The banking sector in Moldova is in themidst of structural changes with worrisome corporategovernance issues at the core. Corporate governance is atthe center of a stable and profitable banking sector whichis essential to support economic growth and productivity.However, the banking system in Moldova suffers from criticalgovernance weaknesses which the National Bank of Moldova(NBM) has been unable to effectively address. The illicitschemes used to gain control of the majority of the bankingsector’s assets have involved raider attacks by unidentifiedindividuals whose subsequent, de facto, related partytransactions have caused the deterioration of bank balancesheets. The recent changes in controlling ownership haveresulted in nontransparent appointments of board members andChief Executive Officers (CEOs). This has led to substantialblurring of the roles and responsibilities of ownership,oversight (board), and management, resulting in no clearaccountability. The legal and institutional corporategovernance framework in Moldova is weak. Sound corporategovernance is first and foremost dependent upon themotivations of owners and the resultant business culturethey instill through their selection and appointment ofboard members. In Moldova, a few actors control the majorityof the banking system. They demonstrate dubious motives byacting obscurely through others and through companies to ownand control important banks. These actions create a systemthat is held captive to serve the needs and pleasures of afew at the expense of many: the depositors, general public,and ultimately, the taxpayer.
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