasks;
statutory audit – statutory audit separate and consolidated financial statements, as necessary, provided by part (2) Art. 85 of the Law No. 202/2017;
risk capability – the maximum degree of risks which the bank is ready to assume, considering the own capital, its capability to manage and control risks, and also regulatory restrictions;
domestic capital – own means of bank necessary for covering of unexpected future losses, on the selected level of credibility, for certain interval of time. It represents form of generalization of risk and connects the capital with risks peculiar to it, irrespective of availability of assets;
culture of risks - regulations, the relation and behavior of organization concerning understanding, acceptance and risk management, and also the mechanisms of control standing at the heart of decisions on risks;
internal control – the system providing carrying out effective transactions, control of the corresponding risks, provident implementation of activities, reliability of the lectured financial and non-financial information, both internally, and external, and also compliance to the legislative and regulating basis, requirements of supervision both internal regulations and internal decisions of bank;
corporate management – set of the relations between governing body
bank, shareholders and other interested persons. Corporate management also includes structures (method of the internal organization) by means of which tasks of bank are established, means of their realization also are traced results;
business model – set of the activities which are carried out based on strategy for the purpose of achievement of financial results;
the identified personnel – the bank staff specified in part (1) Art. 39 of the Law No. 202/2017, which includes members of executive committee, persons holding key positions within bank, and also any worker, general remuneration to which equates it to category of compensation of members of executive body and persons holding key positions;
process of assessment of sufficiency of domestic capital (ICAAP) – the process of identification, generalization, management and monitoring of domestic capital implemented by bank according to Art. 78 of the Law No. 202/2017;
risk profile – assessment at a given time gross podverzhennost to risk and, as necessary, the net podverzhennost (after accounting of decrease in risk) aggregated in limits and between each corresponding category of risk on the basis of provisional estimates;
the main internal regulations – the charter, strategy, codes, politicians, regulations and other internal regulations for management of activities of bank and risks to which is exposed, approved by council of the bank or, as necessary, general shareholder meeting, for the purpose of compliance to regulations;
secondary internal regulations – instructions, procedures, reference books, benefits or other documents approved by executive body of bank for implementation of provisions of the main internal regulations;
the risk concerning information technologies and communications (risk of ITK) – subcategory of operational risk which belongs to risk of loss / to negative impact because of komprometirovaniye of confidentiality of information, integrity of data on information systems, unavailability of information systems and/or data, and also inability to change ITK in certain period and at the reasonable price. These losses / negative impact can follow from external or internal factors, such as: the inadequate organization, defective or not enough protected information systems and infrastructures of communication systems, and also the insufficient number of employees or not respectively qualified in which obligations the information system management of bank enters;
concentration risk – exposure hazard on profit and the capital following from podverzhennost before each partner and/or groups faces of the cooperative persons, and/or groups of persons acting in the same economic sector, performing the same activities or own joint business;
risk of compliance – the subcategory of operational risk relating to present or future exposure hazard on profit and the capital which can promote penalties, losses and/or agreement cancelation or which can do harm to reputation of bank as a result of violations or discrepancy to regulations, the agreements recommended to practicians or ethical standards;
credit risk – present or future exposure hazard on profit and the capital as a result of failure to carry out by the debtor or partner of contractual commitments or its failure in accomplishment of the established actions in the contract;
credit risk of the partner – subcategory of credit risk which represents exposure hazard on profit and the capital to situations when the partner of the transaction enters condition of default (default) before final settlement of cash flow according to the transaction;
settlement risk – risk of loss from difference between the approved estimated price and the current market value for transactions in which the debt instrument, capital securities or currencies remain not calculated after date of repayment period of delivery;
liquidity risk - present or future exposure hazard on profit and the capital determined by inability of bank to fulfill the obligations in case of their repayment period;
operational risk - present or future exposure hazard on profit and the capital following from inadequate or unfortunate internal processes or systems and/or as a result of action of some persons or external events;
process of assessment of sufficiency of internal liquidity (ILAAP) - the process of identification, measurement, management and monitoring of internal liquidity implemented by bank based on Art. 79 of the Law No. 202/2017;
market risk – risk which registers losses on line items of balance and out of balance because of adverse fluctuations in the market, the prices of financial instruments for transactions, interest rates and the exchange currency rate;
risk of line item – exposure hazard on profit and the capital which can appear from behind discrepancy of the price in time, between the moment of the conclusion of the agreement and the moment when payment and receipt of the amount provided by the agreement is performed;
residual risk – exposure hazard on profit and the capital which can arise because the used technicians on decrease in risks are less effective than it was expected for the reason that these technicians generate new risks (such as liquidity risk, risk of compliance) which can affect on the equipment on decrease;
interest rate risk – present or future exposure hazard on profit and the capital owing to various interest rate realignments;
reputation risk - present or future exposure hazard on profit and the capital or liquidity determined by adverse perception of image of bank by partners, shareholders, investors or supervision bodies;
strategic risk - present or future exposure hazard on profit and the capital determined by changes in business environment or adverse business solutions, inadequate implementation of decisions or lack of reaction to changes in business environment;
risk of the translation – exposure hazard on profit and the capital following from inability of converting by the partner of national currency in the currency necessary for payment of some financial liabilities due to the lack or unavailability of national currency as a result of some restrictions delivered by the country of the corresponding partner;
risk of the country – risk of exposure to losses as a result of economic, social and/or political conditions and events in one of foreign states of the foreign country which influence activities of bank;
currency risk - risk of exposure to the losses following from commercial agreements or from other economic relations as a result of fluctuation of exchange currency rate in the market during the period between the conclusion of the agreement and its repayment period;
information system – client information control system in bank together with the associated organizational resources, such as information resources, personnel, organizational structures;
simulations of crisis situations – the technology of risk management used for assessment of potential consequences of some events or future changes of economic conditions which can influence financial position of bank;
risk tolerance – the maximum level of the risk allowed by bank which fits into real regulations within risk appetite, accepted by bank;
economic value – the updated cost of movement of the expected net money of bank.
5. The bank establishes numerical structure and structure of the governing body and the controling mechanism depending on nature, the size and complexity of inherent risks according to business model and activities of bank.
6. Powers and responsibility of governing body shall be accurately determined, and also accurately and are effectively distributed between council of the bank and executive body. The role, structure, number, term to which members of governing body are chosen/are appointed procedure for functioning and power of governing body are established by the charter of bank and in internal main regulations of bank, with observance of provisions of the Law No. 202/2017, of the regulations of National Bank of Moldova published for their execution, and the Join-stock companies law No. 1134/1997 in that measure in which its application is not limited to the Law No. 202/2017.
7. Meetings of council of the bank, and also executive committee of bank, including the number of the present members and frequency of meetings will be organized so that there was possibility of the bank deepened consideration of problems and critical discussion of questions for the purpose of efficiency maintenance. The bank provides inclusion in protocols of governing body of the complete information on consideration of problems and discussion of questions, including the main theses of speakers according to the agenda, with indication of surname of speakers and all proposals / opinions of members of governing body. The bank provides consecutive numbering of protocols of meetings of governing body.
8. All members of governing body shall realize structure and responsibility of governing body and distribution of powers and obligations between executive body, council and specialized committees of council. To have adequate system of check and assessment of activities of bank, decision making process of governing body cannot be dominated by one member of governing body or few group of members. The council of the bank and executive body shall interact and communicate, sufficient for the corresponding accomplishment of entrusted powers and obligations.
9. Council is governing body of bank with powers of supervision of results of bank, claiming and monitoring implementation by executive body of bank of strategic tasks, bases of management and corporate culture, and bears responsibility in general for activities of bank.
10. The council of the bank establishes procedure in which the bank regulates and will organize the activities. For this purpose council determines basis of management of activities of bank by ensuring development, approval, implementation, monitoring of permanent implementation and periodic review of internal main regulations in all spheres of activity of bank.
11. Council bears responsibility, at least, for:
1) accomplishment of the powers provided by Art. 41 of the Law No. 202/2017;
2) accomplishment of the obligations assigned to committee to destination and committee on compensation if data were not created at the level of bank;
3) approval of the code of the behavior which is accurately determining admissible and unacceptable behavior of personnel, including illegal activities and acceptance of excessive risks for bank and also procedure for conflict management of interests at the level of bank;
4) supervision of method of implementation and compliance to the code of behavior of bank, in particular, identifications, managements and preventions of possible and/or current conflicts of interest;
5) supervision and ensuring efficiency of activities of functions of internal control (function on risk management, function of compliance and internal audit) which directly report to council, in particular, for maintenance of independence of their activities;
6) approval and monitoring of process of implementation of the plan of internal audit after preliminary consideration of risks by administrative board and committee of internal audit;
7) approval and supervision of implementation the politician to destination the executive body and personnel holding key positions;
8) approval and supervision of implementation of risk management policies and ensuring personnel training of the bank involved in the respective area.
12. Council shall provide compliance of experience and knowledge of members of executive body to nature and complexity of activities and profile of risk of bank at individual and collective level, to establish standards of effectiveness for executive body according to strategy and politicians of bank and traces compliance of its results to the conforming standards.
13. Members of council shall carry out the powers is fair, incorruptible, objectively and loyally, to devote enough time and foresight in case of their accomplishment, and also in strict accordance with legal statuses and the regulatory base.
14. Members of council shall participate actively in activities of bank and shall be capable to make decisions and to do own reasonable, objective and independent reasonings.
15. Council shall consist of enough independent members, but at least 1/3 from total number of members, elected to council. Criteria for evaluation of independence of the member of council of bank are provided in Item 16.
16. Without prejudice to Item 17 provisions the member of council of bank is considered "independent" in the following cases:
1) owns or owned for the last calendar year the mandate of the member of governing body in bank and/or organizations of perimeter of prudential consolidation, except for line items of the independent member of governing body in bank and/or organizations of perimeter of prudential consolidation;
2) exercises control of bank or is of interest of person exercising control of bank;
3) has considerable financial or commercial tie with bank (more than 5% of own means of bank);
4) is the worker or is in similar communications with person exercising control of bank;
5) is the employee of any organization of perimeter of prudential consolidation, except for case when the following two conditions are satisfied:
a) does not belong to the similar hierarchical level which directly answers only to governing body of the bank/member of governing body;
b) it was chosen as the member of council of bank in the context of system of representation of employees with ensuring the corresponding protection against wrongful dismissal or other forms of the unfair address;
6) it was employed within the last calendar year to position at such hierarchical level within bank or other organizations of perimeter of prudential konsolidirovannost which directly answers only to governing body of bank;
7) in the last calendar year was official, the head and/or the member of governing body in organization of professional consultation, the external auditor or the important consultant for bank or other organization of perimeter of prudential consolidation, or in other situations, the employee significantly involved in the offered position;
8) for the last year is or was considerable supplier (delivered goods or services in the amount of more than 5% of assets of bank) or the important client of bank or organization of perimeter of prudential consolidation, or had considerable business connection or is significantly the involved employee, in other conditions, directly or indirectly, with the supplier, the client or commercial organization who has considerable business connection with bank;
9) receives in addition to remuneration for the role and remuneration for position according to part 5) commission charges or other considerable profits on bank or other organizations of perimeter of prudential consolidation;
10) was effective as the independent member of governing body within bank the last 12 years in a row;
11) is spouse/spouse, the relative of I or II degrees of relationship of the member of governing body of bank or other organization of perimeter of prudential consolidation, or person which is in one of the provisions specified in parts 1) – 10).
17. Inclusion in one or several provisions provided in Item 16, cannot qualify automatically the member "independent". If the member joins in one or several provisions provided in Item of 16, bank has the right to qualify that the member shall be considered independent if it has the reasoned (reasonable) reasons concerning capability of the member to perform the powers objectively and is balanced for decision making independently and if arguments (reasons) provided to National Bank of Moldova by it were accepted.
18. Council exercises supervision of activities of executive body, monitoring its actions for ensuring compliance with strategy and politicians of bank, by consideration of information obtained from executive body and from functions of compliance, internal audit and risk management and by regular convocations with executive committee and the corresponding functions.
19. Council shall claim and periodically update regulations for own activities, considering regulations and the regulations of council approved by general shareholder meeting which establish the organization, the rights, responsibility and activities of council, and also to maintain effectiveness and integrity by implementation of periodic estimates of each member separately, and also council at the collective level.
20. For accomplishment of the obligations, members of council shall have access at any time to any information on activities of bank and executive body, and also to reports of internal and external audit.
21. In addition to creation of the committees provided in Art. 44 of the Law No. 202/2017, banks has the right to have also other specialized committees (committee on ethics, behavior or compliance and/or others), giving help to council on accomplishment of the assigned powers. In the context of the Law No. 202/2017, the essential bank is systemically significant society, determined so according to the Law No. 202/2017 and identified by regulations of National Bank.
22. The council of the bank can determine quantity and structure of committees for simplification of own activities. Availability of committees does not exempt council from collective accomplishment of the tasks and responsibility at all.
23. If the bank did not create committee to destination and/or committee on compensation, provisions of parts 4 and 5 of chapter III about committee to destination and committee on compensation are applied to members of council of bank.
24. Powers, functions and responsibility of specialized committees of council of the bank are established in the main internal regulations approved by council of the bank which shall correspond to these regulations and provisions of Art. 44 of the Law No. 202/2017.
25. In case of change of structure of council of the bank, at the first meeting in new structure council shall consider numerical completeness of committees for the purpose of their amendment.
26. Specialized committees support council of the bank in specific areas and promote development and enhancement of basis of management of activities of bank.
27. Specialized committees shall have the general or separate regulations on each committee approved by council of the bank about role, the purpose and procedure for their activities, and also it shall contain rules of activities of members of the committee.
28. Specialized committees are created only from members of council of bank. Also other persons, according to the decision of committee, thanks to specific experience or the fact that their manuals are relevant for certain aspect / area can be invited to committee meetings for participation.
29. The number of members of specialized committee cannot be less than 3 persons. The chairman of committee is appointed by council of the bank from the elected members of the committee.
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