Moldova’s government has instructed its Public Ownership Agency (APP) to take over major stakes in the country’s largest banks, Moldova-Agroindbank and Moldindconbank, that were previously confiscated by the central bank from shareholders who did not comply with the transparency requirements, Mold Street reported.

The APP is supposed to sell the stakes to investors under the law regulating the state’s intervention in systemic banks, endorsed by the parliament last December. The APP should put the stakes up for sale within seven days of taking them over, at a price no lower than the price paid by APP for the shares, Mold Street reported, quoting the provisions of the law. 

The specification implies that the APP becomes owner of the shares and the initial owners get their money before an investor is found, and the APP receives a price (subject to negotiations) for the shares.

The central bank expressed positive views in regard to the government’s move, commenting to Mold Street that the procedure should result in faster privatisation and eventually improved corporate governance.

The procedures remain, however, debatable given that the state’s role in the $1bn banking fraud in 2014-2015 has never been fully clarified. The price paid by the APP to the initial owners remains open to controversy as well, since it is not the result of competitive bids but perhaps a benchmark calculated from the prices pf the shares traded on the local market.

The financial markets regulator CNPF has already tried to sell the 42% stake in Moldova-Agroindbank (MAIB) and the 64% stake in Moldindconbank (MICB) on the local stock exchange, after the previous owners (who lost their stakes for not complying with transparency requirements) were unable to find buyers. Under the legal procedures, the minimum sale price was calculated based on the prices paid in the most recent deals in the banks' shares on the stock exchange. But such a benchmark remains problematic on an illiquid market.  

The CNPF took control of the 64% stake in MICB in January 2018 after it acquired the 42% stake in MAIB last year. In January, the CNPF also announced that it had received no bid for MAIB by the latest deadline that expired on December 28.

MICB, previously involved in the laundering of some $20bn of Russian money, was reportedly controlled by reputed corporate raider Veaceslav Platon, who accused the ruling coalition’s leader and the country’s number one oligarch Vlad Plahotniuc of exerting pressure in order to take control of the bank. Platon was behind Agroindbank as well, according to unconfirmed rumours.

A situation in which Plahotniuc is eyeing major stakes in the country’s largest banks could explain the lack of prospective investors.