When Herbert Stepic, one of Central Europe's most famous bankers, was looking for a CEO to rebuild the shady bank once at the centre of Moldova’s notorious ‘Russian Laundromat’ scheme, Alexander Picker was likely to have been at the top of his list.

Stepic, the former chairman at Raiffeisen Bank International and now the chairman of Moldindconbank, turned to his fellow Austrian because of Picker’s expertise at crisis management built up over the past 30 years during a number of high-profile banking jobs across Central and Eastern Europe and Eurasia.

But transforming the image of the Chisinau-based Moldindconbank, the main conduit of the $22bn brazen Russian money-laundering scheme, hasn’t been Picker’s toughest assignment.

“Yes, I do like difficult things,” Picker told bne IntelliNews in an interview. “Stepic asked me to get my hands dirty again but it’s not the toughest job I have ever had.”

Picker, who was approved by regulators for the Moldinconbank role in March, maintains that running ATF Bank in Kazakhstan in the aftermath of the 2008 global credit crisis was a much more challenging gig.

The Austrian arrived in Kazakhstan after the Italian lender UniCredit acquired Almaty Trade Finance (ATF) bank in June 2007. 

“I could see before the deal closed that there was a problem looming, but I didn’t dare go to the boss Mr [Alessandro] Profumo and tell him not to close because it will never work out,” recalled Picker.

The international credit crisis hit Kazakhstan hard, laying waste to its financial sector by exposing an era of over-zealous borrowing and lending as well as overt mismanagement. UniCredit ended up paying $2.3bn for ATF bank before offloading it in 2013 to a local Kazakh firm for just $500mn.  

Picker stayed at the Kazakh lender until 2010 before moving to Hypo-Alpe-Adria International Group in Slovenia as chief executive to clean up its operations after the Austrian government was forced to take it over in 2009.

His career has included stints running banks in Bosnia & Herzegovina, Slovenia, Serbia, Uzbekistan and Russia, while he still shuttles occasionally to Mongolia in his capacity as a board member of Golomt Bank.

Tarnished reputation

But right now, most of his time is spent on trying to scour and scrub Moldinconbank’s tarnished reputation. Probes in 2014 by the Organised Crime and Corruption Reporting Project (OCCRP), the Eastern European-based investigative journalism group, revealed how at least $21bn was wired from Russia to accounts held by offshore shell companies at Moldindconbank.

OCCRP found that Ilan Mironovich Shor, the Israeli-Moldovan politician, headed a group of 39 mostly shell companies that were allegedly involved in the theft and laundering schemes.

The money came from fraudulent court decisions, in which bribed Moldovan judges ruled that Russian companies and Moldovan citizens must pay debts to the offshore corporations. In reality, the debts were phony, and the ruse simply allowed Russian criminals to launder and move stolen money out of their country. 

Shor runs a now banned political party called the Shor Party in Moldova, although he was stripped of his parliamentary seat last April, and organises anti-government protests in the country, despite fleeing the country, which has sentenced him to 15 years in jail for bank fraud. His party campaigns against the EU and follows pro-Kremlin narratives. 

The alleged architect of the scheme was a Moldovan businessman Vyacheslav Platon, a former MP and shareholder of the bank. Platon has been sentenced in abstentia to 25 years' jail in Moldova but has fought successfully to avoid extradition from Ukraine. Platon calls the accusations “drivel”. The OCCRP also alleged that Igor Putin, a cousin of the Russian president, was also a key figure in the laundromat.

Shor and Vladimir Plahotniuc, an influential politician and business associate who has also fled Moldova, were recently sanctioned by the EU, while Platon has so far escaped any punitive measures by the West.

Picker claims Moldindconbank has made significant progress cleaning up its act but admits there is more to be done.

“Our reputation is not good yet, but we are working on it,” he says. “In 2014, the central bank came in, cleaned everything up in terms of the problem loans, threw out the former majority owner Platon and sold the shares to the Bulgarian investment fund.”

There is a board member exclusively for compliance and the bank has undergone a compliance review by auditors KPMG.

The biggest problem for Picker and his team has been to clean out all of the legacy problem loans – many of which have been written off. An army of 50 lawyers are working exclusively on the loan book, according to Picker. “We are selling properties and getting some assets back but it’s an incredibly long legal process because everyone in the process is submitting counterclaims and claiming there was some kind of mistake made,” he says.

Picker’s main remit “is to polish up the [bank’s] reputation”, work with the international finance organisations and secure correspondent accounts in dollars where they still have some problems.

Moldindconbank has closed all Russian accounts and is closely monitoring all the sanctions regimes to the letter.

Russian destabilisation

The bank employs a lot of Russian expatriate employees who are facing problems with travelling and obtaining work permits, but Picker agrees that the Moldovan government is justified in being paranoid about Moscow’s efforts to destabilise the country.

Moldova last month ordered 45 Russian diplomats and embassy staff to leave, sharply reducing the number of officials Russia can have in its capital Chișinău, while citing years of “hostile actions” by Moscow. Russian-backed separatists control a breakaway territory in Moldova – Transnistria – in a frozen conflict that has festered since the 1990s.

“We have the backing of the National Bank of Moldova and we have the backing of the government, which is very pro-EU and anti-Russia,” says Picker. “They left the CIS organisation and now they have kicked out half of the diplomatic corps of Russia over allegations of spying.”

With a population of just 2.6mn Moldova is one of Europe's poorest economies and has been heavily exposed to the war in neighbouring Ukraine. The country has faced a major energy crisis because its power infrastructure dates back to the Soviet era. Not only did Russia restrict its gas supplies but its attacks on Ukraine's power grid have also caused sporadic power cuts in Moldova. The invasion also triggered an influx of Ukrainian refugees, putting a strain on Moldova's public services.

Name recognition

Management considered changing the lender’s name but decided against it due to its household name status in Moldova.

“We do not do business abroad and we don’t want to spread to any other country,” explained Picker. “Visa just did a review, and we have a 99% recognition factor in Moldova and more than 90% have a positive impression of the bank.”

Moldindconbank was started in 1959, as a branch of the Soviet-lender Stroibank from the USSR. The lender was reorganised in October 1991 and was meant to primarily finance the country’s industries and construction businesses. After the laundromat scandal until February 2020 Moldindconbank was under the supervision and the early intervention regime of the National Bank of Moldova.

The bank is still Moldova's second largest by assets, but now the lender is more focused on the retail segment, with just one third of its book oriented to corporate clients. In 2022, Moldindconbank grew its assets by 5.8% on the year to MDL25.8bn, while its credit portfolio increased by 9.6% to MDL12.6bn.

At MDL3.5bn, the lender's mortgage portfolio is the largest in Moldova's banking system, with a market share of 28%. It also has largest portfolio of payment cards – more than 1mn cards and a market share of 37,1%, and 34.1% in the money transfer segment, with a transaction volume of $582mn.

Overall non-performing loans stand at 6%, which Picker says is below average for the industry. The bank is also the market leader in mortgage lending with a book worth MDL3bn.

“The bank is highly profitable, and we have plenty of capital available,” added Picker.

Ukraine fallout

While the lender is slowly emerging from the laundromat scandal, the wider financial sector is having to deal with the fallout from the war in nearby Ukraine and the country’s bid to reduce its energy dependency on Russia. Inflation was very high at over 30% but now it has come down to less than 13%.

“People were blaming the government for inflation and high prices and the opposition were arguing that the country should not have broken up with our only friend Russia,” explains Picker. “In reality, I think very few people would go with Russia and about 90% are in favour of the EU.”

Last year, the bank's shareholders decided to skip the distribution of dividends and retain the net profit of MDL716.4mn ($37.6mn) as undistributed profit to ease the negative economic impact from the war in Ukraine.

Moldova’s central bank had been insistent that Moldindconbank be sold to a foreign investor as part of a clean-up of the financial system backed by the International Monetary Fund (IMF) and other donors. Bulgarian fund Doverie United Holding stepped in and acquired an initial 64% stake in 2019 before raising its share to 78% in late 2021.

Doverie are primarily involved in Bulgaria's soft pharma sector. They had previously been blocked in Bulgaria from acquiring a bank in their home market before they started to look overseas.

“They are a good shareholder,” said Picker. “The owners are involved in mainly pharma and were interested in entering financial markets, but they are not influencing anything, which is one of the reasons that I decided to come here. I don’t want to work for a pocket bank for someone because that usually ends badly for the management.”

Last rodeo?

A student of Polish and Russian as well as law in Salzburg, Picker’s father-in-law thought he was a communist due his interest in Slavic languages. A polyglot who speaks 10 languages, Picker instinctively makes a big effort to understand the local customs and cultures of wherever he is posted.

Picker began his career in finance at Bank Austria in before moving to rival Erste Bank. In 1994, he was working for Austrian lender Creditanstalt, later acquired by Italy’s UniCredit, when he was seconded to its Russian operation, where he weathered the 1998 ruble default as its chief risk officer.

After five years in Russia, he was seconded as chief operating officer to the Polish subsidiary BPK before being appointed as chief executive of the Serbian lender HVB Serbia & Montenegro, which later became Unicreditbank Serbia.

Now aged 62, Picker is not sure whether Moldindconbank will be his last rodeo after more than 30 years working as a senior banker across of kaleidoscope of countries.

“Our kids are now grown up, working and earning their own money but my wife always say she didn’t read the small print when we first moved abroad,” he said.