Except for its ever improving wines, Moldova rarely enjoys good news. This, however, has been changing recently with the country’s noticeable achievements worth cautious applause.
Considerable progress has been made in the banking sector. The national bank is successfully tackling the financial system vulnerabilities. With more transparency, lenders are gradually regaining trust of both investors and retail customers.
The ultimate sign of confidence in the recovery of the sector is Banca Transilvania’s investment in Victoriabank earlier this year. The first time in a decade a foreign bank has entered the Moldovan market. The Romanian lender clearly acknowledges the massive efforts leading to notable improvements at their new Moldovan family member. Buying into Moldova’s third largest bank was an opportunity not to be missed.
Together the EBRD and Banca Transilvania now hold a controlling stake of about 70 per cent in Victoriabank. Our current focus is on restoring good governance and risk management. Once this is accomplished, we will proceed with an ambitious development plan. The EBRD plans to resume its lending to the bank and continue supporting the Moldovan businesses with access to finance.
You could argue one swallow does not make a summer. Nevertheless, after the financial scandals tarnished Moldova’s reputation, we see the arrival of a strong strategic foreign investor as a turning point for the whole banking system.
This is also expected to serve as an impetus for the sale of the blocked shares in Moldova Agroindbank and Moldindconbank – 41 per cent and 64 per cent of the banks’ shares, respectively. Being the country’s two largest banks, Moldova simply needs them to work in a sound, transparent manner. It is hardly a secret that the EBRD is exploring opportunities to participate in the shareholding of Moldova Agroindbank. This reinforces our strong and continuous commitment to the country.
We are indeed the largest single investor here and started working in the country shortly after it declared independence in 1991. Since then we have supported the economy with over 1.2 billion euros through 120 investments across the financial, agricultural, energy, infrastructure and manufacturing sectors.
Last year our annual investment in Moldova hit an all-time record: the EBRD provided 130 million euros of financing to support the private sector and develop infrastructure.
We have every intention to maintain the same high level of engagement.
Together with the International Monetary Fund, the EU and other key partners, we will continue efforts aimed at enhancing the resilience of the banking sector.
We are keen to partner with reputable investors to restore transparency and good governance in the banking sector. When an increased number of lenders comply with these standards, we may expand our lending programme for small and medium-sized enterprises and energy efficiency.
Additionally, the EBRD will continue working directly with Moldovan companies and foreign investors to finance viable business models. Public infrastructure projects, which have direct impact on quality of life, will remain a priority.
Our work with the government goes on with the dialogue focusing on reforms to improve the business climate, including through support to the Secretariat of the Economic Council of the Prime Minister.
We have always been a strong supporter and promoter of reforms. We believe it is paramount to keep this process on track, especially now that the economy is on the rise again. Investors will notice and act. And Moldova will benefit.
The views expressed in this opinion editorial are the author’s own and do not necessarily reflect Emerging Europe’s editorial policy.