ANNUAL REPORT 2011 - Eximbank / Homepage REPORT 2011 Paid - up capital - 635000000 lei 2 CONTENTs...

ANNUAL REPORT 2011

Paid - up capital - 635000000 leiwww.eximbank.com

CONTENTs2

CONTENTs

1. MESSAGE OF GENERAL DIRECTOR ...........................................32. KEY EVENTS IN 2011..............................................................43. SUMMARY RESULTS ................................................................54. GRUPUL BANCAR ITALIAN – VENETO BANCA ...........................75. MANAGEMENT OF THE BANK .................................................116. MACROECONOMIC FRAMEWORK ............................................12 6.1. International framework ................................................12 6.2. Italian framework .........................................................14 6.3. Republic of Moldova ......................................................16 6.4. Banking System in the Republic of Moldova ......................17 6.5. Changes to the Regulatory Framework ............................187. CORPORATE GOVERNANCE ....................................................208. RISK MANAGEMENT .............................................................22 8.1. Credit Risk ...................................................................22 8.2. Market Risk ..................................................................23 8.3. Liquidity Risk ................................................................23 8.4. Operational Risk ............................................................249. INTERNAL CONTROL SYSTEMS ..............................................2510. MAIN FINANCIAL RESULTS ...................................................26 10.1. Details on Asset Evolution .............................................26 10.2. Data on liabilities and shareholders’ equity evolution ........29 10.3. Details on revenues and expenses .................................3211. FACILITIES FOR LEGAL ENTITIES ..........................................35 11.1. General framework ......................................................35 11.2. Loan facilities ..............................................................3612. FACILITIES FOR INDIVIDUALS ..............................................3913. BANK CARDS ......................................................................4214. OPERATIONS WITH SECURITIES ...........................................4515. INFORMATION TECHNOLOGIES .............................................4716. STAFF AND CORPORATE SOCIAL RESPONSIBILITY ...................5017. LIST OF MAIN CORRESPONDENT BANKS ................................5218. LIST OF BRANCHES AND AGENCIES ......................................53

Message of general director 3

1. MEssAGE OF GENERAL DIRECTOR

Dear Ladies!Dear Gentlemen!

On behalf of the management team, I have the honor to present the financial statements for “EXIMBANK – Gruppo Veneto Banca” S.A. for the financial year ended December 31, 2011.

Thanks to Veneto Banca sole shareholder support, skills and efforts of the management team and bank staff, not at least, to the loyalty shown by our customers in the reporting year, we have maintained market share and market is constantly among the leaders and market – makers of domestic banking market. Thus, at the end of the year, our Bank registered a market rate of 7.5% of total assets, 9.2% of total statutory capital, as well as 8.5% of granted credits and 5.9% of deposits accepted in the local banking system.

The profit for the financial year ended 2011 was amounting MDL 57.6 million. As at the end of the year, the Bank’s statutory capital of MDL 692.0 million was 6.4 times bigger than the minimum level established by the National Bank of Moldova, positioning our bank as the 4th in the system.

Results over the years, image bank on the local banking market and of the Group on international financial markets, along with efforts in support of real sector of national economy in general and small and medium enterprises in particular, have been recognized and by international financial institutions. As a result, in the reporting year, the International Finance Corporation (IFC) has initiated collaboration with the Bank through a loan worth USD 26 million to support the competitiveness of small and medium enterprises in Moldova.

According to the strategic development plan, during 2011 we paid special attention to a segment including retail development. Objectives have been materialized by developing and implementing an innovative program of mortgage, by enlarging the scale of the bank deposits, further development of remote payment services, etc.

In 2011 we paid special attention to corporate responsibility as a standard of course of activity in relation to all stakeholders. In development of the business processes we have ensured that we operate in an ethical, responsible and well managed manner. We have committed to continually improve our activity, while taking necessary measures in order to ensure a transparent reporting of all processes, decisions and actions.

Take this opportunity to sincerely thank all customers and business partners for their trust in our bank, the shareholders for the great support offered, the Council members for their permanent support and, of course, employees Eximbank - Gruppo Veneto Banca, for intelligence, creativity and contribution to direction of bank development.

Yours faithfully,

Marcel ChircaGeneral Director

JSCB „EXIMBANK – Gruppo Veneto Banca”

Key events in 20114

2. KEY EVENTs IN 2011

◊ January5,2011– JSCB EXIMBANK – Gruppo Veneto Banca obtains EMV certification of the Merchant Acquiring activity within the Visa Inc payment system.

◊ April12,2011– JSCB EXIMBANK – Gruppo Veneto Banca launches another possibility to transfer money internationally without opening accounts via Fast Money Transfer „Zolotaya Corona”.

◊ May 15, 2011 – Visa Electron and Maestro bank cards issued by JSCB EXIMBANK – Gruppo Veneto Banca are accepted as means for online payments, being equipped with additional safety features.

◊ May24, 2011– JSCB EXIMBANK – Gruppo Veneto Banca expands deposit list by 2 new time deposits: „Flexibil” and „Stabil”, with 6 month and 12 month maturity, in national as well as in foreign currency.

◊ May25,2011–JSCB EXIMBANK – Gruppo Veneto Banca participates at the International Forum of SMEs 11th edition, held under the patronage of the Government of the Republic of Moldova.

◊ June27,2011 – JSCB EXIMBANK – Gruppo Veneto Banca launches the mortgage loan product „FAMIGLIA”, for purchasing and renovation of housing, for a period of up to 20 years.

◊ July 29, 2011 – JSCB EXIMBANK – Gruppo Veneto Banca obtains a loan amounting to 26 million US Dollars for a 5 year period from the International Finance Corporation, Private Sector Division of the World Bank Group.

◊ October1,2011 – The Bank launches the deposit „ASCENDO”. The new deposit offers the possibility to invest the available financial resources in national and foreign currency for a period of 7 years.

◊ October11,2011– Branch no.7 relocates to a new modern office, equipped according to the latest requirements imposed for the banking offices.

◊ October 27, 2011 – JSCB EXIMBANK – Gruppo Veneto Banca participates in a specialized fair „IMOBIL Moldova 2011”, 8th edition, held during October 27 – 30, 2011 at CIE „MOLDEXPO”.

◊ November 11, 2011 – JSCB EXIMBANK – Gruppo Veneto Banca becomes an associate member of the Credit Bureau.

◊ November 15, 2011 – JSCB EXIMBANK – Gruppo Veneto Banca launches the deposit „CLASSICO” with a maturity from 1 month to 36 months.

5summary results

1 Sum of interest margin, net fees, income from financial operations and other operating income.2 Sum of Due to clients and Due from clients.3 Loans classified as substandard, doubtful and loss according to the Regulation of the National Bank of Moldova. 4 Loans classified as under supervision according to the Regulation of the National Bank of Moldova.

ECONOMIC, FINANCIAL REsULTs AND MAJOR MANAGEMENT INDICATORs

ECONOMIC REsULTs (in thousand MDL) 2011 2010 var. abs. var. %

Net interest income (Interest margin) 147 216 134 126 13 090 9.8

Intermediation margin1 241 762 202 900 38 862 19.2

Operating costs (expenses) -165 106 -150 884 -14 222 9.4

Net profit before tax 57 573 -145 931 203 504 139.5

Net profit 57 573 -145 931 203 504 139.5

FINANCIAL AND OPERATING REsULTs (in thousand MDL) 2011 2010 var. abs. var. %

Gross banking product2 4 346 377 4331 250 15 126 0.3

Due to clients 1 822 166 1 777 552 44 614 2.5

Due from clients 2 524 210 2 553 698 -29 488 -1.2

Interest-bearing assets 2 426 051 2 421 207 4 844 0.2

Total assets 3 546 219 3 425 395 120 825 3.5

Shareholders’ Equity 715 514 658 267 57 247 8.7

sTRUCTURE INDICEs (%) 2011 2010 var. abs. var. %

Due to clients / Total assets 51.38 51.89 -0.51 p.p. -1.0

Due from clients / Total assets 71.18 74.55 -3.37 p.p. -4.5

Due from clients / Deposits of clients 138.53 143.76 -5.14 p.p. -3.6

CREDIT QUALITY INDICATORs (%) 2011 2010 var. abs. var. %

Non-performing loans3 / Due from clients 22.76 30.98 -8.22 p.p. -26.5

Loans under supervision4 / Due from clients 54.48 41.93 12.55 p.p. 29.9

Non-performing loans / Shareholders’ Equity 80.31 120.18 -39.87 p.p. -33.2

PROFITABILITY INDICATORs (%) 2011 2010 var. abs. var. %

Return on equity (ROE) 18.81 -18.96 37.77 p.p. -199.2

Return on assets (ROA) 3.77 -4.31 8.08 p.p. -187.5

Interest margin / Interest-bearing assets 6.07 5.54 0.53 p.p. 9.5

Intermediation margin / Interest-bearing assets 9.97 8.38 1.59 p.p. 18.9

Net profit / Interest-bearing assets 2.37 -6.03 8.40 p.p. -139.4

Interest margin / Intermediation margin 60.89 66.10 -5.21 p.p. -7.9

Operating costs / Intermediation margin (cost/profit ratio) 68.29 74.36 -6.07 p.p. -8.2

3. sUMMARY REsULTs

6

5 Liquid assets / Total assets (principle II of liquidity regulation, at least 20% according to the standards of the National Bank of Moldova).

6 Assets with remaining maturity of more than 2 years / Financial resources with remaining maturity more than 2 years (principle I of liquidity regulation, maximum 1.0 according to the standards of the National Bank of Moldova).

7 Total regulatory capital / Total risk weighted assets (at least 12% according to the standards of the National bank of Moldova).

LIQUIDITY AND CAPITAL ADEQUACY 2011 2010 var. abs. var. %

Current liquidity5 (%) 29.60 27.42 2.2 8.0

Long-term liquidity6 0.73 0.72 0.0 1.4

Capital adequacy7 (%) 44.80 33.08 11.7 35.4

sTRUCTURE AND EFFICIENCY INDICATORs 2011 2010 var. abs. var. %

Average number of employees (units) 413 431 -18 -4.2

Number of bank branches (units) 20 20 0 0.0

Loans to clients per employee (in thousand MDL) 6 112 5 925 187 3.2

Due to clients per employee (in thousand MDL) 4 412 4 124 288 7.0

Gross banking product per employee (in thousand MDL) 10 524 10 049 475 4.7

Intermediation margin per employee (in thousand MDL) 585 471 115 24.3

summary results

Italian banking group – Veneto Banca 7

4. Background of the Group

Veneto Banca Group is the result of an evolution started in 1877, when the popular cooperative bank Banca Popolare di Montebelluna was founded.

In 1966 the cooperative institution merged with Banca Popolare del Mandamento di Asolo, becoming the Banca Popolare di Asolo e Montebelluna. In 2000, it changed its name into Veneto Banca, after acquiring Banca di Credito Cooperativo del Piave e del Livenza for the purpose of servicing a greater territory of the Treviso province, where it started its activity, and became, in a middle term, a bank of reference for families, enterprises, associations and public agencies in the given region.

Veneto Banca has opened various branches in the regions Veneto and Friuli and has created specialized companies, such as Claris Assicurazioni, Claris Broker, Claris Factor, Claris Leasing and Claris Cinque (the last one is specialized in salary based crediting). Veneto Banca has also implemented online services, Clarisbanca (for natural persons) and Impresa Web (for legal persons) and has offered to its branches a network of financial promoters named Claris Net.

It obtained the control on other credit institutions of Italy (Banca di Bergamo, Banca Popolare di Monza e Brianza, Banca Popolare di Intra, all of them being operational in the North-West of Italy) and Eastern Europe (Banca Italo Romena in Romania, Eximbank in Moldova, Veneto Banka Croatia and Veneto Banka Albania). Veneto Banca has also created a new bank in the south of Italy (Banca Meridiana).

At the beginning of 2008 Veneto Banca Group has changed its structure: the parent bank Veneto Banca has become Veneto Banca Holding, keeping its status of popular cooperative limited bank by shares (società cooperativa per azioni) and government, strategic obligations and control in a reality which is more pronounced as time passes in Italy and abroad.

The commercial sector is already divided into 4 geographic sectors, one company by shares being responsible for each of them: Veneto Banca in the North-East, Banca Popolare di Intra (which has acquired Banca Popolare di Monza and Banca di Bergamo) in the North-West, Banca Meridiana in the South and the foreign banks in Eastern Europe.

Between the end of 2008 and beginning of 2009, Veneto Banca Holding has concluded an agreement with Carifac (Cassa di Risparmio di Fabriano and Cupramontana, in the center of Italy) and with BancApulia (in the southern part of the peninsula) to form – after obtaining the necessary permits – a bank group along the Adriatic coast, from Friuli Venezia Giulia up to Puglia.

At the beginning of 2010, Banca Meridiana merged with BancApulia, forming a greater unique bank for the purpose of better servicing the region of the South-East of Italy.

In April 2010 Veneto Banca Holding informed on the undertaking the offer of acquisition, till the end of the year, of the major share in the subsidiary Co.fi.to. – holding of Gruppo Banca Intermobiliare (BIM), specialized in the private bank sector.

November 2010 Merger by incorporation of Veneto Banca s.c.p.a. and of Banca Popolare di Intra S.p.A. into Veneto Banca Holding s.c.p.a. This transaction of a structural reorganization nature has incorporated the branches of Banca Popolare di Intra S.p.A. and Veneto Banca S.p.A. under the same name Veneto Banca Holding s.c.p.a. (which, in January 2011, was renamed Veneto Banca s.c.p.a.) The commercial network was reorganized into three main Territorial Regions: North Region, with the Central Office in Montebelluna, North-Central region with the Central Office in Verona and North-West region with the Central office in Verbania Intra.

Italian banking group – Veneto Banca8

January 2011: corporate name of the parent bank has been changed from „Veneto Banca Holding s.c.p.a.” to „Veneto Banca s.c.p.a.”. A fusion between Co.fi.to and Veneto Banca is performed, and subsequently it acquires control of Bank Intermobiliare

The mission of Veneto Banca Group is to be an innovative and autonomous group, a leader on its territories, capable of rendering high quality services and generating long term value for the shareholders, clients and employees, in a responsible and ethical way.

Significant Data about the Group as of December 31, 2011:◊ 580 branches, of which 59 branches outside Italy: Romania (22), Republic of

Moldova (20), Croatia (7), Albania (9), Hong Kong (1 representative office) and China (1 representative office).

◊ 6,250 employees, increased with 68 persons compared to previous year.◊ Net profit: EUR 160.046 million, increased by 41.6% compared to year 2010. ◊ Total assets: EUR 37.969 billion, increased by 14.8% compared to previous year.

Rating and the end of 2011:

sTANDARD & POOR’s

Short-term liabilities A-2

Medium and long-term liabilities BBB (revised to BBB- at February 2012)

Rating perspective Negative

FITCH

Short-term liabilities F3

Medium and long-term liabilities BBB

Rating perspective Negative

Italian banking group – Veneto Banca 9

BANCAPULIA

GRUPPO VENETO BANCA

53,188%

50,787%

SE.BA S.p.a32,756%

Apulia Prontoprestito S.p.a.70,458%

Apulia Service S.p.a.100%

Apulia Assicurazioni S.p.a.in liquidazione

20% (Tot. Gruppo 100%)

Apulia Previdenza S.p.a.20% (Tot. Gruppo 100%)

SEC Servizi S.cons.p.a.25,185% (Tot. Gruppo 26,294%)

20,107% (Tot. Gruppo 87,32%)67,213%

54,934%

Apulia Finance S.r.l.51%

Servizi Informatici S.r.l.20%

Bim Vita S.p.a.50%

Bim immobilare S.r.l100%

Immobilare D S.r.l100%

Patio Lugano Sa100%

Air Box s.r.l.100%

Bim Suisse SA100%

Bim Insurance Broker S.p.a.51%

Bim Fiduciaria S.p.a.100%

Symphonia SGR S.p.a.100%

CLARIS ASSICURAZIONI100%

CLARIS CINQUE100%

CLARIS FACTOR100%

CLARIS LEASING100%

BANCA ITALO ROMENA76%

EXIMBANK100%

VENETO BANKA CROAZIA100%

VENETO BANKA ALBANIA100%

ITALO ROMENA LEASING100%

Sintesi 200033,33%

MGR s.r.l24,5%

ETA FINANCE S.P.A

30%

Claren Immobiliare s.r.l.100%

IMMOBILARE ITALO ROMENA100%

VENETO IRELANDFINANCIAL SERVICES GRUPPO VENETO BANCA

100%

Italian banking group – Veneto Banca10

Italian Banks Foreign Banks

Veneto Banca s.c.p.a.Piazza G.B. Dall'Armi, 1 31044 Montebelluna (Treviso)P.Iva 00208740266

EXIMBANK s.p.a.Bd. Ştefan cel Mare şi Sfânt 171/1Chisinau MD 2004, (Moldova)

Cassa di Risparmio di Fabriano e Cupramontana s.p.a.Via Don G. Riganelli, 3660044 Fabriano (Ancona)P.Iva 00077790426

Banca Italo Romena s.p.a. Viale Nino Bixio, 1 31100 - Treviso (Italia)

Banca Apulia s.p.a.Via Tiberio Solis, 4071016 San Severo (Foggia)P.Iva 00148520711

Veneto Banka d.d.Draskovićeva 58, 10000 Zagreb (Croatia)

Banca IPIBI Financial Advisory s.p.A. Via Meravigli n. 220123 Milano P.Iva 01733820037

Veneto Banka sh.a.Bulevardi "Dëshmorët e Kombit" Kullat Binjake, Tirana (Albania)

Banca Intermobiliare di Investimenti e Gestioni s.p.A.Via Gramsci, 710121 TORINOP.Iva 02751170016

Bim suisse s.A.Contrada Sassello, 10 (angolo Via Motta)CH-6900 Lugano (Svizzera)

Italian Companies Foreign Companies

Claris Leasing S.p.a. Immobiliare Italo Romena

Claris Factor S.p.a. Italo Romena Leasing

Claris Cinque S.p.a. Veneto Ireland Financial Service Ltd.

Apulia prontoprestito S.p.a.

Apulia previdenza S.p.a.

Bim Insurance Brokers S.p.a.

Bim Fiduciaria S.p.a.

Symphonia SGR S.p.a.

Management of the Bank 11

5. MANAGEMENT OF THE BANK

BOARD OF THE BANK

Chairman Alessandro Gallina

Deputy Chairman Vincenzo Consoli

Members Renato Merlo

Gianpietro Zannoni

Vladimir Colesnicenco

EXECUTIVE BODY OF THE BANK (GENERAL DIRECTION)

General Director Marcel Chirca

Deputy General Directors Veaceslav Burcovschii

Alexandru Breaben

Vitalie Bucataru

Chief Accountant Tudorita Bicer

AUDITING COMMITTEE

Chairman Sergiu Suveica

Members Adelina Grigoroi

Iurii Cicibaba

THE BANK’s AUDIT COMPANY IN 2011

PricewaterhouseCoopers Audit SRL

MARCEL CHIRCAGeneral Director

JSCB „EXIMBANK- Gruppo Veneto Banca”

SERGIO DALPIAZRepresentative of

Veneto Banca

ALESSANDRO GALLINA Chairman

12

6. MACROECONOMIC FRAMEWORK

6.1.Internationalframework

The second part of the year was characterized by a general slowing in the world economy: uncertainty regarding the consolidation of the public finances in the United States of America and sovereign debt tension in the Eurozone has had negative effects on the growth prospects of the advanced economies. Japan and the emerging economies were no exception, withdrawing in the latter part of the year.

Moreover, in the same period, the first data available on global trade signal a deceleration after the recovery seen during the third quarter, mainly caused by the weakness of demand by the major advanced countries.

Inflation drivers have attenuated both in the main advanced countries and in emerging countries, benefiting above all else from the drop in the prices for raw materials. In the OECD area, consumer inflation over twelve months dropped to 3.1% in November (from 3.2% in October), whilst the rate calculated net of the food and energy components remained unchanged at 2%. In emerging countries too, inflation has dropped slightly in the recent period, whilst fund pressure remains.

With regards to the financial markets, sovereign debt tension in the Eurozone, accentuated and extended in the second part of the year, has gradually become systemically relevant.

Government security trends in many countries of the European Union and the increased spread on the return against securities of the German government have suffered uncertainty on how to manage the crisis on a Community level and during inter-governmental coordination, despite the important corrections in public finance imbalances applied by national governments.

The uncertainty, increased by a worsening of growth prospects, has gone towards increasing investor aversion to risk and a preference for instruments considered safe, such as US and German government securities.

On 13 January 2012, the ratings agency Standard & Poor’s downgraded the sovereign debt of nine countries in the Eurozone including France, Italy and Spain.

In the third quarter of 2011, there has been an acceleration of economic activity in the main advanced countries outside the Eurozone. Of these, the United states of America has recorded an increasing trend in GDP of 1.8% sustained by the recovery of consumption and private gross fixed investments that have offset the negative contribution of the decreased stocks. This trend would appear to be confirmed for the last quarter too, for which initial data indicate a further strengthening of the growth rate, close to 3% per annum, thanks mainly to improved conditions in the employment market.

By contrast, the outlook for the Eurozone showed a progressive deterioration during the second part of the year, both following the weakening of the world economic cycle and the extension of tension on the sovereign debt markets.

During the third quarter of 2011, the area GDP grew by 0.1% on the previous period, still driven by the increase in exports, with the net contribution to commercial trade being 0.2%.

Domestic demand remains weak, under which scope only a partial recovery is recorded of family spending, increased by 0.2% after the 0.5% decrease recorded the previous quarter, whilst gross fixed investments are confirmed as basically stagnant.

Macroeconomic framework

13

Since the end of the summer, the outlook has worsened. Forecasts on the GDP have settled on negative values since October and short-term forecasts of businesses noted in outlook surveys have recorded widespread pessimism.

In the United Kingdom, the GDP has accelerated to 2.3%, driven in particular by an accumulation of stocks against a stagnation of consumption and the negative contribution of net exports. Many of the surveys carried out with businesses and families report indicator trends that remain weak, despite the slight improvement of some of these in December 2011. The employment market situation has not shown signs of improvement and the unemployment rate in the third quarter remained at 8.3%.

In Japan, after having reduced during the first half of the year following the earthquake, in the third quarter production bounced back well, rising by 5.6% per annum, helped significantly by the strengthening of the consumer trend and the re-start of exports, previously negatively affected by the interruption to the production chain.

With regards to the main emerging economies, also due to the restrictive measures of the economic policy adopted during the first half of the year, the activity slowed slightly.

During the third quarter of 2011, China and India saw growth remain high, with the GDP recording progress respectively of 9.1 and 6.9% per annum, thanks to the sustained trend of domestic demand. In Brazil, by contrast, the gross domestic product slowed to 2.2%, driven by the slowdown recorded in the industrial sector. The Russian economy is, on the other hand, expanding further, recording growth in GDP that totals 4.8%.

For the fourth quarter, forecasts of businesses on the trend of industrial production look to a new slowdown, more marked in India and Brazil but also relatively significant in China, where the further weakening of export demand and the lesser activity of the property sector may drive the growth rate to below 9%.

Consumer inflation has, as a whole, remained relatively limited in advanced economies, marking a progressive attenuation both with reference to the latter and to emerging economies.

In the United states of America the consumer price index dropped to 3.4% in November, with a drop of one percentage point on the October figure and of around 0.5 points with respect to the peak in September, above all thanks to the drop in the price of raw materials. In the fourth quarter, the drop in the prices of the main non-energy products and food products continued, encouraged by harvests that were better than expected. The effect of prices of crude oil is less relevant, having only reduced moderately due to the intensification of geo-political tension in the Middle East. Net of food and energy components, the price index has increased slightly, at 2.2% compared with the 2.1 of October, at least partly reflecting a slight stabilization in the growth of lease installments, in line with tension on the real estate market.

The inflation rate in the United Kingdom remains high, although reducing, standing at 5% in November. The index calculated net of energy goods and non-transformed food products has also dropped by the same amount, standing at 3.6%. The gradual loss of certain temporary factors – such as the previous mark-ups of raw materials, the significant increase in electricity prices in autumn 2011 and the increased VAT rate as from January 2011 – and the existence of an unused production capacity margin should help further attenuate inflation drivers.

In emerging countries, consumer prices have dropped slightly recently, but underlying pressure remains. In China, inflation slowed significantly in November,


Macroeconomic framework14

coming in at 4.2% as compared with the 5.6% recorded on average since the start of the year. In India, although reduced, consumer price tension remains very high; the most recent data - relating to October - in fact report an increase of 9.4%, which is lower than both the 9.8% of September and the 12.1% average of 2010. The trends recorded in Brazil head in the opposite direction, where in December the index recorded an annual change of 6.1%, remaining basically at a standstill with respect to the previous month but up if compared with the 5.1% average of 2010.

The trend seen in the Eurozone goes in the opposite direction. From January to November 2011, consumer prices in the Eurozone grew from 2.3% to 3%, as compared with a 1.6% average in 2010, before slightly decreasing in December, to 2.8%. A significant contribution was made to the worsening of the inflation rate by the price of food and, to an even greater extent, the increase in energy products, which over the last few months recorded a rather lively trend.

With regards to employment levels, the OECD has estimated that overall for the area the unemployment rate in December 2011 came to 8.2% and remains relatively stable, as was the case during the year, albeit with rather diversified national dynamics.

In December, the US unemployment rate dropped to 8.5% as compared with the 8.7 in October and the 9.6 average for 2010, whilst requests for benefits reduced down to close to the minimum levels recorded in July 2008. By contrast, average duration of unemployment remains critical and continues to increase, with employment rates rather below the prevailing rates pre-crisis. The employment rate, in fact, continues to be around 58.5%, which is distinctly lower than the 63% recorded as an average for 2002/2007.

Even if in the Eurozone the shock on the employment market was less intense than other areas, since the start of the crisis, the unemployment rate has risen by approximately 3 percentage points, in November standing at 10.3% with no change on the previous month.

The employment rate has also proven to be more resistant to the crisis: in the third quarter of 2011 it came to 64.5% as compared with the 63.7% average recorded from 2002 to 2007. Employment market conditions in the Eurozone are, however, continuing to deteriorate. Growth in employment has now become negative, recording a drop of 0.1% in the third quarter on the previous period, after three quarters of positive growth. On a sector level, the indicator shows a sharp decline of 1.6% in the construction sector, against substantial stability in industry in the stringiest sense and in services, which, moreover, on the basis of the most recent indicators may worsen in the fourth quarter of 2011.

6.2.Italianframework

During the third quarter of 2011, Italy’s GDP dropped by 0.2% on the previous period, marking the first drop since the start of 2010.

The product dynamic suffered above all the weakness of domestic demand, negatively affected by the drop in family consumption and investments, respectively down by 0.2% and 0.8%.

The worsening of the outlook reached a peak in the autumn, when the drop in production was bigger than any time since 2009, at around 3% with respect to the previous quarter. During the last quarter, in fact, industrial activity weakened, also reflecting negatively on the judgments of businesses with regards to the outlook and short-term prospects. Operating profitability remained unchanged and self-financing reduced. Financial conditions in businesses also suffered tension on the financial

Macroeconomic framework 15

markets and a weak demand; this came in addition to greater difficulties in accessing bank credit, which contributed towards worsening tension in terms of liquidity.

In the same period, the extensive unused capacity margins and the weak prospects in terms of demand slowed business investments with a continuation in the trend seen during the third quarter characterized by a drop in spending on machinery, equipment and transport means, and investment in construction of around -0.5% and -1.2%.

Partially offsetting this, in autumn, thanks to the Euro exchange rate trend, the international competitiveness of Italian businesses, measured according to production prices, improved slightly.

By contrast, growth in export sales remained positive, despite suffering the slowing to world trade. During the third quarter of 2011, exports in fact increased by 1.6% with respect to the previous period.

In a parallel manner, imports of goods and services dropped in volume by 1.1%. The reduction in purchases of oil and other minerals and electronic products continued; purchases of pharmaceutical and mechanical products, by contrast, increased. As during the previous quarter, the drop concerned imports from outside the EU, including those from China. Imports from within the EU instead grew, above all driven by flows from Germany and Spain. In the service sector, the reduction was generalized.

The change in stocks further removed around half a percentage point from the trend in the gross domestic product.

During the last few months of 2011, the climate in consumer confidence deteriorated gradually, affecting the trend of domestic demand which had already been influenced by the persistent weakness of available income and the pessimism on the prospects of the employment market. The dynamics of retail sales and motor vehicle registrations, in fact, confirm in the last part of the year the downward trend of the consumption by families recorded in the third quarter, which after over six months of substantial slackness has dropped by 0.2% from the previous period.

Based on preliminary data, the fourth quarter of 2011 again confirms the negative dynamics of gross domestic product, marking a further reduction of 0.7% from the previous quarter and of 0.5% compared to the fourth quarter of 2010.

It is estimated that in 2011 the annual GDP will increase by 0.4%.

From the summer, consumer prices have suffered from the rise in indirect taxes, whilst pressure deriving from domestic demand and imported raw materials is attenuating. In December consumer inflation was estimated at 3.3%, remaining at the same levels as November. Consumer price trends were above all affected by the increase to the ordinary VAT rate resolved at the start of the autumn and which is also the cause of the rise in inflation measured net of food and energy as rising to above 2% in the last few months of 2011. Last December’s taxes on fuel are accompanied by those resolved at the start of this year in some regions, which, together with the rise in some regulated prices, including electricity tariffs, will help sustain growth in prices in the short-term.

On average for 2011 inflation grew by 2.8%, as compared with the 1.5% of the previous year.

Other pricing pressure has been significantly relieved. In November, the gradual deceleration of production prices continued (to 4.5% from the 4.7% recorded in October). The slowing has been supported by the continued reduction of prices of non-energy raw materials.

Macroeconomic framework16

The recovery in employment that began in the fourth quarter of 2010 came to a halt in the last few months of last year: provisional data for October and November mark a drop in the number of people employed with respect to the previous month and a recovery in the unemployment rate, which has reached very high figures indeed for the young. Although use of the temporary lay-off fund continues to fall, company employment forecasts worsen. Salaries drop in real terms, also due to the block on public salaries.

In the third quarter of 2011, net of seasonal factors, the number of people employed increased by one tenth of a point, equal to 33,000 units with respect to the previous period, but the employment rate in the 15 to 64 year old age range remained basically stable at 57%. The activity and unemployment rates also remained basically stable (respectively 62.1 and 8.1%). On a sector level, the negative trend of employment in the construction segment (-2.0%) has been offset by the positive dynamics seen in services (0.4%) and in industry in the stringiest sense (0.2%). In territorial terms, the increase in employment was concentrated in the North (0.3%) and was null in the Centre, whilst the number of employees dropped slightly in the South (-0.1%).

Against a slightly positive trend seen in the third quarter, the provisional data shows a worsening in the last few months of 2011: both in October and in November, a percentage drop is estimated in employment of one tenth of a point with respect to the previous month and again in November unemployment is suggested as having settled at 8.6%, the highest since May 2010, with a peak at 30.1% with reference to the young aged between 15 and 24 years old, a level that is unprecedented since the start of monthly records (January 2004).

6.3.RepublicofMoldova

In 2011, the economy of the Republic of Moldova together with many other economies found itself in a recovery phase due to adverse effects of recent financial and economic crisis, triggered worldwide. In such a way during the reporting year the gross domestic product of the Republic of Moldova increased in real terms by 6.4% compared to the previous year, shown in the data of the National Bureau of Statistics. This increase has been determined by the increase in the gross added value produced in the sectors of goods and services, the raise in taxes on products, and also due to the increase in final consumption.

Gross added value generated in the goods sector increased by 6.3% compared to 2010, influencing positively the volume index of GDP. Goods sector contributed to GDP at a rate of 26.0% compared to 25.3% in 2010.

Gross added value produced in the services sector compared to the previous year increased by 5.4%, contributing at a rate of 3.2% to the increase in GDP. In particular, this increase was subject to the increase in gross added value of wholesale and retail activities, logistics and communication activities by 10.6 % and 6.0% respectively.

The volume of taxes on goods collected in the national public budget exceeded the level of the previous year by 10.1%, influencing the growth of GDP by 1.7%. The contribution of taxes on goods to the GDP has been registered at a rate of 17.5% during the reference period compared to 17.2% during the previous period.

Total final consumption increased by 6.4% compared to the previous year, particularly due to the increase in the final consumption of households by 8.5%, influencing GDP growth by 7.4%. Gross fixed capital formation grew by 10.7% since 2010, contributing 23.2% to GDP growth.

Macroeconomic framework 17

In 2011 consumer prices increased compared to 2010 by 7.6 percent on average, and compared to December 2010 - by 7.8 percent. During the reporting year food prices rose on average by 7.1 percent compared to the previous year, non-food products increased by 7.7 percent.

The national public budget collected revenues in the amount of MDL 30,158.5 million (equivalent of EUR 2 billion) or at 98.4 percent to the task set for this period. Compared to the 2010 budget revenue grew by MDL 2,618.3 million. Tax revenues amounted to MDL 25,599.5 million, being by 0.7% below the annual forecast, and by 13.6% higher than the previous year’s revenues. Non-tax revenue constituted MDL 1,178.8 million, exceeding by 3.2% the forecast and being 16.8% below the achievements of 2010.

General government expenses totaled MDL 32,117.0 million, representing 3.5% below the expected level and exceeding by 9.5% the total expenses made in 2010. As a result of expenses exceeding revenues in 2011, it resulted in a budget deficit that amounted to MDL 1,958.5 million compared to the forecasted deficit of MDL 2,612.3 million.

In 2011 exports totaled USD 2,221.6 million, which is higher than the amount achieved in 2010 by about 44.1%. The exported goods to EU countries amounted to USD 1,087.8 million (49.2% more than in 2010), reaching a 49.0% share of total exports (47.3% in 2010). CIS countries were present in the top of Moldovan exports accounting for 41.4% (in 2009 - 40.5%), which corresponds to USD 919.3 million. Export of goods to these countries increased by 48.3% compared with 2010.

Imports totaled USD 5,191.6 million, which is higher than the amount achieved in 2010 by 34.7%. Imports from EU countries amounted to USD 2,256.6 million (32.4% more than in 2010), reaching a 43.5% share in total imports. Imports of goods from CIS countries were worth USD 1,713.4 million, being by 36.3% higher than in 2010, which equals to a 33.0% share of total imports (32.6% in 2010).

In 2011, according to the National Bureau of Statistics, the average gross monthly nominal wage in national economy constituted MDL 3,193.9 and increased by 11.6% in nominal terms compared to 2010, real wages increasing by 3.7% compared to the previous year.

Unemployment nationwide recorded a value of 5.3%, while the number of unemployed is about 71 000 people according to the methodology of calculation of the International Labor Office.

6.4.BankingSystemintheRepublicofMoldova

In 2011 the Moldovan banking system maintained its stability and development potential, evidencing high liquidity and profitability as a result of stringent measures applied by the National Bank of Moldova on credit portfolios.

Thus a crucial financial indicator of bank solvency, showing system performance in crisis is Tier 1 Capital, which grew by 12.4% to MDL 7,557.8 million (equivalent of EUR 501.4 million) in 2011, compared to the decrease of 5.2% recorded in 2010. At the same time a slight change in the structure of foreign investments in banks due to capital increase by investments of resident shareholders is observed, thus reducing by 3.0 p.p. the foreign investments in banks and reaching 74.0% at the end of 2011.

Total assets of the banking system recorded an increase of 12.9% at the end of 2011 compared to 2010, amounting to MDL 47,707.9 million (equivalent of EUR

18

3,165.0 million). This increase was mainly due to positive dynamics of the net loan portfolio, which compared to the increase of 15.3% during the previous year, reached MDL 27,747.6 million (equivalent of EUR 1,840.8 million) or an increase of 19.0% during the reporting year. At the same time funds Due from NBM recorded an increase of 84.1% during the reporting year, reaching the amount of MDL 4,390.3 million (equivalent of EUR 291.3 million) on December 31, 2011. Also, on the asset side, it may be noted that the decreasing share of net funds due from banks and net overnight placements reduced compared with 2010 by 17.2 percentage points to MDL 3,442.3 million (equivalent of EUR 228.4 million). Another essential element of the asset weight in the banking system is net securities, with a decrease of 3.5 p.p. to MDL 6,416.9 million (equivalent of EUR 425.7 million) and other net assets with a decrease of 1.2 p.p. to MDL 3,719.9 million lei (equivalent of EUR 246.8 million).

At the end of December 2011 total liabilities were MDL 39,613.5 million (equivalent of EUR 2,628.0 million), increasing by 13.2% from the beginning of the year. The basic growth was the increase in the deposit balances by MDL 32,632.1 million (equivalent of EUR 2,164.8 million), or by 13.6% compared to the previous year, including retail deposits – by 13.8 percent to MDL 20,675.4 million (equivalent of EUR 1,371.6 million), as a reflection of increased credibility in the banking system after the financial crisis.

Compared to 2010, the reporting year registered an increase of 11.5% in shareholder’s equity, reaching MDL 8.1 billion (equivalent of EUR 537.4 million) on December 31, 2011.

Taking into account that the background of economic conditions is still difficult, loan portfolio quality remains the main challenge for banks in the Republic of Moldova. In this context it may be important to emphasize the fact that during 2011 the loan portfolio quality improved. Thus, in the reporting period, the weight of nonperforming loans (substandard, doubtful and bad) in total loans decreased by 2.6 p.p., reaching 10.7% on December 31, 2011 compared to the end of 2010.

Bank risks have been traditionally managed and diversified, according to market requirements. Thus, at the end of December 2011 the largest share in total loan portfolio has been granted to the industry and trade - 54.6%, followed by loans granted to agriculture and food processing - 13.5%, loans granted to real estate and construction - 12.2 % and consumer loans - 6.7%.

In 2011, net income of the banking system totaled MDL 879.7 million (equivalent of EUR 58.4 million) or 4.7 times more than the income registered in the previous year when net revenues were MDL 219.1 million (equivalent of EUR 13.6 million).

Long-term liquidity in the banking system reached the coefficient of 0.7 (the prudential maximum limit – 1.0). This indicator shows the availability of resources that can be invested within two years. The current liquidity in the system was 33.2% (the prudential minimum limit - 20%). The value of the coefficient reveals the existence of adequate liquidity to support payments on liabilities and determines the reduced vulnerability of the banks.

6.5.ChangestotheRegulatoryFramework

In the process of performing the duties of elaboration and implementation of monetary and exchange rate policy, in order to ensure a secure and sustainable financial system and to support commercial banks to establish and maintain positive growth trend for increasing resistance to any external shocks, the National Bank of Moldova intervened with numerous changes to both basic regulations related to banking and monetary policy instruments, as well as new regulations.


19

In addition to changes in regulations with reference to „cash operations”, „international transfer system of money”, „transfer credit”, „foreign exchange regulation” and others, the greatest echo in banking was the provisions of a new regulation on branches, representative offices and agencies.

Starting January 1, 2012, according to the Law on accounting, public interest entities, including commercial banks, are required to keep records and prepare financial reports in accordance with the International Financial Reporting Standards (IFRS). To provide a single reporting framework to banks for applying IFRS and to proceed relying on specific reporting requirements established by the National Bank of Moldova, the Instruction on the financial statements FINREP was approved in order to comply with International Financial Reporting Standards applicable to banks.

These amendments to the legal framework for banking activity and subsequent recommendations of the NBM with reference to some of them prompted the bank to review and update internal legal framework, as well as approve new version of the regulation with reference to branches and subsequent reorganization of representative offices into agencies subordinated to the branches of the bank.

Given the situation on the foreign exchange markets, based on the national economy, the dynamics of inflationary processes and projected expectations based on macroeconomic indicators, the National Bank has promoted the rates on monetary instruments policy in such a way that during 2011 the base rate remained unchanged at 7%.

To cover current expenses, the Board of Directors of the Deposit Guarantee Fund of the Banking System, similar to previous years, set the percentage rate applied to calculate amount of payment required for 2012 at the level of 0.0640% of the total amount of guaranteed deposits recorded in the balance sheet as of September 30, 2011.


20

7. CORPORATE GOVERNANCE

The Commercial Bank „EXIMBANK – Gruppo Veneto Banca”, by acknowledging that the use of the best practices and standards is a basic conditions for ensuring the Bank stability, competitiveness on the financial market, as well as success in business, being aware of the level of responsibility before its shareholder, with a view to securing and protecting its interests, conducts its banking activity with the purpose to attain the established objectives.

The system of identification, evaluation, monitoring and control of the risks has been developed and applied by the Bank also with regard to internal control and management of the risks related to the processes of financial reporting, with a view to delivering information that is trustworthy, relevant and complete to the structures involved in decision-making within the Bank and to external users, as well as in order to ensure compliance of the banking activities with the legal framework on financial reporting and the internal policies and procedures.

GeneralAssemblyoftheShareholders

General Assembly of the Shareholders is the supreme governing body of the Bank. Corporate conduct practices of the Bank are aimed at ensuring real opportunities of the shareholders to enforce its rights when participating in the Bank’s activity. The competence of the General Assembly of the Shareholders, the periodicity of its convening, conduct and decisions are governed by the law on joint stock companies and the Bank’s Bylaws. Decisions of the General Assembly of the Shareholders on matters within its competence are mandatory for officers of the Bank and shareholders.

BoardofAdministration

The Board is a governing body of the Bank, which exercises the function of monitoring the Bank’s activity, approves the Bank’s policies and strategy and ensures the implementation thereof. The Board of the Bank represents the interest of the shareholders passed from the General Assembly and carries out the general management and control over the Bank’s activity within the limits of its authorities. The Board of the Bank is subordinated to the General Assembly of the Shareholders. The Board is responsible for the adoption of the corporate strategy, risk control policies and business plans, for the financial operations and stability of the Bank and exercises oversight over their achievement by the General Direction.

AuditCommittee

The Audit Committee of the Bank exercises control over the Bank’s economic and financial activity and is subordinated to the General Assembly of the Shareholders. The Audit Committee of the Bank exercises compulsory control over the Bank’s economic and financial activity as well as performs extraordinary check-ups on its own initiative, at the request of the shareholders, under a resolution of the General Assembly of the Shareholders or under a resolution of the Board of the Bank.

GeneralDirection

The General Direction is the executive body of the Bank that ensures the implementation of the resolutions of the General Assembly of the Shareholders and of the Board of the Bank, and acts on behalf of the Bank in compliance with the laws, the Bank’s By-Laws, the Regulations on the General Direction, approved by the Board of the Bank.

Corporate governance

21

The General Direction exercises the functions of managing the Bank’s current affairs, including the management of all structural subdivisions, the kinds and lines of activity of the Bank, acknowledges its responsibility before the shareholder, the Bank’s clients and community and considers that its main goal is to faithfully and skillfully perform its position-related duties concerning the current activity management, ensuring a profitable, stable and sustainable development.

CreditCommittee

The Credit Committee implements the Bank’s policy and strategy in the field of granting loans by applying measures set by management in practice. The main objective of the Credit Committee is a fair and impartial examination of credit applications, analyzing risks that may arise as a result of entering into a credit transaction, and advancing proposals to the General Direction or the Board of the Bank for a final resolution.

CommitteeonAssetsandLiabilitiesManagement

The Committee on Assets and Liabilities Management has as a main objective management of Bank’s assets and liabilities, and namely the strategic management of the balance sheet, taking into account all market risks with a view to optimizing / minimizing the variability of the net income from interests and of the market value of the Bank’s capital.

Corporate governance

22

8. RIsK MANAGEMENT

At present, risk management has become a priority subject for financial institutions.

Resulting from the above, the identification, measuring, monitoring and control of risks are truly significant for the Bank. Risk positions are reviewed and assessed by top management, internal and foreign auditors, as well as NBM representatives.

The policies and activities of risk management are in line with those of Veneto Banca and are concentrated on the identification and valuation of the risks from their appearance. The Bank cautiously approaches risk in accordance with its long-term strategy. Risk management policies and activities comply with Veneto Banca practices, and are focused upon risk identification and assessment in its initial stage. The Bank implements this approach through risk management and credit monitoring functions.

Main assets and financial debts of the Bank are made up of credits/loans and advance payments to its customers, leasing-related receivables, securities placed at NBM, loans as well as demand deposits and term deposits. Such instruments are subject to a series of risks, such as credit risk, currency risk, interest rate risk and liquidity risk..

8.1.CreditRisk

Credit risk stands for the loss likely to be incurred by the bank provided a customer or other counterparty fails to honor his/her/its contractual obligations. The credit risk is implicitly contained in traditional banking products – credits/loans, crediting commitments and other contingent engagements such as letters of credit.

The Bank manages its exposure both towards individual counterparties and customer groups through crediting threshold-limits established at the moment of analysis. The value of the threshold-limit depends on quantitative factors such as client’s position and financial performance, condition of the industry, as well as qualitative factors, such as management quality, shareholders’ composition, as well as soundness of guarantees (collateral / security) submitted by the client. Guarantees are industrial facilities or held real estate, equipment, or stocks. The exposure in relation to authorized threshold-limits is continuously monitored.

Credit risk management is based on several significant principles, such as:

- analysis and approval of launching of new risk-generating products and activities by the bank management;

- use of well-defined credit-granting criteria, depending on the type of customer, which involve detailed knowledge about the debtor, credit structure and destination, reimbursement source, as well as request for real or personal guarantees for credit risk reduction to acceptable levels;

- establishment of well-documented processes for credit approval, by using a clear system of competences for approval;

- continuous monitoring of exposure both at individual and collective levels, if needed;

- monitoring of credit portfolio quality and periodical reporting to bank management;

- periodic check-ups of crediting activity by internal audit departments;

Risk management

23

- use of a system meant to identify and handle inefficient credits as well as various aspects resulting from such activity by applying objective indicators.

At the same time the objective of credit risk is to maintain a well-balanced portfolio divided by economic sectors, customer categories and geographical areas.

8.2.MarketRisk

Market risk represents the risk of losses associated to the modification of market variables, such as interest rates and exchange rates.

Given the aim of the Bank to identify exposures to this risk, simulations are constantly performed in the view of preventing market movements and managing this type of risk efficiently. The role of stress-tests, as an integral part of market risk management process, is to reduce the subject-to-risk value to minimum through pro-active management, modernize methods and monitor the instruments employed.

The currency risk is tightly connected to the shifts in exchange rates. The Bank manages the currency risk by using threshold-limits for open currency positions at the level of each currency and at the level of total currency position.

The currency risk within Commercial Bank „EXIMBANK - Gruppo Veneto Banca” is thought as minimal, due to its prudent policy regarding the open position threshold-limits. The currencies operated by the Bank correspond to Bank development and market evolution.

Interest rate risk depends on the shifts in interest rates existent in the market. This type of risk is handled by the Bank by means of monitoring gaps between assets and liabilities throughout settling intervals and/or throughout repricing intervals. Generally, the Bank tries to maintain a net positive position of financial interest-based instruments.

8.3.LiquidityRisk

Liquidity risk is associated whether to the difficulties encountered while trying to obtain the necessary funds for meeting its commitments, or to the impossibility of commercializing a financial asset in due time and against a payment close to its real cost.

The bank is systematically monitoring current liquidity discrepancies between Bank’s assets and liabilities, and performing, on a permanent basis, forecasts regarding the future liquidities’ position. At the same time the Bank makes use of stress scenarios as part of liquidity risk management.

Liquidity risk management is grounded on a structure with principles establishing measures for balance structure correction, in order to eliminate unacceptable deviations.

In order to counteract the market crisis, the Bank holds highly liquid assets, such as deposits with other banks, accounts at NBM, and other loan facilities allowing the bank to be placed among the most viable actors on the market.

Risk management

24

8.4.OperationalRisk

Operational risk stands for the risk of losses resulted from inadequate or unobserved internal procedures, human mistakes, system errors, as well as external events.

The management of this risk category is of a major importance in risk management practices existent in modern financial markets in conformity with Basel II requirements. Operational risk management implies structuring domestic controls and corporative governing, able to identify losses resulting from mistakes, frauds, failings to perform transactions within the fixed deadline. At the same time it can affect the bank’s interests by means of dealers, credit officers or other employees who trespass job duties in a risky or non-ethical way. Other aspects of the operational risk include major collapses of the information system, events such as fires or other calamities.

The crucial elements in operational risk management are the clear strategies and supervision on behalf of the Board and General Direction, the culture of internal and operational controls (including segregation of functions and responsibility distribution), effective reporting instruments and continuity plans.

In order to reduce operational risks, the Bank elaborated plans and implemented work continuity devices, which are systematically subject to tests. Back-up solutions were developed in cooperation with IT-specialized and telecommunication partners.

Similar to other aspects of risk management, Eximbank – GVB is continuously modeling an adequate environment for operational risk management:

- Maintaining and developing the necessary governing for ensuring risk management activity performance;

- Ensuring compliance with the norms and regulations imposed by national and international authorities;

- Encoding policies and procedures pertaining to operational risk management and checking at the bank level;

- Drafting strategies for identifying, assessing, monitoring and controlling the operational risk; such aspects include direct and distance controls of branches and their software-based monitoring;

- Developing and implementing an operational risk assessment methodology;

- Modeling and maintaining a work continuity plan;

- Developing and implementing an operational risk reporting system;

- Further developing of operational risk management in order to achieve a much more efficient capital granting.

Risk management

25

9. INTERNAL CONTROL sYsTEMs

The Internal control represents a continuous process that provides a reasonable insurance with reference to achieving the following objectives of the Bank:

• Effectiveness and efficiency of operations;

• Accuracy of financial reporting - credibility, integrity and timely provision of reliable financial information to the management of the Bank;

• Obeying laws and applicable regulations – complying with laws and regulations, with approved policies and procedures.

In order to ensure effectiveness of internal control within Eximbank - Gruppo Veneto Banca, the following structure was established:

1. Line controls – first level of activity management within the control structure, which is meant to ensure the correct performance of operations and compliance of which is ensured at the level of each operational subdivision of the Bank;

2. 2nd level controls – are ensured by the set of supervision and control measures performed by the responsible departments / sections of the Headquarters of the Bank;

3. 3rd level controls – organization and ensuring permanent control by the Internal Audit department of the Bank. The internal Audit has the responsibility to revise policies, processes and mechanisms of control in such a way that it remain sufficient and adequate to the performed activity;

4. 4th level controls – periodical supervision and control of the Bank performed by the auditors of Veneto Banca.

To ensure the above-mentioned objectives, EXIMBANK – Gruppo Veneto Banca designed and organized an internal control system applicable at each hierarchical level. At the elaboration of the internal control system, the volume, number, and type of transactions, the variety of operations, the degree of risk associated to each sphere of activity, the amount of control on the daily activity, the degree of centralization and decentralization, as well as the degree and methods of use of the processers of the electronic database were taken into consideration.

In accordance with the standards implemented by Veneto Banca, Eximbank – Gruppo Veneto Banca pays a special attention to the permanent monitoring and updating of the Internal Control System, thus minimizing the risks of the financial activity.

Internal control systems

26 Main financial results

10. MAIN FINANCIAL REsULTs

10.1.DetailsonAssetEvolution

In 2010 the total assets of the Commercial Bank „EXIMBANK - Gruppo Veneto Banca” registered an absolutely insignificant variation, remaining above the level of MDL 3.3 billion during the entire year, reaching MDL 3.5 billion (equivalent of EUR 235.2 million) on December 31, 2011, as compared to MDL 3.4 billion (equivalent of EUR 212.7 million) at the end of 2010.

ASSETS DYNAMICS IN 2011

MIL

LIO

N M

DL

3 700 —

3 650 —

3 600 —

3 550 —

3 500 —

3 450 —

3 400 —

3 350 —

3 300 —

3 250 —

3 200 —

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

3 408

3 357

3 460

3 422

3 386

3 423

3 365 3 354

3 504

3 559

3 662

3 546

EVOLUTION OF BANK’S ASSETS SHARE OF TOTAL ASSETS PER BANKING SYSTEM

EXIMBANK Assets Banking System Assets Share of EXIMBANK/Banking System

MIL

LIO

N M

DL

50 000

45 000

40 000

35 000

30 000

25 000

20 000

15 000

10 000

5 000

0

2007 2008 2009 2010 2011

10.0%

8.0%

6.0%

4.0%

2.0%

0.0%2 715 3 717 3 648 3 425 3 546

47 430

42 303

39 91539 123

31 855

8.5%

9.5%9.1%

8.1%

7.5%

The dynamics of the bank assets has had an upward trend during 2011, increasing by 3.5% as compared to the end of 2010 based on reevaluation risk assessment attached to the loan portfolio and obtaining a loan amounting to 26 million US Dollars

27Main financial results

0 500 1000 1500 2000 2500 3000 3500 4000

2007

2008

2009

2010

2011

Cash assets and their equivalents Securities Net loans to clients Other assets

ASSET STRUCTURE,MILLION MDL

626

1128

806

469

612

222

207

345

482

450

1 763

2 230

2 230

2 262

2 250

112

152

267

213

235

from the International Finance Corporation (IFC). Another aspect that characterizes this phenomenon is promotion of new lending products and acceleration of lending activity. While EXIMBANK – Gruppo Veneto Banca registered a minor decrease in the share of the banking system total assets from 8.1% (as of December 31, 2010) to 7.5%, the Bank maintained its fifth position by the asset size.

The increase in cash and cash equivalents was due to the loan facility obtained from IFC and accessing credit lines from the parent bank.

Despite the fact that during 2011 EXIMBANK - Gruppo Veneto Banca has granted new loans to the corporate clients and individuals, the share of the Bank in the total loans of the banking system decreased by 1.5 percentage points, thus reaching the level of 8.5% as of December 31, 2011 (2010: 10.0%) the net loan portfolio decreasing by MDL 12.2 million (equivalent of EUR 0.8 million), taking into consideration the decrease in loan provisions to the level of MDL 274.6 million (equivalent of EUR 18.2 million).

AssET sTRUCTURE (thousand MDL)

2011 2010 var %comp.

'11(%)comp.

'10(%)

Cash and other liquid assets 611 743 469 196 30.4% 17.3% 13.7%

Securities 449 934 481 649 -6.6% 12.7% 14.1%

Net loans to clients 2 249 606 2 261 786 -0.5% 63.4% 66.0%

Other assets 234 936 212 764 10.4% 6.6% 6.2%

TOTAL AssETs 3 546 219 3 425 395 3.5 100.0 100.0


0

500

1000

1500

2000

2500

160

140

120

100

80

60

40

20

0


DYNAMICS OF CREDIT PORTFOLIO IN 2011

MIL

LIO

N M

DL

2 522 2 517 2 483 2 468 2 483 2 454 2 4082 468 2 509 2 510 2 514

2 409

52 53 50 5054

5862

67

81

90

102

115

Loans to private individuals Loans to legal entities

In absolute values, the loans granted to the corporate segment decreased by MDL 92.6 million (equivalent of EUR 6.1 million) or 3.7% as compared to 2010, reaching the figure of MDL 2 409 million (equivalent of EUR 159.8 million), as compared to the increase of MDL 52.4 million (equivalent of EUR 3.3 million) in 2010.

The loans granted to individuals registered a substantial increase of MDL 63.1 million (equivalent of EUR 6.1 million), preponderantly offered for the purchase of real estate following the launch of „Famiglia” product.

In the structure of total assets, the largest change in absolute value was registered in cash due from banks, an increase of 69.3% to the amount of MDL 206.9 million (equivalent of EUR 13.7 million) as of December 31, 2011. The increase was mainly due to accessing credit lines from the parent bank, loan obtained from the IFC, as well as to the necessity of the Bank to have sufficient reserves of liquid assets.

As compared with the cash and other liquid assets due from banks, securities registered a decrease, namely in Treasuries issued by the Ministry of Finance in relative values of 72.9%, the total value of the securities reaching at the end of 2011 the amount of MDL 450.0 million (equivalent of EUR 29.9 million)

CAsH AND OTHER LIQUID AssETs 2011 2010 var. % comp. % '11 comp.% '10Due from banks 311 158 226 148 37.6 50.9 48.2

Cash in hand 108 140 107 516 0.6 17.7 22.9

Due from banks 206 916 122 244 69.3 33.8 26.1

Due from banks loss provisions - 3 898 - 3 612 7.9 -0.6 -0.8

Balances with the National Bank of Moldova 300 585 163 048 84.4 49.1 34.8

Overnight placements 0 80 000 -100.0 0.0 17.1

TOTAL CAsH AND OTHER LIQUID AssETs 611 743 469 196 30.4 100.0 100.0


The growing share of investments in National Bank Certificates in total securities is especially due to reinvestment of resources obtained as a result of decreasing investments in Treasuries issued by the Ministry of Finance.

The dynamics of liquid assets in 2011 allowed the Bank to maintain a sufficient level of liquidity in conformity with the prudential limits set by the National Bank of Moldova, also producing some additional reserves.

LIQUIDITY 2011 2010 Var. %

Current liquidity (*) 29.60% 27.42% 2.18%

Long term liquidity (**) 0.73 0.72 1.4%

10.2.Dataonliabilitiesandshareholders’equityevolution

The evolution of liabilities of EXIMBANK - Gruppo Veneto Banca was of a constant nature, increasing by 2.34%, namely by MDL 63.6 million (equivalent of EUR 4.2 million), as compared to the end of 2010, amounting to a total of MDL 2 831 million (equivalent of EUR 187.8 million) as of December 31, 2011.

2 400

2 600

2 800

3000 DYNAMICS OF LIABILITIES IN 2011

MIL

LIO

N M

DL


sECURITIEs, (in thousand MDL) 2011 2010 var. % comp. % '11 comp. % '10

Public securities 447 944 480 651 -6.8 99.5 99.8Government bonds, nominal value 4 500 4 200 7.1 1.0 0.9Treasury bonds issued by the Ministry of Finance, nominal value 34 665 127 864 -72.9 7.7 26.5

National Bank Certificates, nominal value 410 000 350 000 17.1 91.1 72.7Discount on public securities and National Bank Certificates - 1 221 - 1 413 -13.6 -0.3 -0.3

Investments in shares 627 627 -0.1 0.1 0.1Transaction securities 1 409 392 259.3 0.3 0.1

TOTAL sECURITIEs 449 980 481 670 66.3 100,0 100,0

(*) Liquid assets / Total assets (principle II of liquidity regulation, at least 20% according to the prudential limit set by the National Bank of Moldova).

(**) Assets with remaining maturity of more than 2 years / Financial resources with remaining maturity more than 2 years (principle I of liquidity regulation, maximum 1.0 according to the prudential limit set by the National Bank of Moldova).


Due to banks

Shareholders' equity

Loans from EBRD

Loans IFC

Deposits of clients

Loans from Veneto Banca

Loans from NBM

Other liabilities

0 500 1000 1500 2000 2500 3000 3500 4000

2007

2008

2009

2010

2011

STRUCTURE OF LIABILITIES AND SHAREHOLDERS’ EQUITY,MILLION MDL

141 1155 752 580 94

103 1457 808 912 246 50 71

80 1778 658 577 208 46 79

90 1822 716 415 134 305 66

197 1445 864 930 208 71

In the structure of liabilities, we observe an increase of resources attracted from the clients, which amounted to MDL 1 822 million (equivalent of EUR 120.9 million) at the end of the year, with a share of 64.37% of total liabilities, and on the other hand funds due to banks increased by MDL 10.2 million (equivalent of EUR 0.7 million), reaching MDL 90 million (equivalent of EUR 6.0 million) at the end of the year, accounting for 3.17% of total liabilities.

It is worth mentioning the fact that during 2011 the Bank obtained a loan amounting to USD 26 million (equivalent of EUR 20.2 million), representing a 10.8% share of total liabilities.

The other chapters of Bank liabilities recorded a declining trend during 2011. Thus, the balance of loans contracted from Veneto Banca in form of credit lines registered a declining trend compared to 2010, amounting to MDL 414.5 million (equivalent of EUR 27.5 million) or to 14.6 % of total liabilities. Loans from EBRD were also caught in a downward trend, reaching at the end of the year the balance of MDL 133.9 million (equivalent of EUR 8.9 million), representing 4.7% of total liabilities. At the same time it should be mentioned that during the reporting period the loans obtained from NBM were fully repaid, in line with the contract.

LIABILITIEs sTRUCTURE(thousand MDL) 2011 2010 var. % comp. % '11 comp. % ‘10

Due to banks 89 755 79 551 12.8 2.5 2.3

Deposits of non-banking clients 1 822 166 1 777 552 2.5 51.4 51.9

Shareholders’ equity 715 514 658 267 8.7 20.2 19.2

Loans from Veneto Banca 414 528 576 707 -28.1 11.7 16.8

Loans from EBRD 133 890 208 353 -35.7 3.8 6.1

Loans from NBM 0 46 089 -100.0 0.0 1.3

Loans from IFC 304 600 0 100.0 8.6 0.0

Other liabilities 65 765 78 876 -16.6 1.9 2.3

TOTAL LIABILITIEs 3 546 219 3 425 395 3.5 100 100


Deposits from non-banking clients increased compared with 2010, reaching at the end of 2011 the balance of MDL 1,822 million (equivalent of EUR 120.9 million). It should be noted that during 2011 the policy of attracting new clients has propelled customers to open new deposits, the Bank managing to increase the volume of deposits compared to the previous year.

The total amount of deposits from non-banking clients increased compared to the previous year, registering an increase in terms of interest bearing deposits of 5.5%, while non-interest bearing deposits recording a decrease of 28.8%. Interest-bearing deposits of individuals increased by MDL 81.5 million (equivalent of EUR 5.4 million) or 9.7% compared to the previous year. Interest bearing deposits of legal entities increased by MDL 7.9 million (equivalent of EUR 0.5 million) or 1.0% compared to 2010. In terms of non-interest bearing deposits of individuals and legal entities compared to the previous year, we noticed the following:

• In relative values (2.0% and 36.6% accordingly);• In absolute values (MDL 0.7 million and MDL 44.2 million accordingly).

We would like to mention the fact that by applying a tougher prudential policy with reference to granting loans, the ratio between the loan portfolio and deposit portfolio declined from 143.7% in 2010 to 138.5% the end of the reporting year.

0

500

1 000

1 500

2 000

2 500

3 000

EVOLUTION OF LOANS TO CLIENTS AND DEPOSITS OF CLIENTS RATIO

MIL

LIO

N M

DL

2007 2008 2009 2010 2011

180.0%

160.0%

140.0%

120.0%

100.0%

80.0%

60.0%

40.0%

20.0%

0.0%

1 818

1 155

2 327

1 445

2 492

1 457

2 554

1 778

2 524

1 822

157.3% 161.1%171.0%

143.7%138.5%

Loans to clients Deposits to clients Loans/Deposits (%)

DEPOsITs OF CLIENTs (thousand MDL) 2011 2010 var. % comp. % '11 comp. % ‘10

Non-interest bearing deposits 110 748 155 588 -28.8 6.1 8.8

individual 32 350 33 012 -2.0 1.8 1.9

legal entities 78 398 122 576 -36.6 4.3 6.9

Interest bearing deposits 1 711 419 1 621 965 5.5 93.9 91.2

individual 918 655 837 150 9.7 50.4 47.1

legal entities 792 764 784 815 1.0 43.5 44.2

TOTAL DEPOsITs 1 822 167 1 777 553 2.5 100 100


Shareholders’equity

The investments of the sole shareholder Veneto Banca s.c.p.a. in the share capital made during the previous years has allowed the Bank to maintain its leadership in this area even in the most recent years when domestic banks increased their capital.

In the reporting year the share capital increased by MDL 57.2 million (equivalent of EUR 3.8 million) based on the obtained profit, compared with a decrease of MDL 150.5 million (equivalent of EUR 9.35 million) during the previous year.

As a result, the Bank has maintained the fourth position in the banking system in terms of total regulatory capital, which registered MDL 765 million (equivalent of EUR 50.8 million Euro) at the end of the reporting period.

SHARE OF SHAREHOLDER’S EQUITY SHARE OF TOTAL NORMATIVE CAPITAL

2008 2009 2010 2011

100%

80%

60%

40%

20%

0%

30.1% 28.5% 22.2% 19.0%

81.0%77.8%71.5%69.9%

Other Banks Eximbank – GVB

2008 2009 2010 2011

100%

80%

60%

40%

20%

0%12.9% 12.1% 9.3% 10.1%

89.9%90.7%87.9%87.1%

Other Banks Eximbank – GVB

The increase in total regulatory capital and in assets with a low risk weight led to an increase of capital adequacy to 40.45% (7.37 percentage points), exceeding by far the 12.0% minimum prudential limit set by the National Bank of Moldova, which allows further expansion of bank lending.

10.3.Detailsonrevenuesandexpenses

In 2011 EXIMBANK – Gruppo Veneto Banca has obtained revenues in a total amount of MDL 363.5 million (equivalent of EUR 24.1 million), 13.3% more than in 2010.

REVENUEs(thousand MDL) 2011 2010 var.% comp. % '11 comp. % '10

Interest income 268 970 252 082 6.7 74.0 78.6

On placements with banks 7 311 1 770 313.1 2.0 0.6

On overnight placements 942 721 30.7 0.3 0.2

On securities 31 390 30 782 2.0 8.6 9.6On loans (including commission fees) 229 327 218 809 4.8 63.1 68.2

Non-interest income 94 558 68 785 37.5 26.0 21.4On foreign currency exchange operations 23 065 22 691 1.6 6.3 7.1

Commission related 35 870 34 624 3.6 9.9 10.8

Other non-interest income 35 623 11 470 210.6 9.8 3.6

TOTAL NON-INTEREsT INCOME 363 528 320 867 13.3 100.0 100.0


As compared to 2010, an interest income increase of 6.7% (MDL 16.9 million) was observed in the reporting year, thus reaching the amount of MDL 269.0 million (equivalent of EUR 17.8 million) at the end of the year. Amid a minor reduction of the credit portfolio during the reporting year, interest income and fees and commissions on loans increased by 10.5 million lei (4.8%) due to improving loan portfolio quality, by recognizing interest income previously reversed after passing to accrual status. It should be noted that there was an increase and the other components of interest income, of which the most significant change of MDL 5,541 thousand (the equivalent of EUR 367,600) was recorded in interest income due from banks. This increase was mainly due to placing interbank term deposits with domestic banks.

Non-interest income accounted for MDL 94.6 million (equivalent of EUR 6.3 million), by MDL 26 million (37.5%) more due to the increase of seized assets sales in particular than in 2010.

Bank expenses in 2011 reached MDL 306.0 million (equivalent of EUR 20.3 million), decreasing by 34.5% compared with 2010.

In the reporting year EXIMBANK - Gruppo Veneto Banca incurred interest expenses amounting to MDL 121.8 million (equivalent of EUR 8.1 million), ie MDL 3.8 million (3.2%) more than in 2010. Non-interest expenses reached MDL 165.1 million (equivalent of EUR 11.0 million), increasing by MDL 14.2 million or by 9.4%. The most important increase in absolute values was recorded in interest expenses on borrowings, which is explained by the increase in the amount of bank loans, including from international financial institutions.

Bank efforts to improve the quality of the loan portfolio based on positive background signals recorded in the national economy have been successful, contributing to the reduction of loan loss provisions in 2011. At the same time it is worth mentioning that during the reporting year the bank has reduced provisions on interest related assets

EXPENsEs (in thousand MDL) 2011 2010 var.% comp. % '11 comp. % '09

Interest expenses -121 754 -117 956 3.2 39.8 25.3

On bank deposits -2 822 -1 281 120.3 0.9 0.3

On deposits of individuals -54 637 -61 952 -11.8 17.9 13.3

On deposits of legal entities -37 678 -34 324 9.8 12.3 7.4

On borrowings -26 617 -20 399 30.5 8.7 4.4

Provisions on interest bearing assets -19 254 -184 874 -89.6 6.3 39.6

Non-interest expenses -165 118 -150 895 9.4 54.0 32.3

Wages and salaries -59 156 -62 569 -5.5 19.3 13.4

Bonuses -54 141 -37 867 43.0 17.7 8.1

Taxes and fees -1 287 -163 689.6 0.4 0.0

Consultants and audit expenses -3907 -1992 96.1 1.3 0.4

Provisions on contingent engagements and non-interest bearing assets 171 -13 073 -101.3 -0.1 2.8

Other non-interest expenses -46 627 -48 304 -3.5 15.2 10.3

TOTAL NON INTEREsT EXPENsEs -305 955 -466 798 -34.5 100.0 100.0


by MDL 165.6 million (-89.6%), which constituted MDL 19.3 million (equivalent of EUR 1.3 million) at the end of the reporting period.

Profit(orLoss)

In 2011 EXIMBANK - Gruppo Veneto Banca showed its ability to create added value both for the national economy, as well as for the sole shareholder, which has ensured a sustainable development of the Bank over the years. Thus, the net profit at the end of the year amounted to MDL 57.6 million (equivalent of EUR 3.8 million) as compared to a loss of MDL 145.9 million during the previous year.

(*) The sum of interest margin, net commissions, income from financial operations and other operating income.

(**) Starting with November 2007 the National Bank of Moldova requested local commercial banks to create the provisions for contingent engagements and other assets.

The interest margin during the reporting year grew by MDL 13.1 million (9.8%), which was the main component of the intermediation margin that reached the figure of MDL 241.8 million (equivalent of EUR 16.0 million) at the end of 2011.

As a result of registering a benefit, profitability indicators improved, the Bank reported a return on assets of 8.38%, an increase by 12.69 percentage points compared to the previous year, and a return on equity of 1.67%, compared to - 16.96% in 2010.

FINANCIAL sTATEMENT(in thousand MDL) 2011 2010 var. abs. var.%

Interest income 268 970 252 082 16 888 6.7

Interest expenses -121 754 -117 956 -3 798 3.2

Net interest income (Interest margin) 147 216 134 126 13 090 9.8

Net commissions 35 858 34 613 1 245 3.6

Income from financial operations 23 065 22 691 374 1.6

Other operational income 35 623 11 470 24 153 210.6

Intermediation margin(*) 241 762 202 900 38 862 19.2

Wages and salaries -59 156 -62 569 3 413 -5.5

Other operating expenses -105 950 -88 315 -17 635 20.0

Operating costs (expenses) -165 106 -150 884 -14 222 9.4

Gross activity income 76 656 52 016 24 640 47.4

Provision on credit losses -19 251 -184 874 -165 620 -86.9

Provision on losses for contingent engagements and other assets (**) 171 -13 073 13 244 101.3

Net profit / net loss before taxation z 57 573 -145 931 203 504 -139.5

Income tax 0 0 0 0.0

Net profit / net loss 57 573 -145 931 203 504 -139.5

35Facilities for legal entities

11. FACILITIEs FOR LEGAL ENTITIEs

11.1.Generalframework

In 2011, JSCB „EXIMBANK - Gruppo Veneto Banca” took the advantage of mitigating the effects of global economic crisis in the domestic banking system, extending its offer of products and services for legal entities, especially SMEs, which constitute the basic engine for a sustainable qualitative growth of the national economy.

Providing the access to long-term financial resources from international financial institutions allows the Bank to comply with generally accepted standards of corporate banking segment, while for Bank clients – access to a wide range of products and services offered at the European quality prices.

Continuing to promote intensively the image of the Bank as a member of the banking group Veneto Banca, together with a continuous expansion of product range and customer service both qualitatively and quantitatively, contributes to a continuous rise in the number of clients that are served in EXIMBANK - Gruppo Veneto Banca, and thus to a sustainable growth of the Bank.

Maintaining and increasing the client base is due including to individual approach of the Bank to its clients and structuring offers based on their necessities and needs.

At the end of 2011 the number of active corporate clients reached 8,567, the number of accounts managed by the bank – 14,555, increasing by 12.1% and 7.1% from last year.

DYNAMICS OF ACTIVE CORPORATE CLIENTS

UN

ITS

0

2000

4000

6000

8000

9000

2007 2008 2009 2010 2011

5 633

6 581 6 557

7 642

8 567

Economic growth during 2011 was felt by local businesses, with a positive cumulative impact in Bank account turnover of the corporate clients, representing a value of MDL 45.4 billion (equivalent of EUR 3.1 billion), increasing by 28.6% compared to 2010. However, balances in current accounts of corporate customers decreased during the reporting year by MDL 117.7 million (-24.6%) and reached MDL 361.2 million (equivalent of EUR 24.0 million) on December 31, 2011.

It should be noted that expanding the corporate customer base is simultaneously

36 Facilities for legal entities

accompanied by diversification of their structure. Today, Bank customers are quite extensive, including both representatives of international institutions, foreign embassies, large state and private enterprises, as well as micro, small and medium-sized enterprises, being active practically throughout the country in all branches of the national economy.

The image of the Bank as part of an international banking group, a reliable partner in business, along with flexible and balanced policy fees and commissions, are highly valued in the business circles, which helps increase the number of permanent customers that are served at EXIMBANK - Gruppo Veneto Banca and hence contributes to a sustainable development of the Bank.

In the reporting year EXIMBANK - Gruppo Veneto Banca continued to provide customers with optimal opportunities for a successful conduct of international business, using the main forms of payment accepted in international practice:

• Money transfers• Document operations • Exchange operations • Encashment, etc.

To ensure operational and qualitative performance of the international settlements, the Bank has a wide network of correspondent accounts in top banks located in leading financial centers worldwide. List of main correspondents is presented in Chapter 17 of the report.

11.2.Loanfacilities

In 2011 EXIMBANK - Gruppo Veneto Banca continued to implement the credit policy aimed at developing the real sector of the economy supported both by investing money in the form of credit lines drawn from the parent bank, as well as the loan obtained from IFC.

The Bank has continued to provide a large spectrum of competitive and high quality

DINAMICA SOLDURILOR CREDITELOR ACORDATE PERSOANELOR JURIDICE,ÎN MILIOANE LEI

2007

2008

2009

2010

2011

0 500 1000 1500 2000 2500 3000

37Facilities for legal entities

credit services and products designed to satisfy any requirements in order to finance investment projects of existent and potential clients.

Thus, during 2011 the Bank granted credits to corporate clients in a total amount of MDL 855.6 million (equivalent of EUR 56.7 million), while economic agents reimbursed loans in a total amount of MDL 947.9 million (equivalent of EUR 62.9 million). As a consequence, the loan portfolio granted to corporate clients at the end of reporting year reached MDL 2,409 billion (equivalent of EUR 159.8 million).

In the reporting year the structure of the loan portfolio classified by currency suffered some changes. Thus, loans in national currency increased by MDL 101.0 million or by 11.4% reaching USD 990.5 million, while loans in US Dollars fell to the equivalent of MDL 131.5 million or by 13.5%, recording MDL 841.0 million at the end of the year. Loans in Euro remained at previous year level with a variation of only 0.2% and a total of MDL 692.6 million.

LOAN sTRUCTURE BY CURRENCY GRANTED TO LEGAL ENTITIEs(Thousands of MDL)

EXIMBANK – Gruppo Veneto Banca has always tended to credit all sectors of national economy, loan portfolio distribution among branches of the economy reflecting their development trends.

Thus, there is a decrease by 3.3 percentage points in the share of industry and trade credits accounting for 70.2% of total loans to legal entities at the end of 2011, while the share of loans to real estate and construction development increased by 1.1 p.p., reaching 16.1% on December 31, 2011. The share of loans granted to energetic resources and fuel industry fell by 0.1 percentage points as compared to last year, reaching 2.7% on December 31, 2011.

STRUCTURE OF CREDITS GRANTED TO CORPORATE CLIENTS BY BRANCHES

Credits granted to the industry/commerce

70.2%

Credits granted foragriculture / food industry

6.1%

Credits granted for realestate, construction and

development16.1%

Credits granted to theenergetic and fuel

industry2.7%

Credits granted to theGovernment

1.2%

Other credits3.7%

2011 2010 var. % comp. %’11 comp. %’10

Moldovan Lei 990 515 889 541 11.4 39.2 34.8

US Dollars 841 046 972 595 -13.5 33.3 38.1

Euro 692 649 691 562 0.2 27.4 27.1

TOTAL LOANs 2 524 210 2 553 698 -1.2 100.0 100.0

38 Facilities for legal entities

Classification according to the maturity of the loan portfolio granted to corporate clients shows a decrease of about 7.4% of the share of loans with a maturity period of 1-5 years, which reached 52.1% of total loans granted to legal entities at the end of the reporting period. At the same time there was an increase of 7.4% of loans with a maturity of more than five years, which reached a share of 41.9%. Facts data proves once again the Bank’s ability to finance the real sector of the national economy with long term investments mainly due to its sole shareholder Veneto Banca through credit lines, as well as attracting resources from the local market.

STRUCTURE OF LOANS GRANTED TO CORPORATE CLIENTS IN TERMS

Above 5 years41.9%

Up to 1 month0.1%

From 1 to 3 months0.7% From 3 to 6 months

1.2%

From 6 to 12 months4.0%

From 1 to 5 years52.1%

In the reporting year, in addition to the own resources and those received from the parent bank as credit lines, the credit activity of the Bank has been funded by special credit lines contracted from the international financial institutions, in order to finance projects implemented by eligible customers. In 2011 the Bank’s loan portfolio was composed of loans granted from internal resources of the International Fund for Agricultural Development, Project in Rural Finance and Small Enterprise Development, as well as from the resources of the National Agency for Employment of the Ministry of Economy with the aim to finance projects for reducing unemployment and creating new jobs together with the projects initiated in previous years. At the same time, the Bank capitalized on the bank loan worth USD 26 million, contracted from IFC for financing SME sector.

In order to ensure reimbursement of loans, the Bank has adopted tougher requirements on quality and liquidity of pledges, which along with continuous improvement of methods and procedures for evaluating financed projects and loan portfolio diversification helps minimize risks and maintain Bank lending at a high profitability.

39Facilities for individuals

12. FACILITIEs FOR INDIVIDUALs

During the reporting year EXIMBANK – Gruppo Veneto Banca has continued its development policy in retail sector by providing high quality services adjusted to market requirements and offering to clients the team expertise and a wide network of branches and representative offices located in the capital, as well as in the regions.

Private individuals – bank clients, as well as potential clients continued to enjoy a large range of various financial-banking products and services:

• deposit accounts and current accounts in national and foreign currency;• international transfers (including via fast money transfers);• mortgage loans (Famiglia);• debit and credit cards;• cash services and currency exchange operations;• operations with securities;• safe deposit boxes.

Consequently, the dynamics of retail clients showed a positive tendency in 2011 with over 68 thousand clients by the end of the year, meaning an increase by 23.9% compared with end of 2010, strengthening its position on the retail banking services market of the Republic of Moldova.

DINAMIC OF CLIENTS – PRIVATE INDIVIDUALS

UN

ITS

0

10 000

20 000

30 000

40 000

50 000

60 000

70 000

2007 2008 2009 2010 2011

34 744

40 31842 010

55 203

68 418

Like in the previous years, in 2011 EXIMBANK – Gruppo Veneto Banca provided a large range of instruments to create savings and accumulate funds from its clients, such as term deposits in MDL and foreign currency accepted for a period from one month to seven years, as well as other specific deposits characterized by the possibility of combining account efficiency and profitability.

During the year, the amount of fixed term deposits accepted from individuals increased by MDL 72 million (equivalent of EUR 4.8 million) or 10.1% more than at the end of 2010, reaching the amount of MDL 789 million (equivalent of EUR 52.3 million) as of December 31, 2011.

40 Facilities for individuals

DYNAMICS OF TERM DEPOSITS ACCEPTED FROM PRIVATE INDIVIDUALS IN MILLION MDL

0 100 200 300 400 500 600 700 800

2007

2008

2009

2010

2011

657

786

636

717

789

The Bank’s clients also had the opportunity to perform bank operations through current accounts and bank cards, the balance of which increased by MDL 8.8 million (equivalent of EUR 0.6 million) from the previous year, reaching MDL 162.3 million (equivalent of EUR 10.8 million) by the end of 2011.

During the reporting year lending activity of retail segment materialized for the satisfaction of clients’ needs by granting mortgage loans and consumer loans to private individuals, as well as by implementing new lending possibilities with the help of card accounts.

Consequently, in 2011 the Bank disbursed loans to private individuals in a total amount MDL 85.7 million (equivalent of EUR 5.7 million), while the repayment of loans from private individuals measured MDL 2.8 million (equivalent of EUR 188.5 thousand), which caused an increase of the loan portfolio granted to private individuals from MDL 52 million at the end of 2010 to MDL 115 million (equivalent of EUR 7.6 million) as of December 31, 2011.

DYNAMICS OF CREDIT BALANCE PRIVATE INDIVIDUALS, IN MILLION MDL

0 20 40 60 80 100 120

44

46

43

52

115

2007

2008

2009

2010

2011

41Facilities for individuals

In accordance with the strategic development plan and in order to increase the share of the retail segment, in June 2011 JSCB „EXIMBANK - Gruppo Veneto Banca” launched the mortgage product „Famiglia”, designed for individuals that wish to purchase, renovate, modernize, repair and construct real estate for housing. Competitive advantage of the product together with an intensive promotion during June 2011 - September 2011, and not the least the effort of the Bank staff led to the success of this product. In such a way, the balance of the mortgage product „Famiglia” reached MDL 56.5 million (equivalent of 3.7 million) as of 31 December 2011.

In the reporting year the volume of remittances of Moldovan citizens registered an upward trend, which involves the development of a vast system of bank transfers. By means of its policy on this segment, EXIMBANK - Gruppo Veneto Banca promotes a large spectrum of international transfers.

Taking into account the big number of citizens of the Republic of Moldova working abroad, the banking group Veneto Banca continued with customer service by means of „Account without Frontiers” project, designed for transfers of cash under advantageous conditions, between the accounts opened within the group in the countries like Moldova, Italy, Romania and Albania. During 2011 the bank has continued rendering rapid payment transfer services by means of nine international systems: Western Union, Privat Money, Unistream, Anelik, Bystraya Pochta, Leader, Migom, Contact, Zolotaia Korona.

42 Bank cards

13. BANK CARDsIn the field of bank cards JSCB „EXIMBANK - Gruppo Veneto Banca” maintained the growth vector in almost all spheres of activity in the reporting period. These results are due to the expertise, dedication of the whole team of specialists of the Bank, as well as close links with our customers.

In such a way about 10,000 new cards were issued, achieving outstanding results in the bank card activity by increasing the number of cards issued to 80,918, by about 14.5% more than in 2010.

DINAMICS OF ACTIV CARDS

UN

ITS

2007 2008 2009 2010 2011

85 000

75 000

65 000

55 000

45 000

35 000

25 000

15 000

5 000

- 5 000

8 279

13 257

38 186

14 528

44 766

15 866

54 822

16 702

64 216

23 196

VISA MasterCard

As a performance among top commercial banks, JSCB „EXIMBANK - Gruppo Veneto Banca” currently holds one of the most developed networks of servicing bank cards. This is described by 75 ATMs, three units more than in the previous year, beneficially located both in the capital and district centers of Moldova. Also, the Bank currently has 34 POS terminals for cash withdrawal using a bank card, located in its branches and their number is directly proportional to the branch network development, which is dynamically increasing. Total number of transactions in the Bank’s network was 726,000, down by 3.6% from the previous reporting period. However, the total transactions increased by 0.2%, reaching MDL 841 million (equivalent of EUR 55.8 million).

ACTIVE CARDs (units) 2011 2010 var. abs. var. % comp. % ’11 comp. % ’10

VIsA 64 216 54 822 9 394 17.1 79.4 77.6

MasterCard 16 702 15 866 836 5.3 20.6 22.4

TOTAL CARDs 80 918 70 688 10 230 14.5 100 100

43Bank cards

As evidence of good links with existing and new customers, providing competitive and profitable tariffs, qualitative and professional service during the reporting period, JSCB „EXIMBANK - Gruppo Veneto Banca” connected 79 new POS terminals. In such a way at the end of 2011, the Bank had 626 POS terminals installed in commercial units. In order to improve collaboration with them and stimulating work with POS terminals installed, the Bank has been providing continuous assistance, while special training on the maintenance and acceptance of payment by credit cards, including the application of penalties for non-use of POS terminals have been conducted. In such a way, network operators of JSCB „EXIMBANK - Gruppo Veneto Banca” recorded an increase in retail transactions worth MDL 907,000 (equivalent of EUR 60 000), approx. 14% more than in 2010, with a total volume of MDL 841 million (equivalent of EUR 55.8 million), i.e. approx. 6% more than the previous year. By developing the commercial units’ network, the Bank helps reduce cash in circulation and ensures transparency of transactions.

Offering competitive and advantageous products has contributed greatly to increasing the number of corporate clients who opt to transfer salaries to its employees’ card accounts. Thus, 89 agreements were concluded during the reporting period, reaching the total of 707 contracts, approximately 3.5% more than in the previous period.

DYNAMICS OF AGREEMENTS CONCLUDED WITH CORPORATIVE CLIENTS ON WAGES SERVICING

UN

ITS

720

660

600

540

480

420

360

300

240

180

120

60

02007 2008 2009 2010 2011

328

441

532

618

707

Card product reliability and customer loyalty is described by increasing the total card accounts balance by 7.65%, reaching MDL 100.1 million (equivalent of EUR 6.64 million).

Thus, JSCB „EXIMBANK - Gruppo Veneto Banca” is positioned among the top banks in the Republic of Moldova on the entire sphere of activity with reference to bank cards, being one of the four licensed member banks of both the main international

44 Bank cards

payment systems MasterCard Inc. and Visa Inc.

JSCB „EXIMBANK – Gruppo Veneto Banca” is oriented towards advanced technologies to offer its customers reliable and safe products. As proof, during 2011 the Bank implemented several projects in the business of bank cards including, EMV certifications obtained, which guarantees a high level of safety recognized internationally as follows:

• EMV Certification of Merchant Acquiring activity in Visa Inc. payment system. (January 2011). Obtained certification provides the right of independent bank card acquiring in the Visa payment system at the POS terminals the Bank installed in the commercial network of the Republic of Moldova, which allows the promotion of a more flexible pricing policy and strategic market credit cards;

• EMV certification project of accepting activities of MasterCard with microprocessor for ATM, POS and POS Retail Cash.

45Operations with securities

14. OPERATIONs WITH sECURITIEsIn 2011 the activity of investments in State Securities on the market was marked by the increased demand toward these financial instruments, constantly higher than the offer of the issuer, a fact caused by the excess of liquidity in the banking system. The evolution of interest rate of State Securities was marked by the National Bank decisions to modify the interest rate of monetary policy instruments.

From the beginning of 2011, NBM operated three upward adjustments to the base rate by 1.0 percentage point steps and namely on January 7, August 5, and September 6, 2011 (the increase constituted from 7.0 to 10.0 %). Since December 2, 2011 the rate was reduced by 0.5 percentage points (to 9.5%). The NBM decisions have been dictated by the need for monetary stimulus in order to prevent the evolution of overall domestic macroeconomic and international environment, to maintain price stability over the medium term.

The weighted average rate of all types of State Securities with a maturity of up to 1 year had an upward trend for the first 11 months, falling within the boundaries of 8.48% - 12.31%. In December 2011 the downward trend started, weighted average interest rate reaching 11.72% per year.

The excess of liquidity was removed by the Central Bank exclusively by the sale of NBM Certificates. The Certificates had a maturity of 14 days, interest rate being equal to the base rate effective as of the date of auction.

PUBLIC SECURITIES ACQUISITION VOLUME,MILLION MDL

0 2000 4000 6000 8000 10000 12000 14000

247 6 089

1 040811

703 12 707

8 385128

2008

2009

2010

2011

VMS CBN

Thus EXIMBANK – Gruppo Veneto Bank purchased NBM Certificates in the amount of MDL 8.385 million (equivalent of EUR 556.27 thousand) in the reporting year, or by 34.01% less than the amount purchased during the previous year, when investments in NBM Certificates totaled MDL 12.707 million. In this context it should be noted that in 2010 the NBM Certificates maturity was 7 days.

46 Operations with securities

In 2011, purchases of State Securities amounted to MDL 128.4 million (equivalent of EUR 8.52 million), a decrease of 81.73% since 2010, when investments in State Securities totaled MDL 702.6 million.

As a result of investments in State Securities, the bank registered an income amounting to MDL 31.39 million (equivalent of EUR 2.08 million), increasing by 1.98% compared with 2010.

During 2011 the bank has fully met the criteria for primary dealer in the market of State Securities, participating in all auctions conducted by the National Bank of Moldova.

EXIMBANK - Gruppo Veneto Banca is a professional participant to the corporate securities market, being a shareholder and a member of the Moldova Stock Exchange and the National Depository.

There were concluded 11 contracts for brokerage services and received 75 orders under which the Stock Exchange executed 21 transactions with a volume of MDL 1.2 million (equivalent of EUR 80,100) during the reporting year. The Bank carried out two transactions in the auctions organized by the Public Property Agency.

The amount of bank investments in corporate securities and equity increased compared with 2010. Thus, at the end of 2011, investments in shares amounted to MDL 626.5 thousand (equivalent of EUR 41,500) and equity investments for trading constituted MDL 1.4 million (equivalent of EUR 92 800). At the same time, the Bank sold equity held in portfolio (issued by JSC „Orlact”), recording a return on investment of 287.99%.

47Information technologies

15. INFORMATION TECHNOLOGIEsInformation technologies are widely used in the Bank’s activity. For this reason, the dependence of the Bank on the information technologies has been evaluated by the sole shareholder Veneto Banca as a very high one, and, accordingly, it was of critical importance for the bank to adequately manage the risks related to Information Technologies. Thus, extending the Bank activity, both as amount of operations and as range of offered products and services, led to additional requirements for the bank software existing before November 01, 2010.

At the same time, the requirements towards the accounting and reporting system imposed by the parent company imply the need of existence of high performance software based on most modern information technologies in each entity member of Veneto Banca Italian financial-banking group. For this purpose, the shareholder Veneto Banca has taken the decision to implement a new Core-Banking system “abSolut”, part of the abSolute system, meant for technical support of the Bank’s activity (property of ASSECO, Romania) which was successfully implemented by November 01, 2010.

Once starting the process of optimization, parameterization and testing of new features and products for expanding the Bank’s array of deposits and loans that offers advantageous interest rates in domestic and foreign currencies and stimulates savings and contributes to the aspirations of our customers, about 100 units of computer equipment for bank branches and agencies were upgraded, modern equipment and communications network were purchased, etc.. In 2011 the bank has purchased four disks with a capacity of 600 GB each in order to increase storage capacity of the bank’s servers with information resources (storage - file servers that are part of the file-cluster nodes VB-CLUSTER), while later all the technical work needed to adopt the new version of firmware Storage (HP Storage Works EVA Command Wiew ver 9.1. 09534000) and the migration of all SIB information resources to the newly created spaces was made.

Banking network has been upgraded by adding new connections that provide flexibility, scalability and high speed data transmission using optical fiber for all bank subsidiaries. At the same time, given the increasing role of information technologies to ensure the vitality of the Bank, as well as taking into account the need to ensure continuity of operation of information systems and ongoing servicing of customers, backup data transport channels for all bank branches and agencies were created. Having the same purpose, all communications equipment was provided with units of power storage (UPS) modules and functions of management / monitoring their existing banking network, while for the server room of the Central Office of the Bank a power storage base was acquired, which ensures continuous functioning for approximately 1.5 hours all network equipment and bank servers in case of power failure.

Given the importance of the existence of a backup center sufficiently equipped to ensure resumption of all critical systems, the Bank will complete equipping the backup center with all necessary technical means sufficient to ensure business continuity in case of major incidents (disaster Recovery Plan / Business Continuity Plan)

48 staff and corporate social responsibility

16. sTAFF AND CORPORATE sOCIAL REsPONsIBILITYBy the end of 2011 EXIMBANK – Gruppo Veneto Banca had 413 employees, of which 26 employees had a determined term labor contract, and an important territorial presence with 20 branches and 14 representative offices.

Employees represent the main driver for development for EXIMBANK – Gruppo Veneto Banca, while care for employees is paramount.

• Job security,• Safe working conditions,• Opportunities to evolve,• Recognition of personal contribution,• Opportunities for internal promotions,• Training and development opportunities•

EXIMBANK - Gruppo Veneto Banca respects the rights of the employees as fundamental elements for development and profitable business conduct.

Employee relations are developed and managed so as to ensure and guarantee equal opportunities and promote the necessary climate conducive to personal development of each employee.

The Bank does not admit any discrimination of sex, religion, age, and ethnicity or by other factors.

Structure

In the last three years, personnel structure, the number and level of preparation was as follows:

Education experience 2011 2010 2009

Graduate Studies 22 21 22

Undergraduate Studies 315 315 333

Specialized degree – College 30 32 41

Secondary Professional Studies 21 26 33

High School Degree 24 32 42

Other 1 3 7

TOTAL employees 413 429 478

49staff and corporate social responsibility

On December 31, 2011 the age structure of employees was as follows:

Age (years) Number of employees %

< 30 150 36.32

31-40 144 34.87

41-50 72 17.43

51-60 40 9.69

> 60 7 1.69

TOTAL 413 100.00

On December 31, 2011 59.3% of total employees were female and 40.7% were male.

AVERAGE AGE OF BANK’S STAFF

37

36

35

342007 2008 2009 2010 2011

Average age

EXIMBANK - Gruppo Veneto Banca realized the importance of maintaining an appropriate moral and psychological climate among employees in order to ensure an effective degree of professional excellence in achieving the mission and strategic tasks.

50 staff and corporate social responsibility

Training

EXIMBANK – Gruppo Veneto Banca ensures continuous professional improvement of its employees.

In 2011 training and development programs were attended by 234 employees, representing 56.65% of the total number of employees

Recruitment and selection was made based on the strategic objectives and programs proposed by the bank, retaining the employees with undergraduate and graduate education segment at the highest level, which is visible in the chart below.

Having the goal of professional development of the existing staff as well as of the new employees for achieving sustainable corporate success, training courses were organized both internally and externally, including major issues, with special reference to the mechanisms of preventing and fighting money laundering and terrorism financing, international financial reporting standards, implementation of credit risk assessment and other aspects.

Special attention was drawn to the implementation of new information system absolut, a process that involved all bank specialists, their participation in in-house professional training being provided.

Master

Other

Special secondary – College

Higher education

General secondary

Professional secondary

Bank’s staff structure in terms of education level

51staff and corporate social responsibility

Organizationalstructure

In 2011 the organizational structure was adapted to streamline the activities and is the following:

ADUNAREA GENERALĂ A ACŢIONARILOR

COMISIA DE CENZORI

CONSILIUL

Reprezentantul Veneto Banca s.c.p.a

Secţia "Audit Intern"

DIRECŢIA GENERALĂ

Director General

Vicedirector General Vicedirector General Vicedirector General Vicedirector General Contabil şef, Membru al

Direcţiei Generale

Departmentul "Decontări Internaţionale"

Departmentul "Credite" Departmentul "Analiză economică şi raportări"

Secţia "Securitate" Secţia "Contabilitate"

Secţia "Evidenţa salariilor"

Secţia "Procesarea plăţilor

Secţia "Gajuri" Secţia "Raportări" Secţia "Achiziţ ceS "ii ţia "Back-office"

Secţia "Decontări Internaţionale"

Secţia "Credite"Secţia "Analiză economică

şi bugetare" Secţia "Logistică"

Departamentul "Carduri Bancare"

Secţia "Credite instituţii financiare internaţionale"

Secţia "Dirijare riscuri"

Secţia "Emitere şi procesare carduri"

Secţia "Monitorizare a creditelor"

Secţia "Securitate Technologiilor

COMITETUL DE CREDITE

Secţia "Deservire Tehnică"

Secţia "Marketing" COMITETUL PRIVIND DIRIJAREA

ACTIVELOR ŞI PASIVELOR

Departamentul "Trezorerie"

FililaleCOMISIA PRIVIND PREVENIREA

ŞI COMBATEREA SPĂLĂRII

Secţia "Operaţiuni de piaţă"

Oficii secundare COMISIA PRIVIND APROBAREA INVESTIŢIILOR ÎN AMTLConsilieri ai Directorului

GeneralSecţia "Forex"

Departamentul "Comercial"Departamentul "Organizare"

Secţia "Prevenire şi combatere a spălării Secţia "Tehnologii

Informaţionale"

Secţia "Protocol"

Secţia "Juridică" Secţia "Operaţiuni de casă"

Secţia "Conformitate"

Secţia "Resurse Umane"

It is to be noted that the Bank pays particular attention to social development and local business environment by creating general standards implemented by Veneto Banca, taking an active role and acting responsibly towards all related parties both within the bank as well as towards society.

52

17. LIsT OF MAIN CORREsPONDENT BANKs

BANK sWIFT COUNTRY CITY CITY

BANK OF NEW YORK MELLON UsA NEW YORK UsD

COMMERZBANK A.G. GERMANY FRANKFURT AM MAIN EUR UsD JPY

VTB BANK (DEUTsCHLAND) AG GERMANY FRANKFURT AM

MAINEUR UsD GBP CHF CAD JPY

VENETO BANCA HOLDING ITALIA MONTE-

BELLUNAEUR UsD GBP

CHF JPY

INTEsA sANPAOLO s.P.A. ITALY MILANO EUR

RAIFFEIsEN ZENTRALBANK OsTERREICH A.G.

AUsTRIA VIENNA UsD EUR

BANCA ITALO-ROMENA sPA, sUCURsALA BUCUREsTI

ROMANIA BUCHAREsT RON UsD EUR

BANCA TRANsILVANIA ROMANIA CLUJ-NAPOCA RON UsD EUR GBP CHF

sAVINGs BANK OF RUssIAN FEDERATION (sBERBANK ROssII)

RUssIA MOsCOW RUB UsD EUR

ZAO UNICREDIT BANK RUssIA MOsCOW RUB

PROMsVYAZBANK RUssIA MOsCOW RUB UsD

RAIFFEIsENBANK AUsTRIA ZAO RUssIA MOsCOW UsD EUR

RAIFFEIsEN BANK AVAL UKRAINE KIEV UAH

PRIVATBANK UKRAINE DNEPRO-PETROVsK UAH UsD EUR

BELGAZPROMBANK BELARUs MINsK BYR

List of main correspondent banks

53

18. LIsT OF BRANCHEs AND AGENCIEs

List of branches and agencies

NAME OF BRANCH LOCATION CONTACT

TELEPHONE No.

FILIALE

Branch no. 1 53 Pobedi Street, Comrat (+ 373 0 298) 2 47 47

Branch no. 2 16 Decebal Street, Ungheni (+ 373 0 236) 2 20 98, 2 23 38

Branch no. 3 1 Alecu Russo Street, Chisinau (+ 373 0 22) 49 55 68, 43 85 29

Branch no. 4 4 Stefan cel Mare Street, Causeni (+ 373 0 243) 2 18 15, 2 17 49

Branch no. 5 15/A Scrisul Latin Street, Orhei (+ 373 0 235) 3 21 50, 3 21 47

Branch no. 6 76 Mihail Kogalniceanu Street, Chisinau (+ 373 0 22) 23 20 62, 23 20 66

Branch no. 7 27 Dacia Blvd, Chisinau (+ 373 0 22) 55 15 80, 55 15 89

Branch no. 8 20 Kogalniceanu Mihail Street, Soroca (+ 373 0 230) 2 30 38, 3 06 21

Branch no. 9 16 Grigore Vieru Blvd, Chisinau (+ 373 0 22) 21 04 12, 21 03 92

Branch no. 11 ap.1 , 48 Eminescu Mihai Street, Chisinau (+ 373 0 22) 22 48 19

Branch no. 13 1 Aeroportului Street, Chisinau (+ 373 0 22) 52 62 36

Branch no. 15 13, 31 August Street, 13 (+ 373 0 299) 9 38 08

Branch no. 16 149 Hancu Mihalcea Street, Hancesti (+ 373 0 269) 2 14 74

Branch no. 17 35 Bulgara Street, Chisinau (+ 373 0 22) 27 71 72

Branch no. 18 48 Stefan cel Mare Street, Balti (+ 373 0 231) 6 10 70

Branch no. 19 6 Stefan cel Mare si Sfant Blvd, Chisinau (+ 373 0 22) 54 33 67

Branch no. 20 171/1 Stefan cel Mare si Sfânt Blvd, Chisinau (+ 373 0 22) 30 11 88

Branch no. 21 Taraclia, str. Lenin, 111/a (+ 373 0 294) 2 11 21

Branch no. 22 Chisinau, str. Alba Iulia, 190/1 (+ 373 0 22) 59 90 70

Branch no. 23 1 Socoleni Street, Chisinau (+ 373 0 22) 85 50 15

List of branches and agencies54

NAME OF THE AGENCY LOCATION CONTACT

TELEPHONE No.AGENCIEsAgency no.1

of Branch no.1 46 Pobedi Street, Comrat (+373 0 298) 2-94-92

Agency no.2of Branch no.2 12 Gh. Crestiuc Street, Ungheni (+373 0 236) 2-60-52

Agency no.3of Branch no.3 8/a Moscova Blvd, Chisinau (+373 0 22) 44-98-66

Agency no.4of Branch no.4 7 Tighina Street, Causeni (+373 0 243) 2-64-25

Agency no.5of Branch no. 9 69 Varlaam Mitropolit Street, Chisinau (+373 0 22) 21-11-56

Agency no. 6of Branch no.9 44/1 Puskin A. Street, Chisinau (+373 0 22) 22-91-15

Agency no.8of Branch no.15 17 Stefan cel Mare Street, Cahul (+373 0 299) 3-27-63

Agency no.9of Branch no.15 17 Republicii Blvd, Cahul (+373 0 299) 3-30-96

Agency no.10of Branch no.19 3Stefan cel Mare si Sfint Blvd, Chisinau (+373 0 22) 27-71-80

Agency no. 11of Branch no.19 5 Negruzzi Blvd, Chisinau (+373 0 22) 27-50-46

Agency no. 12of Branch no.19 7/1 Calea Mosilor Street, Chisinau (+373 0 22) 92-43-70

Agency no.13of Branch no.20 37 Cibotari Maria Street, Chisinau (+373 0 22) 88-16-18

Agency no. 14of Branch no.20 22 Puskin A. Street, Chisinau (+ 373 0 22) 23-26-87

BANCA COMERCIALA EXIMBANK – GRUPPO VENETO BANCA S.A.

FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH NATIONAL

ACCOUNTING STANDARDS

FOR THE YEAR ENDED 31 DECEMBER 2011

Paid-up capital - 635000000 leiwww.eximbank.com

Contents58

CONTENTSBalance sheet ..........................................................................60Statement of comprehensive income ...........................................62Statements of cash flow ............................................................64Statement of changes in equity ..................................................66

NOTES TO THE FINANCIAL STATEMENTS 1 Nature of activities ................................................................672 Basis of presentation .............................................................673 Summary of significant accounting policies ...............................684 Credit activity .......................................................................735 Capital adequacy ratio ...........................................................746 Liquidity ..............................................................................747 Geographical concentration and segment analysis .....................768 Financial risk management .....................................................779 Due from banks ....................................................................8710 Cash and Balances with the National Bank of Moldova ...............8711 Overnight placements ...........................................................8812 Investment securities ...........................................................8813 Available for sale securities....................................................8914 Loans and finance lease receivables ........................................9015 Property and equipment ........................................................9216 Other assets ........................................................................9417 Repossessed collateral ..........................................................9418 Intangible assets .................................................................9519 Due to banks .......................................................................9520 Due to customers .................................................................9621 Other borrowings .................................................................9722 Other liabilities ....................................................................9823 Share capital .......................................................................9924 Commission income .............................................................9925 Other non-interest income .................................................. 10026 Premises, depreciation and other related costs ....................... 10027 Other non-interest expenses ................................................ 10128 Provisions for losses on assets ............................................. 10229 Income tax expense ........................................................... 10230 Cash and cash equivalents .................................................. 103

Contents 59

31 Capital adequacy ............................................................... 10332 Bank liquidity .................................................................... 10433 Transaction with related parties ............................................ 10534 Contingent liabilities and commitments ................................. 10635 Subsequent events ............................................................. 106Independent Auditor’s Report to the Shareholders of JSCB „EXIMBANK- Gruppo Veneto Banca .................................... 107

Balance sheet60

All amounts in Moldovan Lei (MDL) unless otherwise stated

Assets Note 31 December 2011 31 December 2010

Cash in hand 108,140,350 107,516,225

Due from banks 9 203,017,752 118,631,466

Due from the National Bank of Moldova (“NBM”) 10 300,585,265 163,048,291

Overnight placements 11 – 80,000,000

611,743,367 469,195,982

Investments

Available for sale securities 13 1,380,414 384,339

Investment securities 12 448,553,675 481,264,371

Total investments 449,934,089 481,648,710

Loans and finance lease receivables 14 2,249,606,251 2,261,785,889

Property and equipment 15 70,340,660 81,157,311

Accrued interest receivable 51,309,546 26,529,458

Repossessed collateral 17 73,961,784 73,538,575

Other assets 16 39,323,785 31,538,759

234,935,775 212,764,103

Total assets 3,546,219,482 3,425,394,684

Liabilities and shareholders’ equity

Non–interest bearing deposits

Due to banks – 487,927

Deposits of individuals 20 32,349,663 33,011,792

Deposits of enterprises 20 78,398,199 122,575,723

Total non–interest bearing deposits

110,747,862 156,075,442

Balance sheet 61


Interest bearing deposits

Assets Note 31 December 2011 31 December 2010

Due to banks 19 89,755,080 79,063,100

Deposits of individuals 20 918,654,667 837,149,701

Deposits of enterprises 20 792,763,672 784,814,886

Total interest bearing deposits 1,801,173,419 1,701,027,687

Total deposits 1,911,921,281 1,857,103,129

Other borrowings 21 864,255,965 845,623,990

Accrued interest payable 21,175,935 14,678,540

Other liabilities 22 29,360,725 43,984,614

Subordinated debt – –

Provision for losses on commitments 3,991,711 5,737,414

Total liabilities 2,830,705,617 2,767,127,687

Shareholders’ equity

Share capital 23 635,000,000 635,000,000

Statutory reserve 11,439,615 11,439,615

Revaluation reserve 2,847,957 3,173,649

Retained earnings 66,226,293 8,653,733

Total shareholders’ equity 715,513,865 658,266,997

Total liabilities and shareholders’ equity 3,546,219,482 3,425,394,684

These financial statements were approved to be published on 13 March 2012 and signed on behalf of the Executive Board by:

Tudorita BicerChief Accountant

Marcel Chirca,General Director

62 Statement of comprehensive income


Note 2011 2010

Interest income

Interest income on placements with banks 7,310,683 1,769,944

Interest income on overnight placements 942,047 721,312

Interest income or dividends on available for sale securities – –

Interest income or dividends on investment securities 31,389,513 30,782,384

Interest income and commission on loans 229,327,443 218,808,807

Other interest income – –

Total interest income 268,969,686 252,082,447

Interest expenses

Interest expense on deposits from banks (2,822,079) (1,281,025)

Interest expense on deposits from individuals (54,637,390) (61,952,302)

Interest expense on deposits from enterprises (37,677,976) (34,323,541)

Total interest expense on deposits (95,137,445) (97,556,868)

Interest expense on overnight borrowings – –

Interest expense on borrowings from other creditors (26,616,643) (20,399,170)

Total interest expense on borrowings (26,616,643) (20,399,170)

Total interest expense (121,754,088) (117,956,038)

Net interest income 147,215,598 134,126,409

Less: impairment provision on interest bearing assets 28 (19,254,023) (184,874,141)

Net interest loss after impairment provisionon interest bearing assets

127,961,575 (50,747,732)

63Statement of comprehensive income

Note 2011 2010

Non – interest income

Net income from available for sale securities 6,154 30

Income from foreign currency exchange operations

23,058,770 22,690,521

Commission income 24 35,869,555 34,623,651

Other non–interest income 25 35,624,132 11,470,549

Total non–interest income 94,558,611 68,784,751

Non – interest expenses

Wages and salaries (45,667,035) (47,816,027)

Bonuses – (598,203)

Social insurance, medical insurance and other payments

(13,488,656) (14,154,523)

Premises, depreciation and other related costs

26 (54,141,410) (37,867,402)

Taxes and fees (1,287,349) (163,242)

Consultants and audit expenses

(3,907,220) (1,992,052)

Other non – interest expenses

27 (46,627,016) (48,304,038)

Provision for losses non–interest bearing assets

(1,566,610) (11,067,929)

Provision for commitments

1,737,670 (2,004,960)

Total non – interest expenses

(164,947,626) (163,968,376)

Net income / (loss) before income tax and extraordinary items

57,572,560 (145,931,357)

Income tax expense 29 – –

Net income / (loss) before extraordinary items

57,572,560 (145,931,357)

Extraordinary items net of income tax

– –

Net profit / (loss) 57,572,560 (145,931,357)

These financial statements were approved to be published on 13 March 2012 and signed on behalf of the Executive Board by:


Tudorita BicerChief Accountant

Marcel Chirca,General Director

64 Statements of cash flow

2011 2010

Operating activities

Interest and commissions receipts 221,013,045 247,749,148

Interest and commission payments (88,640,050) (99,194,492)Recoveries of assets previously written off against provisions 21,404,950 8,112,761

Other income received 65,305,046 42,370,709

Payments to employees (59,197,650) (62,610,712)

Payments to suppliers (80,195,162) (52,173,408)

Receipts before changes in assets and liabilities 79,690,179 84,254,006

Increase / (decrease) in assets

Receipts / (payments) related to due from banks (15,073,700) 16,477,200

Receipts / (payments) related to due from NBM (30,698,243) (7,521,937)

Receipts / (payments) related to loans (1,016,402) –

and finance lease receivables 64,721,482 (269,675,485)

Receipts / (payments) related to other assets (8,913,533) 71,579,108

Increase / (decrease) in liabilitiesReceipts/ (payments) related to deposits from customers 44,614,099 320,271,016

Receipts/ (payments) related to deposits and borrowings from banks 10,204,053 (23,085,762)

Receipts / (payments) related to other borrowings 3,231,425 (3,042,460)

Receipts / (payments) related to other liabilities (14,759,478) 16,143,070

Cash flows before income tax 131,999,882 205,398,756

Income taxes paid – –

Net cash inflows from operating activities 131,999,882 205,398,756

Investing activitiesReceipts / (payments) related to loansand finance lease receivables (96,245,121) (36,444,546)

Receipts / (payments) related to investment securities 32,705,893 (136,726,914)

Receipts related to property and equipment 154,558 –

Payments related to property and equipment (5,751,463) (2,878,437)

Receipts related to intangible assets – –

Payments related to intangible assets (6,615,963) (14,645,985)

Interest received 58,800,013 57,248,016

Net cash out flows from investing activities (16,952,083) (133,447,866)


65Statements of cash flow

2011 2010

Financing activities

Receipts / (payments) from long–term borrowings 15,400,550 (377,236,956)

Interest paid (26,616,643) (20,012,231)

Net cash inflows / outflows from financing activities (11,216,093) (397,249,187)

Net cash outflows before extraordinary items 103,831,706 (325,298,297)

Extraordinary receipts / (payments) – –

Net cash flows after extraordinary items 103,831,706 (325,298,297)

Positive / (negative) exchange rate fluctuations (6,770,548) (8,209,609)

Cash and cash equivalents at the beginning of the year 332,270,482 665,778,388

Cash and cash equivalents at the end of the year (Note 30) 429,331,640 332,270,482


66 Statement of changes in equity

Share capital

Statutory reserves

Revaluation reserve

Retained earnings Total

Balance at 1 January 2010 635,000,000 11,439,615 7,766,520 154,219,152 808,425,287

Allocation to statutory reserves – – (4,592,871) – (4,592,871)

Revaluation of property and equipment

– – – 365,938 365,938

Net loss for the year – – – (145,931,357) (145,931,357)

Balance at 31 December 2010/ and 1 January 2011

635,000,000 11,439,615 3,173,649 8,653,733 658,266,997

Revaluation of property and equipment (2010)

– – (325,692) – (325,692)

Correction of prior periods results – – – 57,572,560 57,572,560

Net loss for the year

Balance at 31 December 2011 635,000,000 11,439,615 2,847,957 66,226,293 715,513,865

According to local legislation and the Bank’s statute, 5% of the Bank’s net profit has to be allocated to the statutory reserve, until this reserve represents 15% of the Bank’s share capital. As of 31 December 2011, because of losses recorded in 2010, this reserve was not completed.

Statutory and revaluation reserves cannot be distributed to the shareholders.


67Notes to the financial statements

1 NATURE OF ACTIVITIES

The Commercial Bank EXIMBANK – Gruppo Veneto Banca S.A. (the “Bank”) was established in the Republic of Moldova in 1994 as „Banca de Export –Import a Moldovei” and was registered by the National Bank of Moldova (“NBM”) in 1994 as a limited liability company. In 1996 the Bank was transformed into a joint–stock commercial bank „Export–Import”. In 2001 in accordance with the decision of the shareholders’ meeting the Bank was renamed into BC EXIMBANK S.A. In May 2006 the new shareholder of the Bank became Veneto Banca Societa Cooperativa per Azioni. Afterwards, in August 2006 to reflect its membership of the Italian Bank Group, the new name of the Bank was registered.

As at 31 December 2011 the Bank had 20 branches and 14 representation offices in Chisinau, Balti, Ungheni, Soroca, Comrat, Causeni, Orhei, Cahul, Hancesti and Taraclia, which offer the full range of banking services and operations.

As at 31 December 2011 the Board of Directors of the Bank comprised the following members:

● Allesandro Gallina, Chairman of the Board. Member of the Board of Veneto Banca Holding s.c.p.a.

● Vincenzo Consoli, Vice Chairman of the Board. General Director of Veneto Banca Holding s.c.p.a.

● Renato Merlo, member of the Board. Head of Planning and Control Department of Veneto Banca Holding s.c.p.a.;

● Gianpietro Zannoni, member of the Board. Member of the Board of “Veneto Sviluppo” S.a.A.; “Enrive” S.p.A. Administrator of SRL “Idroelectrica Alpina”; SRL “Veneto finanza”; “Building Group” SRL, and as well loan broker at SRL “Veneto Finanza”

● Vladimir Colesnicenco, member of the Board. President of Board of Directors of Jolly Alon SA

2 BASIS OF PRESENTATION

Presentation currencyAll amounts are stated in Moldovan Lei (“MDL”) unless otherwise stated.

General principles

These financial statements are prepared in accordance with National Accounting Standards (NAS) issued by the Ministry of Finance on 25 December 1997, the chart of accounts No. 55/11–01 dated 26 March 1997 and the NBM’s regulations, that regulate, the accountancy and internal procedures and regulations of commercial banks.


68 Notes to the financial statements

Financial statements

The balance sheet, the income statement, the statement of cash flow and the statement of changes in equity as well as notes to the financial statements are prepared in accordance with the National Accounting Standard No.30 and the NBM’s regulation regarding preparation and presentation of financial statements by commercial banks, dated 8 August 1997.

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Interest income and expense

Interest income and expense on any interest bearing financial instruments are recognized in the income statement on an accrual basis. Interest income is brought to non – accrual status when overdue by more than 60 days and is subsequently excluded from interest income until received. Interest income includes interest earned from lending, from fixed income investment securities and accrued discounts on treasury bills.

Income from commissions on loans

Income from commissions on loans are recognised as deferred income and amortised on a monthly basis over terms of corresponding loan.

Cash and cash equivalents

For the purposes of the cash flow statement, cash and cash equivalents comprise balances, including: cash, non–restricted balances with NMB, nostro accounts and overnight deposits with other banks.

Available – for – sale securities

Transactions with available – for – sale securities are recorded at the purchase price. Realised or unrealised gains and losses from transactions with such securities are included in Net income for available for sale securities. Interest from available – for – sale securities is included in Interest income. Dividends received are included separately in Interest income or dividends on available for sale securities. Available–for–sale securities include securities sold at auctions. Investment securities

Investment securities represent securities which the management intends to hold for the foreseeable future and which are carried at purchase cost, adjusted by the linear amortisation of any premium or the discount on acquisition.

Interest on investment securities is included in interest income. Decrease in market value is recognised only if it could be definitely estimated.



Investment securities include treasury bills in local currency issued by the Ministry of Finance of Republic of Moldova and Certificates of the National Bank of Moldova. Investments in equity securities

The Bank holds investments in other entities that represent long term investments in shares or participations that are carried at market value.

Dividends received are separately recognised as income from dividends on investment securities.

Loans, provisions for loan losses, losses on assets and commitments

(i) Loans and provision for loan losses

Loans are stated at their nominal value, net of provision for loan losses.

A provision for loan losses is individually estimated by the management for the purpose of covering inherent losses related to the loan portfolio. The provision is established following an assessment of the recoverability of loans within the loan portfolio. When a loan is deemed non–collectable, it is written off, in the year, against the related loan loss provision.

Loans reimbursed during the financial year, being previously written off against provisions, are credited in the income statement.

Interest income is recognised in the income statement on an accrual basis. A loan is classified as non – performing and interest income is brought to non–accrual status, when overdue by more than 60 days, and the overdue interest income is recorded in the off balance sheet accounts. Loans, provisions for loan losses, losses on assets and commitments (continued)The Bank consistently forms and maintains the provision for loan losses according to the requirements of the Regulation „On the classification of assets and conditional liabilities”.

Loans are evaluated and classified into risk categories taking into account client financial situation, compliance with contractual payment terms, future cash flow estimates, and duration of outstanding payments recovery.

(ii) Provision for losses on other assets

Provisions for other assets are estimated by the management for the purpose of covering inherent losses related to such assets. In accordance with the Regulation regarding classification and establishment of provision for assets and contingent liabilities, dated 30 August 2007, the provision is established following an assessment of recoverability of the financial asset. If there is an impact of situation of other countries over financial assets it also should be taken into consideration. When the financial assets are deemed non–collectable, they are written off against the related loss provision. The amounts reimbursed during the financial year, being previously written off against provisions, are credited in the income statement.



(iii) Provision for credit related commitmentsA provision for credit related commitments is estimated based on the appropriate credit conversion factor, related to the respective loans.

Property and equipment

Property and equipment are stated at purchase value or revaluated amount less accumulated depreciation.

Gains and losses on disposal of property and equipment are determined by reference to their carrying amount and expenses related to their disposal.

Depreciation

Depreciation is applied on a straight–line basis, from the time when assets are brought into use. The following estimated useful economic lives are used:Category of property Effective operating period (Years)

Buildings 30 – 45

Modernisation of leased assets 1 – 10

Furniture and equipment 5

Vehicles 5

Other 5

Land is not depreciated. Assets in construction are not depreciated until they are brought into use.

Operating leases

The Bank’s rental agreements are classified as operating lease. Payments made under operating leases are charged to the income statement on a straight–line basis over the period of the lease.When an operating lease is terminated before the lease period has expired, any payment that is required to be made to the lessor by way of penalty, is recognised as an expense in the period in which termination takes place.

Expenses

Bank expenses are recorded in the accounting and financial reports for the period they occurred, regardless of the payment time.

Interest expenses are reflected daily in the accounts, as were incurred, based on accrual method.Bank expenses are recorded according to their nature and respectively are included in income (loss) at the end of accounting period.

Advertising expenses are recorded in the period in which they were made.



Staff travel expenses are accounted under the Regulation regarding the detachment of employees of enterprises, institutions and organizations from Republic of Moldova (Government Decision No.836 of 24 June 2002) as amended.Representation expenses are covered by the Regulations on the rules of maximum permitted representation costs to be reduced from gross proceeds (Government Decision No.130 of February 6, 1998).

Income tax and the liabilities related to current and deferred income taxes

The calculation of income tax is made in compliance with the provisions of the Fiscal Code adopted by the Parliament of the Republic of Moldova on 24 April 1997 and with the Budget Law for the reporting period.

The computation of deferred tax is based on temporary differences between the registered amounts in the financial accounting and these registered for fiscal purposes for the reporting period and in accordance with the undeclared fiscal losses carried forward.

Foreign currency translation

Transactions denominated in foreign currency are recorded at the exchange rate ruling at the transaction date. Exchange differences resulting from the settlement of transactions denominated in foreign currency and representing the difference between official exchange rate and the commercial one are included in income statement for the year at the time of settlement.

Monetary assets and liabilities denominated in foreign currency are expressed in MDL at the official rate of the National Bank of Moldova at the balance sheet date. At 31 December 2011 the exchange rate used for converting the balances into foreign currency was USD 1 =11.7154MDL and EUR 1 =15.0737 MDL(2010: 1 USD = 12.1539 MDL, and 1 EUR = 16.1045 MDL).

Foreign currency gains and losses arising from the translation of monetary assets and liabilities are reflected in the income statement for the year.

Provisions

The Bank recognises provisions when it has a present legal or constructive obligation to transfer economic benefits as a result of past events and a reasonable estimate of the obligation can be made. The entitlement for annual leave and unpaid leave of employees is recognised in the period when it is accrued. A provision is established for liabilities regarding annual leave in respect to services provided by the employees till the balance sheet date.



Pension obligations and other post employment benefits

The Bank, normally, makes payments to the Moldovan state funds on behalf of its employees for pension, health care and unemployment benefit. All employees of the Bank are members of the State pension plan. The Bank does not operate any other pension scheme and, consequently, has no other obligation in respect of pensions. The Bank does not operate any other defined benefit plan or post employment benefit plan. The Bank has no obligation to provide further services to current or former employees.

Due to customers and other liabilities

Liabilities are reflected in financial statements to the extent of the amounts which are to be reimbursed or to the extent of the necessary amounts required for it’s repayment. Bank liabilities represent deposits, current accounts and other liabilities due to banks, clients or International Financial Institutions and are classified by type and maturity. Interest on liabilities is calculated daily and reflected based on accrual method.

Equity and reserves

Bank’s equity includes share capital and reserves, including retained earnings for current year and previous periods. In accordance with requirements of the Statute a statutory reserve fund in the amount of 5% of the net undistributed profit after tax is created.

Repossessed collateral

The Bank is recording assets taken into possession (voluntary or under court order) in the balance sheet accounts. If the collateral represents land or real estate then it is recorded as Repossessed collateral. In case of good or equipments the value of repossessed collateral is recorded within Other assets.

When recording the assets taken into possession in exchange for repayment of loans, the Bank reflects the lower of the outstanding loan balance and market value of the collateral. The Bank’s Regulation on long – term assets states, if within 18 months from the time of their initial recognition in bank balance, the assets were not sold they should be written – off against expenses.

Simultaneously, written – off assets are recorded in off balance sheet accounts.



4 CREDIT ACTIVITY

The Bank’s credit activity is conducted in accordance with the Law on Financial Institutions and is regulated by Regulation on credit activity in banks from March 25, 2009.

In accordance with internal policies, the loan portfolio is divided into:

– interest bearing loans;– noninterest bearing loans

An interest bearing loan is a loan to which all payments were paid on time and the interest income is recorded according to accrual method. Loans with overdue payments up to 60 days also are considered as interest bearing.

Non interest bearing loans are considered loans under the following conditions:

– payments are overdue for more than 60 days; or– loan is classified as „doubtful”; or– loan is classified as „loss”

Provision for loan losses is estimated for each credit category, as required by NBM.

Loans are individually evaluated by the Bank and subsequently reflected in one of the following categories, based on criteria specified in NBM requirements:

Category Provision

Standard 2%

Watch 5%

Substandard 30%

Doubtful 60%

Loss 100%

In accordance with the Law on financial institutions the Bank should apply special measures in view of:

– transaction with related parties;– large exposures.



5 CAPITAL ADEQUACY

Capital adequacy ratios measure capital adequacy by comparing the Bank’s eligible capital with its balance sheet assets, off–balance–sheet commitments and other risk positions at weighted amount to reflect their relative risk.

The Bank estimates capital adequacy ratios in accordance with the Regulation of NBM on capital adequacy, dated 17 October 2001.

Assets are weighted according to categories of notional credit risk, being assigned a risk weighting according to the amount of capital deemed to be necessary to support it. Four categories of risk weights (0%, 20%, 50%, and 100%) are applied; for example cash and money market instruments have a zero risk weighting which means that no capital is required to support the holding of these assets. Uncollateralised with real estate loans, non–interest bearing loans and property and equipment carry 100% risk weight. Other asset categories have intermediate weightings.

Off–balance–sheet credit related commitments are taken into account by applying different categories of credit conversion factors, designed to convert these items into balance sheet equivalents. The resulting credit equivalent amounts are then weighted for credit risk using the same percentages as for balance sheet assets.

Tier 1 capital consists of ordinary shares in circulation, retained earnings and reserves less intangible assets (see note 31).

Tier 2 capital is nil as at 31 December 2011 (31 December 2010: nil), (see note 31).

6 LIQUIDITY

Liquidity represents the Bank’s capacity to settle its obligations as they fall due and is estimated in accordance with two principles established by the Regulation of the NBM regarding banking liquidity, dated 8 August 1997.

Principle I requires that the amount of Bank’s assets with a maturity of 2 years and more should not exceed the amount of its financial resources (see note 32).

Principle II requires that the current liquidity ratio, expressed as total liquid assets over total Bank assets, shouldn’t be less than 20% (see note 32).


75

7 GEOGRAPHICAL CONCENTRATION AND SEGMENT ANALYSIS

The Bank’s geographical concentration with regard to its assets and liabilities is prepared based on the counterparty location and is outlined below:

As at 31 December 2011

Total assets Total liabilities Off balance sheet commitments

Moldova 3,358,344,130 1,806,699,656 160,917,972

Italia 167,166,263 555,656,302 –

USA 7,223,064 307,255,948 –

Germania 6,609,793 2,110,934 –

Russia 5,229,044 184,737 –

Austria 1,393,869 586,451 –

Great Britain 4,880 134,640,416 –

Greece – 7,788,621 –

Turkey – 3,695,346 –

Romania 106,456 2,170,545 –

Switzerland – 1,622,020 –

South Africa – 1,564,072 –

Sweden – 1,289,201 –

Alte ţări 141,983 5,441,368 35,146

3,546,219,482 2,830,705,617 160,953,118

As at 31 December 2010

Total assets Total liabilities Off balance sheet commitments

Moldova 3,307,914,268 1,833,605,226 170,148,834

Italy 81,431,216 701,328,175 –

Russia 34,743,916 1,836,270 –

Austria 685,335 462,902 –

USA 351,483 1,691,565 –

Germany 188,700 2,008,512 –

Great Britain 496 209,536,483 –

Greece – 7,816,702 –

Switzerland – 714,903 –

Israel – 339,960 –

Other countries 79,270 7,786,989 –

3,425,394,684 2,767,127,687 170,148,834


Notes to the financial statements


8 FINANCIAL RISK MANAGEMENT

8.1 Market risk

The economy of Republic of Moldova is in the early stages of its development and there is a considerable degree of uncertainty with regard to tendencies in the development of the economy and local policies. It may be difficult to foresee changes that can take place in Republic of Moldova and their respective effects on the financial position of the Bank, but also on the Bank’s financial results and cash flows.

8.2 Credit risk

The Bank takes on exposure to credit risk, which is the risk that counterparty will cause a financial loss for the Bank by failing to discharge an obligation. Significant changes in the economy, or in the health of a particular industry segment that represents a concentration in the Bank’s portfolio, could result in losses that are different from those provided at the balance sheet date. Management therefore carefully manages its exposure to credit risk. Credit exposures arise principally in loans and advances, debt securities and other bills. There is also credit risk in off–balance sheet financial arrangements such as loan commitments.

The Bank’s credit risk management process includes: – Risk measurement;– Risk limit control and mitigation policies; – Impairment and provisioning policies.

The table below represents the maximum exposure to credit risk:

Assets 2011 2010

Due from banks 203,017,752 118,631,466

Due from the NBM 300,585,265 163,048,291

Overnight placements – 80,000,000

Available for sale securities 1,380,414 384,339

Investment securities 448,553,675 481,264,371Loans and finance lease receivables 2,249,606,251 2,261,785,889

Accrued interest receivable 51,309,546 26,529,458

Other assets 19,060,335 16,575,958

3,293,776,688 3,148,219,772

Credit risk exposure related to off–balance sheetGuarantees issued 61,874,655 57,759,979

Commitments to grant loans in future

99,069,699 112,388,855

160,944,354 170,148,834



8.3

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ate

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k

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table

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tere

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s at

31 D

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2011 a

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1 D

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eprici

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aver

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des

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he

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and

--

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108,1

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47,9

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91,7

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3,9

91,7

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88,5

98,2

72

45,5

90,3

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722,6

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189,8

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27,6

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77,0

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88,4

38,6

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(91,8

34,6

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20,5

35,9

10

20,4

18,7

84

101,9

31,2

22

658,2

66,9

97

The

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nsi

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nal

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has

bee

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eter

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ed b

ased

on t

he

exposu

re t

o inte

rest

rat

e risk

at

the

report

ing d

ate.

At

31 D

ecem

ber

2011,

if inte

rest

rat

es h

ave

bee

n h

igher

/ low

er b

y 0.2

% o

n d

ue

from

ban

ks a

ccounts

, by

1.5

% o

n inve

stm

ents

se

curities

, by

1%

on loan

s an

d fi

nan

ce lea

se r

ecei

vable

s , by

0.2

% o

n d

ue

to b

anks

, by

1%

to b

orr

ow

ings

and b

y 1.5

% o

n B

ank

dep

osi

ts, w

ith a

ll oth

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aria

ble

s w

ere

hel

d c

onst

ant,

the

Ban

k’s

post

– tax

pro

fit fo

r th

e tw

elve

month

per

iod e

nded

31 D

ecem

ber

20011 w

ould

res

pec

tive

ly incr

ease

/ d

ecre

ase

by

appro

xim

atel

y 4,1

87,9

75 M

DL

(2010:

8,4

89,2

50 M

DL)

.



8.4

Liq

uid

ity r

isk

Liquid

ity

risk

is

the

risk

that

the

Ban

k w

ill b

e unab

le t

o m

eet

its

pay

men

t oblig

atio

ns

asso

ciat

ed w

ith its

finan

cial

lia

bili

ties

when

th

ey f

all due

and t

o r

epla

ce f

unds

when

they

are

withdra

wn.

The

conse

quen

ce m

ay b

e th

e fa

ilure

to m

eet

oblig

atio

ns

to r

epay

dep

osi

tors

and f

ulfi

l co

mm

itm

ents

to len

d.

The

Ban

ks’ liq

uid

ity

man

agem

ent

pro

cess

as

carr

ied o

ut

and m

onitore

d b

y Tr

easu

ry

Dep

artm

ent,

incl

udes

: a)

Day

- today

fundin

g, m

anag

ed b

y m

onitoring futu

re c

ash fl

ow

s to

insu

re that

req

uirem

ents

can

be

met

; b)

Mai

nta

inin

g a

port

folio

of

hig

hly

mar

keta

ble

ass

ets

that

can

eas

ily b

e liq

uid

ated

as

pro

tect

ion a

gai

nst

any

unfo

rese

en inte

r-ru

ptions

to c

ash fl

ow

; c)

Monitoring t

he

liquid

ity

ratios

agai

nst

reg

ula

tory

req

uirem

ents

.

The

table

s bel

ow

pre

sent

exposu

re o

f th

e Ban

k to

liquid

ity

risk

by

contr

actu

al m

aturities

at

31 D

ecem

ber

2011 a

nd 3

1 D

ecem

ber

2010:

At

31

Dece

mb

er

20

11

Up

to

1 m

on

th1

to

3 m

on

ths

3 t

o 1

2 m

on

ths

1 t

o 5

years

Over

5 y

ears

To

tal

Ass

ets

Cas

h in h

and

108,1

40,3

50

--

--

108,1

40,3

50

Due

from

ban

ks,

net

203,0

17,7

53

--

--

203,0

17,7

53

Due

from

the

NBM

300,5

85,2

65

--

--

300,5

85,2

65

Ove

rnig

ht

pla

cem

ents

--

--

--

Ava

ilable

for

sale

se

curities

1,3

80,4

14

--

--

1,3

80,4

14

Inve

stm

ent

secu

rities

422,2

04,0

44

22,8

63,3

74

2,2

76,9

99

600,0

00

609,2

57

448,5

53,6

74

Loan

s an

d fi

nan

ce lea

se

rece

ivab

le1,1

78,2

04

15,2

82,0

99

105,7

73,9

64

1,1

87,8

62,9

21

939,5

09,0

63

2,2

49,6

06,2

51

Proper

ty a

nd e

quip

men

t-

--

-70,3

40,6

60

70,3

40,6

60

Acc

rued

inte

rest

re

ceiv

able

51,3

09,5

46

--

--

51,3

09,5

46

Rep

oss

esse

d c

olla

tera

l4,1

73,8

42

3,1

41,9

72

66,6

45,9

70

--

73,9

61,7

84

Oth

er a

sset

s 3

7,7

66,9

05

- 1

,556,8

80

- -

39,3

23,7

85

Tota

l Ass

ets

1,1

29,7

56,3

23

41,2

87,4

45

176,2

53,8

13

1,1

88,4

62,9

21

1,0

10,4

58,9

80

3,5

46,2

19,4

82



At

31

Dece

mb

er

20

11

Up

to

1 m

on

th1

to

3 m

on

ths

3 t

o 1

2 m

on

ths

1 t

o 5

years

Over

5 y

ears

To

tal

Liab

ilities

Due

to b

anks

15,0

73,7

00

–74,6

81,3

80

––

89,7

55,0

80

Due

to c

ust

om

ers

647,2

43,9

37

222,0

28,1

96

754,3

38,0

24

25,7

34,1

64

172,8

21,8

80

1,8

22,1

66,2

01

Oth

er b

orr

ow

ings

133,9

73,0

76

–22,0

00

494,3

49,8

78

235,9

11,0

11

864,2

55,9

65

Acc

rued

inte

rest

pay

able

21,1

75,9

35

––

––

21,1

75,9

35

Oth

er lia

bili

ties

29,3

60,7

25

––

––

29,3

60,7

25

Prov

isio

ns

for

loss

es o

n

com

mitm

ents

61,7

43

209,7

10

678,5

69

2,9

58,3

86

83,3

03

3,9

91,7

11

Tota

l lia

bili

ties

846,8

89,1

16

222,2

37,9

06

829,7

19,9

73

523,0

42,4

28

408,8

16,1

94

2,8

30,7

05,6

17

Net

liq

uid

ity

surp

lus

/ (g

ap)

282,8

67,2

07

(180,9

50,4

61)

(653,4

66,1

60)

665,4

20,4

93

601,6

42,7

86

715,5

13,8

65

Unuse

d a

mount

of

the

cred

it lin

e fr

om

Ven

eto B

anca

(Pa

rent)

in a

mount

of

EU

R 2

8,4

00,0

00 w

ill a

ssure

Ban

k’s

abili

ty t

o c

over

sh

ort

ter

m liq

uid

ity

gap

arise

n.



At

31

Dece

mb

er

20

10

Up

to

1 m

on

th1

to

3 m

on

ths

3 t

o 1

2 m

on

ths

1 t

o 5

years

Over

5 y

ears

To

tal

Ass

ets

Cas

h in h

and

107,5

16,2

25

––

––

107,5

16,2

25

Due

from

ban

ks,

net

118,6

31,4

66

––

––

118,6

31,4

66

Due

from

the

NBM

163,0

48,2

91

––

––

163,0

48,2

91

Ove

rnig

ht

pla

cem

ents

80,0

00,0

00

––

––

80,0

00,0

00

Ava

ilable

for

sale

se

curities

384,3

39

––

––

384,3

39

Inve

stm

ent

secu

rities

399,0

68,2

14

75,1

76,0

64

2,5

06,0

32

3,9

00,0

01

614,0

60

481,2

64,3

71

Loan

s an

d fi

nan

ce lea

se

rece

ivab

le4,8

41,6

83

8,3

92,8

94

129,4

58,4

56

1,4

19,7

86,9

59

699,3

05,8

97

2,2

61,7

85,8

89

Proper

ty a

nd e

quip

men

t–

––

–81,1

57,3

11

81,1

57,3

11

Acc

rued

inte

rest

re

ceiv

able

26,5

29,4

58

––

––

26,5

29,4

58

Rep

oss

esse

d c

olla

tera

l–

–68,6

21,6

13

4,9

16,9

62

–73,5

38,5

75

Oth

er a

sset

s 2

7,8

43,8

45

– 3

,694,9

15

– –

31,5

38,7

59

Tota

l Ass

ets

927,8

63,5

21

83,5

68,9

58

204,2

81,0

16

1,4

28,6

03,9

22

781,0

77,2

68

3,4

25,3

94,6

84



At

31

Dece

mb

er

20

10

Up

to

1 m

on

th1

to

3 m

on

ths

3 t

o 1

2 m

on

ths

1 t

o 5

years

Over

5 y

ears

To

tal

Liab

ilities

Due

to b

anks

487,9

27

-79,0

63,1

00

--

79,5

51,0

27

Due

to c

ust

om

ers

710,7

85,2

56

263,4

65,3

63

676,0

43,0

37

50,9

73,4

19

76,2

85,0

27

1,7

77,5

52,1

02

Oth

er b

orr

ow

ings

208,3

52,5

72

-46,9

07,7

02

410,6

96,7

12

179,6

67,0

05

845,6

23,9

91

Acc

rued

inte

rest

pay

able

14,6

78,5

40

--

--

14,6

78,5

40

Oth

er lia

bili

ties

43,9

84,6

14

--

--

43,9

84,6

14

Prov

isio

ns

for

loss

es

on c

om

mitm

ents

105,7

83

146,0

20

1,2

99,4

90

3,7

11,6

52

474,4

68

5,7

37,4

13

Tota

l lia

bili

ties

978,3

94,6

92

263,6

11,3

83

803,3

13,3

29

465,3

81,7

83

256,4

26,5

00

2,7

67,1

27,6

87

Net

liquid

ity

surp

lus

/ (g

ap)

(50,5

31,1

71)

(180,0

42,4

25)

(599,0

32,3

13)

963,2

22,1

39

524,6

50,7

68

658,2

66,9

97

8.5

Fo

reig

n E

xch

an

ge r

isk

The

Ban

k ta

kes

on e

xposu

re t

o e

ffec

ts o

f fluct

uat

ions

in t

he

pre

vaili

ng f

ore

ign c

urr

ency

exc

han

ge

rate

s on its

finan

cial

posi

tion

and c

ash fl

ow

s. T

he

Boar

d s

ets

limits

on the

leve

l of ex

posu

re b

y cu

rren

cy a

nd in

tota

l for

both

ove

rnig

ht an

d in

tra-

day

posi

tions,

w

hic

h a

re m

onitore

d d

aily

. The

table

bel

ow

sum

mar

izes

the

Ban

k’s

exposu

re t

o f

ore

ign c

urr

ency

exc

han

ge

rate

ris

k at

31 D

e-ce

mber

2011 a

nd 3

1 D

ecem

ber

2010. In

cluded

in t

he

table

are

the

Ban

k’s

asse

ts a

nd li

abili

ties

at

carr

ying a

mounts

, ca

tegorize

d

by

curr

ency

.



8.5 Foreign Exchange risk (continued)

At 31 December 2011 USD EUR

Other foreign

currenciesMDL Total

Assets

Cash in hand 16,046,478 31,934,463 3,842,101 56,317,308 108,140,350

Due from NBM 77,607,472 93,628,615 – 129,349,178 300,585,265

Due from banks 99,255,630 77,894,590 10,761,662 15,105,871 203,017,753Overnight place-ments – – – – –

Available – for – sale securities – – – 1,380,414 1,380,414

Investment securi-ties 1 – – 448,553,673 448,553,674

Loans and finance lease receivables 756,218,978 640,501,064 – 852,886,209 2,249,606,251

Property and equipment – – – 70,340,660 70,340,660

Accrued interest receivable 16,940,523 5,975,621 24,549 28,368,853 51,309,546

Repossessed collateral – – – 73,961,784 73,961,784

Other assets, net 2,881,429 2,390,216 804,590 33,247,550 39,323,785

Total assets 968,950,511 852,324,569 15,432,902 1,709,511,500 3,546,219,482

Liabilities

Due to banks 23,430,800 66,324,280 – – 89,755,080Non–interest bearing deposits 21,098,982 24,455,127 4,483 65,189,270 110,747,862

Interest bearing deposits 240,214,022 585,963,182 10,280,139 874,960,996 1,711,418,339

Other borrowings 664,597,906 188,421,250 – 11,236,809 864,255 965Accrued interest payable 4,674,091 7,808,656 1 8,693,187 21,175,935

Other liabilities 5,638,695 7,743,694 55,828 15,922,508 29,360,725Provisions for losses on commitments 1,317,890 1,045,927 – 1,627,894 3,991,711

Total liabilities 960,972,386 881,762,116 10,340,451 977,630,664 2,830,705,617Net on balance sheet position 7,978,125 (29,437,547) 5,092,451 731,880,836 715,513,865

At 31 December 2010Total assets 993,091,819 762,445,571 44,012,785 1,625,844,509 3,425,394,684

Total liabilities 984,232,058 762,277,683 40,323,433 980,294,513 2,767,127,687Net on balance sheet position 8,859,761 167,888 3,689,352 645,549,996 658,266,997



Other foreign currencies mainly include the Russian Ruble, the Romanian Leu and the Ukrainian Hrivna. At 31 December 2011, if the MDL had weakened/ strengthened 10 per cent against the foreign currencies with all other variables held constant, the post-tax profit for the twelve month period ended 31 December 2011 would have been approximately 1,636,697 MDL (2010: 1,216,360 MDL) higher/lower.

The open currency position, determined as the ratio between the value of assets de-nominated in foreign currency and the value of total regulatory capital of the Bank has been calculated at 31 December 2011. The Bank complied with standards es-tablished by NBM, namely, the open currency position for each foreign currency did not exceed 10%, and the amount of the open currency position over all currencies constituted 6.79 % (2010: 2.97%).

8.6 Fair values of financial assets and liabilities

The following table summarizes the carrying amounts and fair values of those finan-cial assets and liabilities not presented on the Bank’s balance sheet at their fair value.

Carrying value Fair value

2011 2010 2011 2010

Financial assets

Due from banks 203,017,753 118,631,466 203,017,753 118,631,466

Loans and finance lease receivables 2,249,606,251 2,261,785,889 1,991,702,237 1,939,332,595

Investment securities 448,553,674 481,264,371 448,553,674 481,264,371

2,901,177,678 2,861,681,726 2,643,273,664 2,539,228,432

Financial liabilities

Due to banks 89,755,080 79,551,027 89,755,080 79,551,027

Due to customers 1,822,166,201 1,777,552,102 1,776,127,369 1,769,608,811

Other borrowings 864,255,965 845,623,990 848,061,197 702,933,708

2,776,177,246 2,702,727,119 2,713,943,646 2,552,093,546



9 DUE FROM BANKS

31 December 2011 31 December 2010

Deposits in banks from OECD countries and Moldova 15,073,700 –

15,073,700 –

Current accounts in banks from OECD countries and Moldova 185,974,470 85,552,638

Current accounts in banks from non-OECD countries 5,867,642 36,691,172

191,842,112 122,243,810

Provision for due from banks (3,898,060) (3,612,344)

203,017,752 118,631,466

10 CASH AND BALANCES WITH THE NATIONAL BANK OF MOLDOVA


Nostro account 129,349,178 22,510,447

Minimum required reserves held in for-eign currency 171,236,087 140,537,844

300,585,265 163,048,291

According to NBM regulations, the Bank is to maintain an average balance with the NBM amounting to 14 % (2010: 8%) of the average amount of attracted resources in MDL and foreign currencies for the previous 15 day period.

For the period of 8 November – 07 December 2011 the Bank had to maintain an aver-age balance of required reserves at 31 December 2011 of MDL 303,644,614 (2010: MDL 217,732,822). As at 7 January 2012 the Bank was in compliance with the re-quired mandatory reserves level. Amounts in Nostro account at NBM could be used anytime by the Bank, according to NBM regulations.



11 OVERNIGHT PLACEMENTS


National Bank of Moldova - 80,000.000

- 80,000.000

12 INVESTMENT SECURITIES


Held to maturity investments

State bonds, nominal value (i) 4,500,000 4,200,000

Debt securities – at amortised cost

Treasury bills issued by the Ministry of Finance (ii) 34,665,200 112,606,700

Deposit certificates issued by the NBM (iii) 410,000,000 350,000,000

Pledged securities (iv) – 15,256,800

Discounts on treasury bills and deposit certificates (1,220,782) (1,413,189)

443,444,418 476,450,311

Held for sale investments

Equity securities-at cost:

Equity participation (v) 626,592 626,592

Provision for investment securities (17,335) (12,532)

448,553,675 481,264,371



i. State bonds bear coupons of 11.96 % - 14.02 % per annum and mature in 2012 in amount

of MDL 3,900,000 and in 2013 in amount of MDL 600,000.

ii. Treasury bills issued by the Ministry of Finance are due within one year from 31 Decem-ber 2011. The average interest rate on treasury bills during 2011 varied between 8.80 % - 13.58 % (2010: 3.43% - 9.06%)

iii. Deposit certificates issued by the NBM are due in January 2011 and have an average inter-est rate of 9.50%.

iv. In 2011, investment securities in the amount of MDL 0 were pledged (2010: 15,256,800).

v. The Bank’s equity participation consists of shares in non-associated companies.

Entity Nature of business

Interest held (%)

31 December 2011

31 December 2010

Stock Exchange of Moldova Stock exchange 2.56 10,000 10,000

CA “Exim-Asint” S.A. Insurance 1.64 160,100 160,100

National Depositary of Moldova Registry keeping 3.13 6,250 6,250

IM “Floresti Industrial Park” SRL Services 4.90 10,241 10,241

Master Card World Wide Cards transactions 0.00 1 1

SIG “Garantinvest” S.R.L. Guarantee services 9.92 440,000 440,000

626,592 626,592

13 AVAILABLE FOR SALE SECURITIES


Corporate bonds 1,408,586 392,183

Provision for available for sale securities

(28,172) (7,844)

1,380,414 384,339



14 LOANS AND FINANCE LEASE RECEIVABLES

Loans and financial lease receivables including provision for impairment losses are summarised as follows:

2011 2010

Short term loans with a residual maturity less than 3 months

19,900,706 15,916,389

Short term loans with a residual maturity between 3 and 12 months

127,937,099 139,636,815

Long term loans with a residual maturity more than 12 months

2,376,372,673 2,398,145,072

2,524,210,478 2,553,698,276

Less: Provision for loan losses (274,604,227) (291,912,387)

2,249,606,251 2,261,785,889

Movements in loan loss provision are as follows:

2011 2010

Opening balance at 1 January 291,912,387 262,114,483

Current year charge (Note 28) 18,943,175 190,692,572

Write-offs (104,325,183) (168,992,338)

Recoveries 68,073,848 8,097,670

Closing balance at 31 December 274,604,227 291,912,387

In August 2011 the Bank approved a prolongation of exposures totalling MDL 45 million assumed to a local stock company. Approved the transaction on the grounds that the client is the responsibility of the General Assembly of shareholders, and con-vened by the time required to strictly follow the local legislation in the field, signing agreements effective prolongation occurred in November 2011. Applying the principle of substance prevails over form; the bank considers the deadline of three months provided for by prudential regulations of the Bank for loan reclassification in a more



favourable category (Supervised).Interest rates on loans to customers varied in 2011 between 9% and 25% (2010: between 5.00% and 29%) per annum for loans in MDL (the average market rate ac-cording to NBM during 2011 varied between 13.96 % to 15.24 % per annum (2010: 17.23% and 22.98%) and from 5.05% to 14% (2010: 4.75% to 28.00%) per annum for loans and advances in foreign currency (the average market rate during 2011 var-ied between 7.67 % to 9.31% per annum (2010: 10.78% to 14.00%).

Net credit exposure on loans granted to the Bank’s top ten borrowers, amounted at 27.8 % (2010: 40.78%) of the total loan portfolio.

Gross loans and finance leases by industry are summarised as follows:

2011 2010

Manufactory and commerce 1,690,211,926 1,817,381,672

Construction and real estate acquisition 487,819,526 409,409,298

Agriculture and food industry 146,107,624 178,736,354

Fuel and energy 65,647,468 69,405,448

Road construction and trans-ports 29,604,549 30,558,635

Consumer loans 14,239,015 12,658,922

Loans to public authorities 500,169 2,480,000

Other loans 90,080,201 33,067,947

2,524,210,478 2,553,698,276

Gross loans by type of borrowers are classified as follows:

2011 2010

Companies 2,408,996,277 2,501,587,925

Individuals 115,214,202 52,110,351

2,524,210,478 2,553,698,276



15

P

RO

PER

TY

AN

D E

QU

IPM

EN

T

Lan

d a

nd

b

uil

din

gs

Eq

uip

men

tFu

rnit

ure

Veh

icle

sO

ther

ass

ets

Ass

ets

un

der

con

stru

ctio

nTo

tal

Co

st o

r re

valu

ed

am

ou

nts

Bal

ance

at

1 J

anuar

y 2011

59,3

63,9

24

44,4

64,1

75

17,0

36,6

99

7,9

06,8

25

19,5

37,7

53

918,6

41

149,2

28,0

17

Additio

ns

1,6

71,2

58

2,4

69,3

60

250,2

68

338,8

12

576,2

66

1,4

12,3

72

6,7

18,3

36

Rev

aluat

ion

(325,6

92)

––

––

–(3

25,6

92)

Dis

posa

ls–

1,2

23,6

40

––

–(1

,223,6

40)

–

Bal

ance

at

31 D

ecem

ber

2011

(1,0

73,7

52)

(2,0

26,7

74)

(834,4

26)

(628,1

48)

(1,6

21,6

33)

–(6

,184,7

33)

59,6

35,7

38

46,1

30,4

01

16,4

52,5

41

7,6

17,4

89

18,4

92,3

85

1,1

07,3

72

149,4

35,9

28

Dep

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2011

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Bal

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31 D

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2010

59,3

63,9

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44,4

64,1

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17,0

36,6

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7,9

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25

19,5

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918,6

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149,2

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17

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24,4

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31 D

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11,4

58,0

78

29,5

71,6

29

9,8

80,5

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70,7

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27,9

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9,9

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59,4

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89,6

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99,8

10,9

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16 OTHER ASSETS


Receivables from transactions with international money transfer systems 2,874,075 917,904

Debtors on capital investments 1,608 961,415

Intangible assets (Note 18) 20,263,450 14,944,831

Repossessed assets 1,556,880 5,251,794

Other materials 1,759,790 982,325

Other prepayments 5,004,919 1,583,737

Settlements with other individuals and entities 4,770,234 4,158,705

Other assets 3,805,397 3,083,325

Provision for other assets (712,568) (345,277)

39,323,785 31,538,759

Repossessed assets represent equipment and finished goods taken into possession by the Bank.

17 REPOSSESSED COLLATERAL


Repossessed collateral carrying value 73,961,784 73,538,575

Market value according to the last valuation reports

from which: 109,072,756 108,302,015

Coverage ratio (outstanding amount by market value) 147.47% 147.27%

Taken into account that the outstanding amount of loans has been much lower than the market value of repossessed collateral, the assets have been recorded at the overdue debt value (outstanding amount of loans).

The market value of the collateral has been estimated by independent valuators during the years 2010–2011.



18 INTANGIBLE ASSETS

2011 2010

Cost:

Balance at 1 January 18,292,894 3,981,623

Additions 6,615,963 14,645,985

Disposals (20,687) (334,714)

Balance at 31 December 24,888,170 18,292,894

Accumulated amortisation:

Balance at 1 January 3,348,063 3,277,230

Charge for the year 1,297,344 405,547

Disposals (20,687) (334,714)

Balance at 31 December 4,624,720 3,348,063

Net book value 20,263,450 14,944,831

19 DUE TO BANKS

Interest rate

31 December 2011

Interest rate

31 December 2010

Veneto Banca Societa Cooperativa per Azioni 5.59% 74,681,380 1.58% 79,063,100

Banca Comerciala Romana Chisinau SA 4.50% 15,073,700 –

89,755,080 79,063,100



20 DUE TO CUSTOMERS


Non–interest bearing deposits:

Deposits of individual customers

In MDL 8,344,620 9,501,062

In foreign currency 24,005,043 23,510,730

32,349,663 33,011,792

Deposits of corporate customers

In MDL 56,844,650 87,419,966


78,398,199 122,575,723

Interest bearing deposits:

Deposits of individual customers

In MDL 510,617,528 443,178,533


918,654,667 837,149,701

Deposits of corporate customers

In MDL 364,343,468 340,905,977


792,763,672 784,814,886

1,822,166,201 1,777,552,102

In 2011, interest rates on interest bearing deposits from customers vary between 1% and 14% (2010: 1% and 11.50%) per annum for deposits in MDL (the average mar-ket rate during 2011 varied between 0.88 % – 8.45% (2010: 1.5% – 14.75 %) and from 0.5% – 6.2 % (2010: 0.5% – 6.03%) per annum for deposits from customers in foreign currency (the average market rate during the year varied between 0.1% – 3.8% (2010: 0.6% – 8.5%).



21 OTHER BORROWINGS


Loans from Veneto Banca Societa Cooperativa per Azioni

414,528,470 576,707,215

Loans from Ministry of Finance (IFAD) 11,229,809 14,461,234

Loans from Ministry of Economy and Commerce

7,000 14,000

IFC 304,600,400 –

EBRD 133,890,286 208,352,571

National Bank of Moldova – 46,088,970

864,255,965 845,623,990

Loans from Veneto Banca Societa Cooperativa per Azioni

Loans from Veneto Banca are granted as credit lines for financing the activity of the Bank in total amount of EUR 12,500. The amounts are granted based on the credit re-quests made by EXIMBANK. The interest rate for the granted amounts in EUR or USD is equal to three months Euribor plus 3.93 % – 8.45% (2010: 0.95% – 2.65%) for the deferred credit lines. The interest rate is paid each quarter, at anticipated reimburse-ment or at maturity. During 2011 the effective interest rate on these loans varied from 2.066 % – 6.124% for USD (2010: 1.199% – 1.5625%) and from 1.22375 % – 5.476% for EUR (2010: 1.625% – 3.123%).

Eximbank also benefits from 2 bank savings: 3,400,000 EUR 2,000,000 USD and drawn from VBH for a period of 6 months. During 2011 the interest rate applied to these deposits ranged from 1.861% – 5.257% for ERUs and 1.10375% – 5.92% for USD.

Bank’s policy to diversify sources of funding resulted in a decrease in the form of loans and credit lines in 2011.

Loans from Ministry of Finance

Loans from Ministry of Finance of the Republic of Moldova for certain agricultural pro-jects are financed by International Fund for Agricultural Development. The purpose of these projects is to contribute to the eradication of the poverty in the rural sector by boost agriculture and by creating work places that generate income. During 2011 the effective interest rate on these loans varied between 0.75 % – 2.15 % (2010: 0.75% – 3.4%) for USD and 7.0 % – 9.30 % (2010: 2.75% – 1.90%) for MDL.

Loans from Ministry of Economy and Commence

Loans from Ministry of Economy and Commerce of Republic of Moldova for certain projects are financed by National Agency for Employment. The purpose of these is granting credits to small/middle enterprises, and individuals, including unemployed ones that are registered at the agency for labour employment. During 2011 the effec-tive interest rate on these loans varied between 4.5 % (2010: 2.5% – 4.5%).



Loans from EBRD

Loans from EBRD (European Bank for Reconstruction and Development) are a credit line for 5–year term for financing small and medium enterprises. The interest rate for the granted amounts in USD or EUR is equal to six month Libor plus 2.65%. The inter-est rate is paid twice a year on certain dates stipulated in the agreement. During 2011 the effective interest rate on these loans varied between 3.05% and 3.41 % for USD.

As at 31 December 2011 the Bank was in compliance with financial covenants con-tained in the Loan Agreement with BERD, except for 2 indicators which are: the cove-nants for Gross Loans in Arrears (over 60 days) / Total Gross Loans and Net exposure of a group of clients to one person / Total Regulatory Capital.

The Bank did not request a waiver letter from the creditor neither prior or after the balance sheet date.

As such the outstanding amount of the borrowing from EBRD was reclassified as due immediately as at 31 December 2011 (please see Note 8.4).

Loans from National Bank of Moldova

Loans from NBM are a credit line for 1–year term financing of enterprises in the real sector of the economy. The interest rate for the granted amounts in MDL is equal to the base rate of NBM. The interest rate is paid monthly as it is stipulated in the agree-ment, on the first working day of next month. During 2011 the effective interest rate on this loan varied between 2,323 % and 6,271%.

22 OTHER LIABILITIES

Other liabilities are summarized as follows:


Deferred income 12,815,187 13,061,282

Due to the State Budget 155,203 695,468

Payables to companies and individuals 8,818,124 20,991,245

Transfers to be collected by individuals 512,512 2,363,517

Provision for unused vacation 5,371,761 4,948,122

Amounts from clients to be transferred 380,215 735,801

Other liabilities 1,307,723 1,189,179

29,360,725 43,984,614

The Bank started deferral of commissions on granted loans at the end of 2007. The unamortised part of those commissions is reflected as deferred income.All amounts in Moldovan Lei (MDL) unless otherwise stated


23 SHARE CAPITAL

All shares are ordinary and have a nominal value of MDL 1,000 each.Movements in the Bank’s share capital are summarized as follows:

2011 2010

Units MDL Units MDL

Placed ordinary shares

Balance as at 1 January 635,000 635,000,000 635,000 635,000,000

Issue of shares for the year – – – –

Balance as at 31 December 635,000 635,000,000 635,000 635,000,000

24 COMMISSION INCOME

2011 2010

Payment transactions 12,316,928 11,568,170

Cash transactions 11,522,715 8,642,859

International money transfers payments 2,237,104 3,038,862

Other payments in local currency 755,200 2,413,596

Income from SWIFT and Telex 2,119,644 2,003,539

Guarantees and letters of credit 1,855,119 1,716,398

Payment acceptance 3,037,396 1,243,783

Other 2,025,449 3,996,444

35,869,555 34,623,651



25 OTHER NON–INTEREST INCOME

2011 2010

Commission income on credit cards 5,583,516 5,003,583

Fines and penalties received 8,862,584 4,358,786

Incomes from premature withdrawal of deposits 1,284,886 630,695

Gain on disposal of fixed assets 154,558 11,667

Incomes from credit indexing 125 4,432

Incomes from sales of assets in possession 15,370,150 857,542

Incomes from conventional closure of accounts 3,917,704 271,858

Other 693,709 331,986

35,624,132 11,470,549

26 PREMISES, DEPRECIATION AND OTHER RELATED COSTS

2011 2010

Depreciation (Note 15) 17,202,229 16,561,709

Rent 25,701,263 12,049,400

Repairs and maintenance 7,229,770 6,335,332

Security 2,876,323 1,865,442

Electricity, heating and water 1,131,825 1,055,519

54,141,410 37,867,402



27 OTHER NON–INTEREST EXPENSES

2011 2010

Expenses related to write – off of repossessed collateral 6,637,292 22,988,543

Expenses on operations with VISA and MasterCard 7,449,201 7,337,664

Stationery expenses 5,624,006 6,001,536

Telephone and correspondence expenses 2,412,559 2,539,918

Expenses related to unused vacation 223,639 (2,306,545)

Commissions paid 2,180,795 1,921,615

Marketing and promotion 2,370,876 1,206,128

Printing, publishing and stationery 910,131 847,785

Expenses related to maintenance of intangible assets 1,870,002 840,921

Travelling 832,406 719,013

Disbursements to deposits guarantee fund 705,066 693,976

Amortization of intangible assets and low value as-sets 1,504,672 583,469

Administration and representation expenses 962,536 578,305

Contributions related to Trade Union 571,000 505,000

Legal expenses 2,834,419 388,042

Newspapers and magazines 381,608 362,417

Sponsorship 346,363 355,592

Expense related to information services from Reuters 355,371 353,445

Insurance 1,058,516 333,268

Membership fees 159, 916 304,890

Expenses on disposal of other assets 270,541 124,492

Training 263,766 51,047

Expenses related to cash transactions with NBM 783,246 17,145

Expenses related to disposal of fixed assets – 10,942

Loss on write–off of other assets 38,382 4,030

Other 5,880,707 1,541,400

46,627,016 48,304,038

Expenses related to the writing–off of repossessed collaterals, occurred due to expiry of the 18 months – period of maintenance of these assets on the balance sheet and which were subsequently recorded in off balance sheet accounts.



28 PROVISIONS FOR LOSSES ON ASSETS

2011 2010

Provisions for losses on interest bearing assets:

On loans and advances to customers (Note 14) 18,943,175 190,692,572

On due from banks 310,847 (5,818,431)

19,254,022 184,874,141

Provisions for commitments (1,737,670) 2,004,960

Provisions for losses on non interest bearing assets 1,566,610 11,067,929

19,082,962 197,947,030

29 INCOME TAX EXPENSE

During 2011 the income tax rate amounted to 0% (2010: 0%).The following is a reconciliation of the Bank’s profit before taxation under National Accounting Standards and taxable income under the legislation in effect:

2011 2010

Net profit / (loss) before income tax 57,572,560 (145,931,357)

Adjustments under tax law:

Income not subject to tax (19,076,853) (15,547,567)

Expenses not deductible for tax purposes 30,625,795 42,985,546

Taxable profit / loss 60,121,502 (118,493,378)

Income tax rate 0% 0%

Current income tax – –

Deferred income tax – –

Total income tax expense – –



30 CASH AND CASH EQUIVALENTS


Due from banks (Note 9) 191,842,112 122,243,810

Cash in hand 108,140,350 107,516,225

Nostro accounts with NBM (Note 10) 129,349,178 22,510,447

Overnight placements (Note 11) – 80,000,000

429,331,640 332,270,482

31 CAPITAL ADEQUACY

2011 2010

Tier I capital 692,402,458 640,148,516

Tier II capital – –

Total Tier I capital and Tier II capital 692,402,458 640,148,516

Less participation in equity of other banks (366,055) (366,055)

Total regulatory capital 692,036,403 639,782,461

Risk weighted assets 1,710,891,268 1,934,023,812

Capital adequacy ratio 40.45% 33.08%

According to NBM’s rules with regard to banks’ capital adequacy, the banks have to hold a coefficient of capital adequacy at the rate of at least 12%. At 31 Decem-ber 2011, the minimal limit of regulatory capital required constituted 150,000 MDL (2010: MDL 100,000 thousand).



32 BANK LIQUIDITY

Principle I

2011 2010

1 Assets with a maturity of 2 years or more 1,258,345,632 1,161,002,650

2 Financial resources with a maturity of 2 years or more 1,727,791,035 1,602,783,423

Ratio ½ 0.73 0.72

Principle II

2011 2010

Liquid assets

Cash and valuable metals 108,140,350 107,516,225

Deposits with NBM 300,585,265 243,048,291

Liquid securities 449,165,200 466,806,700

Less / plus net interbank loans (less than 1 month) 191,842,113 121,755,883

Total liquid assets 1,049,732,928 939,127,099

Total assets 3,546,219,482 3,425,394,684

Liquid assets / Total assets * 100% 29.60% 27.42%

Minimum required current liquidity ratio 20.00% 20.00%



33 TRANSACTION WITH RELATED PARTIES

As at 31 December 2011 the Bank is controlled by Veneto Banca Societa Coopera-tiva per Azioni (“Parent Bank”), which owns 100% of the ordinary shares, being the ultimate parent. During the year 2006 Veneto Banca Societa Cooperativa per Azioni purchased 100% of shares from Royal HTM Group Inc. being then the sole and ulti-mate shareholder.

During 2011 the Bank entered into a number of banking transactions with related parties in the normal course of the business. These transactions include loans, depos-its and foreign currency transactions.

Management Related entities

2011 2010 2011 2010

(i) Loans

Opening balance 14,248,066 10,847,442 105,001 246,752

Loans received during the year 6,094,670 7,618,583 – 12,635

Loans reimbursed during the year

(8,471,183)

(4,217,959)

(36,001) (154,386)

Closing balance 11,871,553 14,248,066 69,000 105,001

Interest income earned 943,045 819,430 9,207 12,828

(ii) Deposits and borrowings

Opening balance 16,120,784 12,138,877 657,056,211 1,001,075,842

Amounts deposited and granted during the year 90,775,099 37,374,999 937,454,687 388,929,012

Amounts reimbursed during the year 88,198,947 (33,393,092) 1,063,336,939 (732,948,643)

Closing balance 18,696,936 16,120,784 531,173,959 657,056,211

Interest expense 805,384 962,368 18,024,413 9,409,368

In 2011 total remuneration of the key management personnel was MDL 10,624 thousand (2010: MDL 10,736 thousand).

During the year 2011 the Bank has earned interest income on Nostro accounts with Veneto Banca s.c.p.a. of MDL 1,293,664 (2010: MDL 436,346).



34 CONTINGENT LIABILITIES AND COMMITMENTS

Taxation risk

Local tax legislation is subject to varying interpretations and constant changes. Fur-ther, the interpretation of tax legislation by tax authorities as applied to the transac-tions and activity of the Bank may not coincide with that of management. As a result, tax authorities may challenge transactions and the Bank may be assessed additional taxes, penalties and interest. Last complete and thematic tax inspection of the Bank took place in August 2010 and the.

Legal proceedings

At 31 December 2011 the Bank filed claims related to loans in court. These claims are analysed by the Bank’s administration, which considers that no significant loss will be brought to the Bank.

Investment capital commitments

At 31 December 2011 the Bank had no significant capital commitments.

Credit related commitments

As at 31 December 2011, the Bank had contractual engagements that commit it to extent credits, and related to issued guarantees as follows:


Guarantees issued 61,874,655 57,759,979

Commitments to grant the loans in future 99,069,699 112,388,855

160,944,354 170,148,834

35 SUBSEQUENT EVENTS

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ANNUAL REPORT 2011 - Eximbank / Homepage REPORT 2011 Paid - up capital - 635000000 lei 2 CONTENTs...

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