The National Bank increases banks' share of equity capital in their operating activities 05.12.2025

Commentary by InfoMarket agency

Following up on the topic of whether the National Bank finances the state budget, and what the IMF and commercial banks have to do with it, some necessary clarifications have emerged. (Reference to the article https://infomarket.md/en/analitics/387769 )

The matter concerns the National Bank's decisions to increase the countercyclical capital buffer (CCyB) rate for exposures from loans in Moldova from 0% to 0.5% in June 2025 and from 0.5% to 1.5% in November. In an article published in late November, InfoMarket agency estimated that the amount would range from 2.5 billion lei to 3 billion lei. The National Bank clarified that the 0.5% rate adopted in June amounts to 444.5 million lei. And following the decision to raise the CCyB to 1.5%, banks will have to reserve another 956.8 million lei. This means that by the end of spring next year, banks' CCyB reserves will total 1,401.3 million lei.

The decision to raise the CCyB rate from zero to 1.5% is explained by the fact that lending volumes in Moldova are growing faster than the economy, and banks need to prepare for a situation where economic growth will be replaced by a decline. This is because in the event of possible crises (and crises are always cyclical in time), additional buffer capital will grant the bank more stability, and when the buffer is released, additional opportunities for lending will arise at a time when the economy needs it most.

A bank's own funds consist of a number of indicators, including authorized capital, retained earnings, reserves, etc. The minimum amount of own funds must exceed the minimum requirements (10%) plus additional capital requirements. This also includes so-called buffers – additional capital that the bank must maintain. They are also created from the bank's own funds, i.e., they cannot be replenished, for example, from deposits. All of the bank's own funds are called eligible capital.

In its activities, the bank operates with both its own money and borrowed money (primarily deposits). At the request of the National Bank, the share of own funds in the bank's operations (primarily in lending) must be at least 10%. However, the regulator has tools that can increase this figure to a maximum of 17.5%. Depending on the situation in the economy as a whole and in each bank in particular, buffers are applied to increase the share of own funds in the bank's activities. One such tool is the countercyclical capital buffer. There are also several other similar buffers, ranging from the capital conservation buffer to the buffer applied to systemically important banks.

Thus, by raising the CCyB, the regulator told banks to use 1.5% more own funds in their activities in a proportion of at least 15.0-17.5%.

How is this percentage calculated? Eligible capital is divided by an indicator called “Total risk exposure”: today, for the banking system, this is 23.43 billion lei to 97.46 billion lei, or 24.04%.

This means that currently, 24.04% of the banking risks of the entire banking system of Moldova are covered by the banks' own funds (shareholders' money).

Today, for all 10 commercial banks, this indicator ranges from 20.91% (maib) to 37.51% (Eximbank) with a base rate of 10%, and taking into account current requirements - 15.0%-17.5% taking into account the latest requirements of the National Bank. The lower this percentage and the closer it is to the requirement, the more effectively a commercial bank manages its money. The difference between the actual indicator and the required one can be used by the bank at its discretion – for lending, for example, or for the purchase of government securities. In accordance with the bank's policy and the risks it calculates.

In other words, in order to make the most effective use of their own resources, let's say, by lowering the indicator closer to the norm (15.0%-17.5%), banks still have about 30 billion lei of their own resources available. They can remain in reserves, be used for lending, or be used to purchase government securities. //05.12.2025-InfoMarket.