The National Bank of Moldova has published a draft Executive Committee decision to amend its regulation on the credit risk treatment for banks using the standardized approach, with the stated harmonisation updated to reflect Regulation (EU) 2024/1623. The proposal would recalibrate risk weights, credit conversion factors and key definitions across multiple exposure classes, including substantial changes for real estate lending, bank and public sector exposures, covered bonds and specialised lending. Among the more operational changes, off-balance-sheet items would be reclassified into five risk bands with credit conversion factors of 100%, 50%, 40%, 20% and 10%, alongside revised rules for treating commitments (including when a 0% factor applies). The definition of default would shift to an absolute-plus-relative test using MDL-equivalent thresholds of EUR 100 for retail and EUR 500 for other exposures plus a 1% ratio, and banks relying on external data would need to adjust it to achieve substantial equivalence. For bank exposures, the draft introduces an A/B/C classification for unrated banks with differentiated risk weights (including 20%/50%/150% for short-term exposures and 40%/75%/150% otherwise, plus a possible 30% risk weight for certain class A exposures), restricts the use of external ratings that assume implicit public support, updates risk weight tables for regional and local authorities and other public sector entities, and adds the International Development Association and the Asian Infrastructure Investment Bank to the list of multilateral development banks. Real estate treatment is reworked around non-ADC versus ADC and IPRE versus non-IPRE exposures, including exposure-to-value bands for residential (20% up to 55% of market value, then 30% to 105% by band) and commercial property (60% up to 55% of market value, then 70% to 110% by band), a 150% risk weight for ADC exposures with a potential 100% treatment for certain residential projects, and a 1.5 multiplier (capped at 150%) for unhedged foreign-currency retail and residential mortgage exposures. The package also introduces a preferential framework for covered bonds (including minimum 5% overcollateralisation and risk weights as low as 10%), sets a 150% risk weight for subordinated debt exposures, adds an infrastructure supporting factor that multiplies credit risk capital requirements by 0.75 for qualifying exposures with semi-annual COREP reporting, updates the SME supporting factor formula with a MDL 7,500,000 threshold, expands property valuation monitoring to include ESG considerations and model-based monitoring requirements, introduces annual real estate loss reporting by national market, and moves securitisation treatment references to the National Bank of Moldova’s dedicated securitisation framework. The draft sets an application date of 1 July 2026, with the securitisation-position related amendments scheduled to apply from 1 January 2028.
National Bank of Moldova 2025-10-13
National Bank of Moldova publishes draft EU-aligned amendments to banks' standardized credit risk rules
The National Bank of Moldova released a draft decision to amend credit risk regulations for banks using the standardized approach, aligning with Regulation (EU) 2024/1623. Key changes include recalibrated risk weights, credit conversion factors, and definitions across various exposure classes, notably impacting real estate, bank, and public sector exposures. The draft introduces new classifications, risk weight adjustments, and a preferential framework for covered bonds, with implementation set for 1 July 2026 and securitisation amendments from 1 January 2028.