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38 I Southeast Europe bne November 2018
and management of the MAIB stake on behalf of the consortium, an EBRD statement said.
MAIB is the largest commercial bank in Moldova, with assets at the end of 2017 of €1.078bn and equity of €180mn. It
is also one of the oldest, having been established in Soviet times. The shares that went under the gavel on October 2 have had a complicated history, Malige explains. They have changed hands several times in the last two decades, but were bought by the non-transparent shareholders in 2012.
“None of the new shareholders
has a controlling share and we will
work together with the like-minded shareholders, local Moldovan investors,” Malige told bne Intellinews.
On the block
These shareholders were using the bank in various scams to launder money and although the stake was split up into various holdings, they were illegally coordinating their actions.
The determination to do something about the corrupt nature of the Moldovan banking sector has been gathering momentum, especially
after there were mass demonstrations following the $1bn bank theft in 2014.
The 41% stake in MAIB was confiscated by the state, under the new banking regulations introduced last year
that provide improved ownership transparency, from non-transparent shareholders spotted by the central bank as operating in a coordinated manner. The stake was controlled by controversial local investor Veaceslav Platon according to reports. Platon
is currently in jail for frauds related to Moldova’s savings bank Banca de Economii (BEM).
The National Bank of Moldova (NBM) had already blocked the voting and other shareholder rights of the bank in March 2016 after the shareholders had been found to be illegally coordinating their actions: the stake had been split up into small pieces so as not to raise the central bank’s red flags on collusion.
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An appeal to the Stockholm arbitration court by the shareholders failed in 2017, clearing the way for the stake to be
sold by the government to new investors. In June this year the EBRD threw its
hat into the ring and said it would buy the stake in a consortium with the two private equity firms.
Regional banking clean-up
Moldova has become famous for its banking scams. In one popular version a shell company offers a guarantee on a loan made by a second shell company. Then the first is bankrupted and transfers cash to the second as an award ordered by the courts, cleaning the money in the process.
In another popular scheme, one company deposits money in an account in Moldova. A second company sues the first on some charge like breach of
There were 518 banks left in Russia as
of the end of August, down from over 4,000 in the 90s, and well on the way
to reaching the unofficial target of 300 banks in the next few years. In parallel the CBR has been beefing up regulation and reporting. It has introduced the Basel III regulations, banks were made to report using IFRS standards long before the rest of the economy, and more sophisticated prudential rules have been introduced for banks that offer retail loans, among other measures.
Ukraine has seen a similar story. Although reforms are going very slowly under the International Monetary Fund (IMF)-sponsored programme, the changes to the banking sector carried out by former central bank governor Valeriya Gontareva have been a stunning success. She also closed about half the banks to bring the total down to 86 as of the end of
“Moldova’s banking sector has been plagued by non-transparent shareholders for too long”
contract and takes the case to a fake arbitration tribunal, which then awards the second company the deposits of the first. A court order is obtained to make the transfer and the money becomes white in the process.
While MAIB was not involved in this sort of scam the whole banking sector has been infected by an environment of dodgy dealing that the regulator wants to put behind it.
The changes in Moldova are part of a region-wide trend where central banks are attempting to clear out the banking rot that set in during the wild days of the 1990s.
Central Bank of Russia (CBR) governor Elvira Nabiullina has closed down half of the sector's banks since taking office in 2013 at a steady pace of 100 banks a year. That has caused its own problems and nearly sparked a banking crisis last autumn when the CBR shuttered several of the country’s biggest commercial banks, the so-called Garden Ring banks.
August and shuttered many of the money laundering scams posing as banks. In November 2016 the National Bank of Ukraine (NBU) took its boldest step yet and nationalised PrivatBank, the largest commercial lender in the country, where 98% of the loan book was discovered
to have been made to shell companies belonging to the owners, in what was a wholesale theft of depositors’ money.
“It is not enough for the regulator to want to clean the sector up – you need everyone on board,” says Malige. “In the case of the nationalisation of PrivatBank in Ukraine the deposit insurance agency, the NBU, the Ministry of Finance, the legal authorities, the parliament and the international partners all had to be on board before the bank could be nation- alised. In the last years we have seen a similar alignment of interests happen
in Moldova. The authorities have said enough is enough and the people have suffered enough. They want change.”
Now it’s Moldova’s turn. The NBM has taken control over two of the three top