Page 12 - bne magazine September 2023

12 I Companies & Markets bne September 2023
in Moldova, although he was stripped of his parliamentary seat last April, and organises anti-government protests in the country, despite fleeing the country, which has sentenced him to 15 years in jail for bank fraud. His party campaigns against the EU and follows pro-Kremlin narratives.
The alleged architect of the scheme was a Moldovan busi- nessman Vyacheslav Platon, a former MP and shareholder of the bank. Platon has been sentenced in abstentia to 25 years' jail in Moldova but has fought successfully to avoid extradi- tion from Ukraine. Platon calls the accusations “drivel”. The
“The biggest problem for Picker and his team has been to clean out all of the legacy problem loans – many of which have been written off”
OCCRP also alleged that Igor Putin, a cousin of the Russian president, was also a key figure in the laundromat.
Shor and Vladimir Plahotniuc, an influential politician and business associate who has also fled Moldova, were recently sanctioned by the EU, while Platon has so far escaped any punitive measures by the West.
Picker claims Moldindconbank has made significant progress cleaning up its act but admits there is more to be done.
“Our reputation is not good yet, but we are working on it,” he says. “In 2014, the central bank came in, cleaned everything up in terms of the problem loans, threw out the former major- ity owner Platon and sold the shares to the Bulgarian invest- ment fund.”
There is a board member exclusively for compliance and the bank has undergone a compliance review by auditors KPMG.
The biggest problem for Picker and his team has been to clean out all of the legacy problem loans – many of which have been written off. An army of 50 lawyers are working exclusively on the loan book, according to Picker. “We are selling proper- ties and getting some assets back but it’s an incredibly long legal process because everyone in the process is submitting counterclaims and claiming there was some kind of mistake made,” he says.
Picker’s main remit “is to polish up the [bank’s] reputation”, work with the international finance organisations and secure correspondent accounts in dollars where they still have some problems.
Moldindconbank has closed all Russian accounts and is closely monitoring all the sanctions regimes to the letter.
Russian destabilisation
The bank employs a lot of Russian expatriate employees
who are facing problems with travelling and obtaining work permits, but Picker agrees that the Moldovan government is justified in being paranoid about Moscow’s efforts to destabi- lise the country.
Moldova last month ordered 45 Russian diplomats and embassy staff to leave, sharply reducing the number of offi- cials Russia can have in its capital Chișinău, while citing years of “hostile actions” by Moscow. Russian-backed separatists control a breakaway territory in Moldova – Transnistria –
in a frozen conflict that has festered since the 1990s.
“We have the backing of the National Bank of Moldova and we have the backing of the government, which is very pro-EU and anti-Russia,” says Picker. “They left the CIS organisation and now they have kicked out half of the diplomatic corps of Russia over allegations of spying.”
With a population of just 2.6mn Moldova is one of Europe's poorest economies and has been heavily exposed to the war in neighbouring Ukraine. The country has faced a major energy crisis because its power infrastructure dates back to the Soviet era. Not only did Russia restrict its gas supplies but its attacks on Ukraine's power grid have also caused sporadic power cuts in Moldova. The invasion also triggered an influx of Ukrainian refugees, putting a strain on Moldova's public services.
Name recognition
Management considered changing the lender’s name but decided against it due to its household name status in Moldova.
“We do not do business abroad and we don’t want to spread to any other country,” explained Picker. “Visa just did a review, and we have a 99% recognition factor in Moldova and more than 90% have a positive impression of the bank.”
Moldindconbank was started in 1959, as a branch of the Soviet-lender Stroibank from the USSR. The lender was reor- ganised in October 1991 and was meant to primarily finance the country’s industries and construction businesses. After the laundromat scandal until February 2020 Moldindcon- bank was under the supervision and the early intervention regime of the National Bank of Moldova.
The bank is still Moldova's second largest by assets, but now the lender is more focused on the retail segment, with just one third of its book oriented to corporate clients. In 2022, Mold- indconbank grew its assets by 5.8% on the year to MDL25.8bn, while its credit portfolio increased by 9.6% to MDL12.6bn.
At MDL3.5bn, the lender's mortgage portfolio is the largest in Moldova's banking system, with a market share of 28%. It also has largest portfolio of payment cards – more than 1mn cards and a market share of 37,1%, and 34.1% in the money transfer segment, with a transaction volume of $582mn.
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