2007 Supervision Annual Report Supervision Annual Report 2007 B a n k o f A l b a n i a
Supervision Annual Report 2 0 0 7
PB Bank of Albania Bank of Albania 2007 Supervision Annual Report Supervision Annual Report 2007
If you use data from this publication, you are requested to cite the source. Published by : Bank of Albania, Sheshi “Skënderbej”, No.1, Tirana, Albania Tel : 355-4-2222230; 2235568; 2235569; Fax : 355-4-2223558 www.bankofalbania.org For enquiries relating to this publication, please contact: Publications Section, Foreign Relations, European Integration and Communication Department e-mail: [email protected]
Printed in: 1000 copies
Bank of Albania Bank of Albania 2007 Supervision Annual Report Supervision Annual Report 2007 C o n t e n t s
A. DOCUMENT “ON SUPERVISION MISSION” 7
B. REGULATORY FRAMEWORK AND LICENSING PROCESS 9 1. Legal and regulatory framework 9 2. Licensing 11
C. ON-SITE SUPERVISION 17 1. Activity of the on-site supervision function 17 2. Cooperation with other authorities 17 3. Problems observed during the examinations 18
D. BANKING SYSTEN AND NON-BANK DEVELOPMENTS 22 1. Economic environment 22 2. Main banking system highlights 24 3. Banking system structure 26 4. Managing banking activity risk 31 5. Capital adequacy 40 6. Profitability indicators 43 7. Non-bank financial institutions 49
E. CREDIT REGISTRY 52 1. Overview 52 2. Main characteristics of the Credit Registry 53 3. Reports and information designed by the Credit Registry 54
F. OTHER 55 1. Housing loans. Financial stability implications 55 2. Albanian banking system position related to IFRS 60
G. Annex 66 Annex 1. Organisational chart of the Banking Supervision Department (dated December 31, 2007) 66 Annex 2. Each bank’s specific share to the banking system 67 Annex 3. Assets and liabilities 67 Annex 4. Basic financial indicators 69 Annex 5. Bank network extention indicators as at end 2007 and the number of employees 70 Annex 6 List of licensed entities 71 Annex 7 List of Banking Supervision Regulations and Guidelines in force as of July 2008 103
Endnotes 106
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T a b l e s
B. Regulatory framework and licensing process Table 1 Electronic products supplied by banks, December 2007 14 Table 2 Number of cases of administrators approved according to these categories 15 Table 3 List of entities licensed by the Bank of Albania in years 15 Table 4 Geographical distribution of banking branches and agencies as at end 2007 16
C. On-site supervision Table 5 Examinations performed over 2007 18
D. Banking systen and non-bank developments Table 6 Banking network extension indicator as at end 2007 28 Table 7 Coverage with banking services 28 Table 8 Total asset share of the banking system to GDP 29 Table 9 Performance of main asset items of the banking system 30 Table 10 Performance of main banking system liability items 30 Table 11 H (Herfindahl) index of assets, deposits and loans concentration 31 Table 12 Credit outstanding structure by terms, in percentage 32 Table 13 Credit outstanding structure by currencies (in %) 33 Table 14 The share of foreign currency credit unhedged against foreign exchange risk (in percent) 33 Table 15 Credit rating in % to credit outstanding 34 Table 16 Region developments on lending quality 36 Table 17 Performance of short-term assets to short-term liabilities of the banking system 37 Table 18 Monthly and quarterly maturity gap of the banking system 38 Table 19 Shareholders’ equity structure of the system and its components performance in years 41 Table 20 Performance of net overdues to regulatory capital ratio (in %) 42 Table 21 Performance of risk-weighted assets of the banking system by years 43 Table 22 Performance of capital adequacy ratio by bank groups 43 Table 23 Performance of core elements of net result (non-cumulative) in ALL million 44 Table 24 Core profitability indicators in percentage (cumulative) 45 Table 25 Indicators of profitability from core activity in percentage (cumulative) 47 Table 26 Average indicators of profitability in ALL million (quarterly average) 48 Table 27 Efficiency indicator (non-cumulative) in ALL million 49 Table 29 Assets quality 50 Table 28 Asset structure 50
F. Other Table 30 Housing loan indicator in some EU member states 56 Table 31 Housing loan indicator in Albania and in some new EU member states 56
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C h a r t s
B. Regulatory framework and licensing process Chart 1 Number of branches/agencies (in per cent) by peer groups 16
D. Banking systen and non-bank developments Chart 2 Paid in capital structure of the system by origin 27 Chart 3 Capital origin by peer groups, December 2007 27 Chart 4 Number of employees (in per cent) by peer groups 27 Chart 5 Share of peer groups to the system by total assets 30 Chart 6 Share of peer groups to total credit outstanding of the banking system (in %) 32 Chart 7 Credit outstanding to enterprises and households (in % to total credit outstanding) 32 Chart 8 Credit outstanding volume by terms, in ALL billion 33 Chart 9 Credit outstanding volume by currencies, in ALL bn. 33 Chart 10 Performance of non-performing credit outstanding of the banking system 34 Chart 11 Non-performing loans to credit outstanding of the previous year (in %) 34 Chart 12 Provisions for non-performing loans 35 Chart 13 Non-performing credit outstanding by sectors 35 Chart 14 Non-performing credit outstanding by currencies 35 Chart 15 Performance of liquid asset composition in years 37 Chart 16 Asset liability structure by residual maturity (in ALL billion) 37 Chart 17 Performance of total deposits (in ALL million) and their growth rate (in percentage) during 2002-2007 38 Chart 18 Deposit structure by availability 38 Chart 19 Deposit structure by final maturity 39 Chart 20 Performance of deposit share in ALL and in foreign currency to total deposits (in percentage) 39
Bank of Albania Bank of Albania 2007 Supervision Annual Report Supervision Annual Report 2007
Bank of Albania Bank of Albania 2007 Supervision Annual Report Supervision Annual Report 2007
A. DOCUMENT “ON SUPERVISION MISSION”
Supervision function is carried out by the Bank of Albania, which comprises the central bank of the country, pursuant to the Law “On the Bank of Albania”, No. 8269 of 23.12.1997 and the Law “On Banks in the Republic of Albania”, No. 8365 of 02.07.1998.
Supervision mission
The Bank of Albania, in line with its legal responsibilities, as the supervisory authority of banks and other financial institutions licensed by it, is committed to:
• ensuring a sound banking activity that is in good harmony with the Bank of Albania laws, rules and regulations, in order to protect depositors and prevent financial crises; • Safeguarding the banking system stability and even broader, by monitoring the market developments and recommending adequate measures, so that banks adapt to these developments and are continuously managed according to best principles; • Strengthening the banking system credibility and promoting a healthier market discipline, by requiring higher transparency in the system; • providing a fair competition in the banking system and beyond, and ensuring equal treatment of licensed entities and their clients; • providing continuous and professional communication with financial market operators and other institutions which influence the activity of the Bank of Albania, in the framework of enhancing the functioning of the financial market and its operators.
The Bank of Albania will carry out its supervisory function through:
a) Continuous establishment and improvement of the supervisory regulatory framework, so that it is in harmony with the best international principals and applicable in practice; b) on-site and off-site examinations of licensed institutions indices, as well as through corrective measures taken for sorting out various problems. c) orientation of supervisory process towards risk identification the licensed institutions are faced with, recommending proper solutions. d) implementation of policies which focus toward a development-oriented
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banking system; e) Co-operation with financial institutions under supervision and with other domestic financial institutions, as well as with international supervisory authorities; f) ongoing improvement of the supervisory capacities.
The Bank of Albania, in compliance with the requirements of the supervisory function, strives for the highest levels of integrity, professionalism, efficiency and transparency.
Bank of Albania Bank of Albania 2007 Supervision Annual Report Supervision Annual Report 2007
B. REGULATORY FRAMEWORK AND LICENSING PROCESS
1. Legal and regulatory framework
2007 challenges and priorities, the new Law “On Banks in the Republic of Albania” and the regulatory framework were comprehensive processes in progress of the work for reviewing and drafting regulatory acts that regulate the activity of entities licensed and supervised by the Bank of Albania.
The Bank of Albania, in order to precede the process of adapting the regulatory framework to new requirements of the Law “On Banks in the Republic of Albania”, to the Directives of the European Council, to the Basle Committee principles for effective supervision and to the New Capital Accord concepts, even during 2007 aimed to complete the draft regulations. They have effectively reflected the banking industry thought, subject of implementing the requirements of regulatory acts and have also taken into account the recent developments of the Albanian banking market.
1.1 new regulatory acts
2007 finalised the drafting of two new regulations and witnessed changes to some banking supervision regulations.
Decision No. 57 of 15.10.2007 adopted the Regulation “On operational risk management at branches of foreign banks”. The regulation was drafted in implementation of the new banking law and in the framework of the national strategy for legal harmonization with the European Union Directives. The Regulation considers the observance of the Basle Principles, Minimum Standards of the Basle Committee, as well as other countries` experience with regard to regulating the activities of foreign bank branches. Exclusion of the branch from the obligation to complete some standard bank regulatory acts evidently creates the genuine profile of real supervision of foreign bank branches.
The regulation establishes the regulatory supervisory base for foreign bank branches, including therein as very important documents, the memorandum of understanding with the supervisory authorities of the bank and the memoranda of understanding with the parent bank itself. The regulation anticipates that
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the branch activity is administratively dependent on and authorized by the parent bank, while the entirety of risks and exposure to them is a responsibility of the parent bank and shall be analyzed in the framework of the whole bank. So, the financial position and risk profile shall be monitored by the parent bank.
The Regulation sets out the instruments aimed at ensuring a safe and sound activity of the foreign bank branch licensed to carry out banking and financial activity in the Republic of Albania. An important instrument to this end is the Capital Equivalency Deposit (CED), which is equal to a part of the minimum initial capital granted to open a bank. CED, comprising its “obligatory” investment in unencumbered assets, is aimed at ensuring financial position sustainability of the branch, depositors` protection and in the event of liquidation, rapid return being considered as a minimum investment level. The regulation sets out the CED amount, functions, investment criteria, its reporting and supervision.
Decision No. 58 of 15.10.2007 adopted the “Unified Reporting System – URS for foreign bank branches”. The unified reporting system for foreign bank branches stipulates the entirety of financial data and prudential indicators that a foreign bank branch should report to the Bank of Albania. This system was drafted in cooperation with the Statistics Department, pursuant to and in implementation of the Regulation “On operational risk management at branches of foreign banks”.
Decision No. 31of 06.06.2007 adopted the Regulation “On licensing, organization, activity and supervision of foreign exchange bureaus”. The Regulation was drafted in response to the requirement for formalizing the foreign exchange market. It is a total revising of the existing regulation and is presented as more complete. It encompasses also requirements for integration, transparency to clients, document holding manner, additions to activity and capital level according to these activities, reporting manner, supervision, etc. Also, the Regulation provides for a reduction of capital requirements for entities operating as foreign exchange bureaus, this being a right to be recognized only to trading legal entities organized under the Law “On Trade Associations” that have included even foreign exchange business in their statutes. From the conceptual viewpoint, the Regulation has been broadened even with stipulations on foreign exchange bureau organization, on additional activities permitted to be carried out by the bureau as an agent for a nonbank entity about money transfer, supervision and penalties, obligation and about transaction reporting form, as well as about measures to be taken for money laundering prevention.
1.2 Regulatory changes
Decision No. 7 of 31.01.2007 adopted a change to the Regulation “On capital-adequacy ratio”. This change is related to the addition for weighting bank assets at a 150 % weighting ratio. The change to the Regulation arose
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as a logical necessity from the recent changes to the regulation “On credit risk management”. According to stipulations of the latter one, banks under the phase of a significant growth of portfolios or their quality deterioration should accrue even larger risky undertaking, deriving from this activity. In order to prevent banks’ and the system’s failure from this process, the Bank of Albania takes into consideration some indicators related to credit risk management, presented in detail under Article 22/2 on “Risk management operations” of the respective regulation. The banks weight a part of performing credit and/or of non-performing credit to a higher risk factor, in the event some prudential indicator limits are exceeded, as specified under the Regulation. So, the part of assets weighted at a 150 percent weighting rate is added to the part of risk-weighted assets, as an element of capital adequacy calculation. This will enable a fairer allocation and calculation of bank capital requirements, for every (counterparty) credit risk level or degree. Capital-adequacy ratio (CAR), which is calculated as a ratio of bank’s regulatory capital to risk-weighted assets and off-balance sheet items, denominated in percentage, will consider more effective economic needs of the bank for capital, in the monitoring process of risks, mainly of (counterparty) credit risk.
Decision No. 73, dated 27.11.2007 adopted some changes to the Regulation “On licensing, organization, activity and supervision of foreign exchange bureaus”. These changes relate to specifying some moments in licensing and operating process of foreign exchange bureaus; specifying the organ – National Registration Centre (NRC) – that presently holds the trading register and defines a unique number for the association; specifying the possibilities of the entity in the quality of the trade association, to carry out other operations besides those permitted in the licence by the Bank of Albania. This is so, provided these operations can not be carried out in the bureau, i.e., in the premises, which under the Regulation have been destined only for carrying out foreign exchange activity and money transfer in agent’s role. Other changes relate to specifying the required capital level for carrying out foreign exchange activity and the agent’s role. It also specifies that the licensed entity may carry out its activity in one or more than one bureau, without creating the obligation of existence of two offices.
2. LICENSING
2.1 Granting a licence, approvals
During 2007, the banking system underwent important qualitative and quantitative developments, mainly due to structural changes taking place in banks because of the consolidation process encompassing the banking system and the tasks arising from the implementation of the Law “On Banks on the Republic of Albania”, which provided its effects over the second half of the year. Under more concrete terms:
Structural changes in commercial bank’s ownership
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• As an outcome of consolidation of the American Bank of Albania’s position in the banking system, in early June 2007 the acquisition of 80 percent of the shares of the American Bank of Albania by the Intesa Sanpaolo Bank was approved. The impact of this group on the Albanian banking market will not only contribute to enhancing the competition but will also become a positive factor for the country’s economic growth. • Decision No. 43 of the Supervisory Council of the Bank of Albania of August 29, 2007 adopted the ownership transfer of 76.129 percent of the shares of the shareholders’ equity of the Italian Albanian Bank Jnt. Stk., from the shareholder Sanpaolo IMI S.p.A. Italy to the shareholder Intesa Sanpaolo S.p.A., Italy. This transfer results from the merger of Sanpaolo IMI S.p.A. and Banca Intesa S.p.A. • on December 2007 the merger of the Italian Albanian Bank and the American Bank of Albania was approved. The integrating banking environment that associated many banks in Europe along the year, involved even the Albanian banking market through the integration of these two banks of the Albanian banking system. Bank merger practice was applied for the first time by the Bank of Albania and the effects of this merger commenced on January 2008. • Further to the growth process of foreign capital participation, there was granted approval to the entry of the Société Général Bank (of French capital) into the Albanian banking system, for the first time in early July 2007, through the acquisition of 75.006 percent of the shareholders’ equity of the Banka Popullore (Popular Bank). The Société Général group is specialized mainly in investment and corporation and over the long run it is expected to contribute even to banking industry stability in the country. • Aiming at restructuring and optimizing the management of shares owned by the Raiffeisen Bank, on December, at indirect shareholder’s request, the transfer of indirect qualifying holding was approved for 70 percent of the shareholders’ equity of the Raiffeisen Bank to Cembra Beteilingugs GMBH, Austria. But, in essence, the economic structure of the Raiffeisen Bank’s shareholders did not change. • on January 2007 the sale of 14.67 percent of the shares of the Credins Bank shareholders’ equity was adopted, from the shareholder Muhamet Malo to the shareholder Renis Tërshana. • the proposed shareholder BFSE Holding BV, Netherland, requested its stake in Credins Bank, by acquiring the bank’s existing shares and by underwriting new shares, at 22.17 percent of the shareholding of this bank. The approval of this new shareholder of the Credins Bank was granted on February 2008. • proCredit Holding AG, Germany requested to increase its stake in ProCredit Bank Albania, by acquiring the shares from IFC and FEFAD foundation. Following this transaction, ProCredit Holding AG holds 80 percent stake in ProCredit. The approval on changing the participating equity in ProCredit Bank Jnt.Stk., was made on January 2008. • italian Development Bank had decided on changing the structure of its shareholders through acquisition of the shares of Francesco Mariano Mariano by Nereo Finance S.A., Luxemburg (37 percent), Cerere S.r.l.,
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Italy (18 percent + 2 shares), Assicurazioni Generali S.p.A., Italy (10 percent – 1 share) and Banka Podravska d.d., Croatia (10 percent – 1 share). Under the process of looking into the request and documentation, the main shareholder of the IDB notified the Bank of Albania that he resigned from the offer submitted by the proposed shareholders as above stated. As a result of this notification, the practice was closed.
In the meantime, the company Veneto Banca Holding soc.coop., Italy has expressed the interest in and has notified of the signing of Agreement for acquiring 75.1 percent of the shares of the Italian Development Bank. This practice is under the process of providing the documentation and assessing the potential shareholder of this bank.
Licensing new banks
• June 2007 witnessed the transformation and licensing process as a bank of the First Investment Bank - Tirana Branch. The process initiated since 2006 went on even in early 2007, with the preparation of material for postponing the bank’s licensing term, because of some conditions created for the implementation of new legislation on capital requirements (Basle II) in Bulgaria, for the parent bank. As a new practice, the transformation process from a foreign bank branch into a subsidiary was solved by preparing and later on making an agreement for transferring the banking activity from the branch into a new bank. The process was completed with the decision of the Supervisory Council of the Bank of Albania for licensing the First Investment Bank, Albania.
Revoking bank licence
• Decision of the Supervisory Council of the Bank of Albania of 12. 03. 2008, No. 22, revoked the Italian Albanian Bank’s licence. The revoking of this licence was supported by the request of the Italian Albanian Bank, following the merging of the Italian Albanian Bank (the merged company) with the American Bank of Albania (the merger). • Decision of the Supervisory Council of the Bank of Albania of 09.04.2008, no. 28, revoked the licence to the First Investment Bank -Tirana Branch. The revoking of this licence was carried out because of the voluntary liquidation of the First Investment Bank - Tirana Branch, after the completion of the agreement on transformation into the First Investment Bank, Albania.
Due to above-mentioned changes, the number of banks in our banking system as at April 2008 went to 16.
The new Law “On Banks in the Republic of Albania” adds the cases when banks must not operate without the initial approval of the Bank of Albania, such as initial approval for changes to banks’ statutes; approval for internal audit managers, considering them as bank administrators. It also stipulates clearly the steps and procedures to be followed for prior approval on bank network extension within the country.
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The provisions of the Law “On Banks in the Republic of Albania” for sanctions applied against unlicensed activity and the administrative action of relevant bodies for closing the informal foreign exchange market over the first semi-annual of 2007 made necessary changes to the regulation on licensing foreign exchange bureaus and led to replacing of the previous regulation. The new Regulation “On licensing, organization, activity and supervision of foreign exchange bureaus” eased the capital requirement for performing foreign exchange business, from ALL 2,500,000 to ALL 1,500,000; regulated the agent’s activity of money transfer and cut the licensing process commissions. Due to these operations, 59 foreign exchange bureaus were licensed during 2007, against 9 foreign exchange bureaus licensed in the preceding year. The joint commitment of the State Police structures, the Prosecution and the Bank of Albania to market formalization has been at maximum. The licensing process of foreign exchange bureaus was accompanied not only with treatment, completion and assessment of submitted documentation, but also with explanatory meetings. This practice was applied for coming to entities’ assistance, in order to cut cost and time needed for their definitive licensing.
In the meantime, competition has been enhanced among banks, even in terms of providing new e-banking products to client service. Currently 11 banks of the Albanian banking system use e-banking transactions according to products in the following table. What was remarked during 2007 is the extension of internet banking even to three other banks of the system.
Table 1 Electronic products supplied by banks, December 2007 BANKS ATM POS Internet banking Electronic cards RAIFFEISEN Bank Jnt.Stk. √ √ √ √ NATIONAL COMMERCIAL BANK, Jnt. Stk. √ √ TIRANA BANK Jnt. Stk. √ √ TIRANA BRANCH OF NATIONAL BANK OF GREECE √ √ ALPHA BANK, ALBANIA √ √ √ PROCREDIT BANK JNT. STK. √ √ √ √ FIRST INVESTMENT BANK, ALBANIA Jnt.Stk. √ √ CREDINS BANK Jnt.Stk. √ √ √ √ UNION BANK Jnt. Stk. √ √ POPULAR BANK Jnt. Stk. √ √ √ AMERICAN BANK OF ALBANIA Jnt.Stk. √ √ √ √ Source: Bank of Albania
Considerable banking network extension with new branches and agencies is an evidence of enhanced banking competition and increased financial transactions volume through banks. So, the number of branches and agencies opened during 2007 within the territory of the Republic of Albania amounted to 104, of which only 43 in the district of Tirana. The American Bank of Albania extended its banking network abroad, with two new branches in Greece.
Also changes to composition of bank administrators have been approved. Administrators appointed by banks and approved by the Bank of Albania have had good reputation and meet our criteria. Upon entry into force of the new Law “On Banks in the Republic of Albania”, the Bank of Albania shall also approve the Head of the Internal Audit Unit of the bank.
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During 2007, the Bank of Albania has granted approval for 53 administrators of banks. The nature of approval of administrators may be classified according to four categories. Concretely speaking:
1. (New) Administrators who were presented for the first time for approval. 2. Administrators who changed position within the same bank. 3. Administrators involved in two leading functions within the same bank. 4. Administrators who changed position, moving from one bank to another.
Table 2 Number of cases of administrators approved according to these categories Change of position Second position Change of position from Approved administrators New Total within the bank within the bank one bank to another 2007 45 3 4 1 53 Source: Bank of Albania
In 2007 a licence to perform activity as a non-bank institution, No. 09, of 06.06.2007 was granted to “Albanian Partner in Microcredit” Jnt.Stk.
Also during this year a request was submitted from the “BESA” Fund to receive a licence as a non-bank institution, in implementation of the decision of the Supervisory Council of the Bank of Albania, No.87, dated 16.11.2005 “On abrogating the decision of the Supervisory Council of 29.03.2000, No. 26”.
The non-bank entity “Credit Card Services” ltd. (former “Diners Club Albania” ltd.) notified the Bank of Albania of the termination of its activity through voluntary liquidation, and consigned the licence issued by the Bank of Albania.
Currently there are licensed and operating 6 non-bank entities.
During 2007 the Bank of Albania, besides granting the licence to 57 foreign exchange bureaus, also revoked the licence of 7 existing foreign exchange bureaus, mainly because of business interruption on their side.
Licensing and merging of savings and loan associations continued even during 2007. Along this year, 7 new savings and loan associations were licensed and 2 mergers were approved. Due to these mergers, the licence of two existing associations was revoked.
In the end of 2007, after the effected changes, the list of entities licensed by the Bank of Albania by years is presented as follows:
Table 3 List of entities licensed by the Bank of Albania in years No Entities 2000 2001 2002 2003 2004 2005 2006 2007 1 Banks and foreign bank branches 13 13 14 15 16 17 17 161 2 Non-bank financial institutions 2 4 5 7 7 7 6 6 3 Foreign exchange bureaus 19 38 58 58 54 58 60 112 4 Savings and loan associations 113 131 130 131 125 130 5 Unions of savings and loan associations 2 2 2 2 2 2 Source: Bank of Albania
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2.2 Branches Chart 1 Number of branches/agencies (in per cent) by peer groups As concerns the banking network extension, a great number of requests and projects for opening branches and agencies have been dealt with. In 100% accordance with the Law, a different approval
80% process was applied, dividing the licensing into two 59% 54% 66% 75% phases. The first phase has to do with assessment of 60% the extending capability of the bank and the granting
40% of initial approval of a licence. The second phase 35% 18% 31% has to do with examination of technical conditions 20% 19% 16% and the granting of a licence to conduct banking 6% 10% 11% 0% business. So, based on this practice, 100 initial 2004 2005 2006 2007 approvals for opening bank branches and agencies
G1 G2 G3 have been granted, of which 60 have acquired the licence to commence business. Source: Bank of Albania
Virtually all banks have opened new branches and agencies during 2007. The largest share to 2007 network extension is occupied by medium-sized banks (G2 peer group), with 49 new branches and agencies.
Table 4 Geographical No. Districts TOTAL No. Districts TOTAL distribution of banking 1 Tiranë 144 26 Gramsh 2 branches and agencies as at 2 Sarandë 10 27 Librazhd 32 end 2007 3 Kavajë 7 28 Peshkopi 3 4 Bilisht 5 29 Koplik 2 5 Durrës 27 30 Shijak 3 6 Fier 16 31 Delvinë 3 7 Elbasan 14 32 Divjakë 2 8 Korcë 93 33 Rrëshen 3 9 Shkodër 13 34 Krujë 3 10 Vlorë 17 35 Laç 6 11 Lezhë 8 36 Tepelenë 24 12 Pogradec 10 37 Bajram Curri 1 13 Berat 8 38 Bulqizë 1 14 Gjirokastër 9 39 Çorovodë 15 15 Lushnje 10 40 Ersekë 1 16 Kukës 4 41 Krumë 1 17 Burrel 3 42 Pukë 16 18 Himarë 2 43 Peqin 1 19 Kakavijë (Customs) 4 44 Fushë Krujë 3 20 Kuçovë 3 45 Athinë 3 21 Kamëz 4 46 Selanik 1 22 Shëngjin 3 47 Shkup 1 23 Kapshticë (Customs) 3 24 Përmet 37 25 Ballsh 2 T O T A L 404 Source: Bank of Albania
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C. ON-SITE SUPERVISION
1. Activity of the on-site supervision function
During 2007 the on-site supervision worked in view of fulfilling the rights assigned by the legal and regulatory framework. The supervisory cycle defined by the operational supervision policy serves as a basis for carrying out this function. Being an important link of accomplishing Bank of Albania’s mission, it has carried out its tasks, adhering to the supervisory principles, clarifying, broadening and observing them. The presence in the financial system not only has guaranteed an orientation of the banking activity towards standard observance, but has also increased its specific weight in order to preserve the stability.
The use of supervisory instruments has been intensified, giving priority to nature of problems and type of entity and constantly keeping their use at a minimum satisfactory level. Special attention has been paid to the objective of working to prevent phenomena rather than addressing them after the appearance of weaknesses. To this end, possible impacts of certain risk positions have been taken into account and awareness of certain phenomena has been made, aiming at taking proper measures in due time.
It is aimed at achieving a fair objective behaviour of market actors in service to clients. This issue having to do with bank transparency has been an innovation of 2007 on-site supervision. Observance of effective legal and regulatory framework has been taken into special consideration and other assessments on market operators’ behaviour have been taken into account to identify problems and to succeed in providing adequate and comparative information.
2. Cooperation with other authorities
Taking into consideration the financial market developments, increased importance of extended banks’ presence in different countries of the region, as well as banking supervision challenges, the cooperation with other supervisory authorities has been increased. This cooperation has been mainly with countries where the capital of banks carrying out their activity in Albania comes from.
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A multi-lateral cooperation agreement was signed over the last year with six countries of the region, to promote a structured coordination in banking supervision area.
Cooperation with the Bank of Greece, the banking supervisory authority in that country, has been strengthened and a joint examination has been carried out to one of the banks having the capital origin from Greece, a subsidiary of a bank founded in Greece.
Strong bridges of cooperation with the supervisory authorities of Austria and Italy have been set up. The capital originating from these countries comprises an important structural share and development to the domestic market. At the same time, these links have been developed, aiming at final signing of a cooperation agreement with the supervisory authorities of these countries.
During 2007 joint examinations with other authorities were also carried out. In cooperation with the Responsible Anti-Money Laundering Authority, examinations were carried out over all banks of the system, about issues that are subject to the Law on money laundering prevention.
Based on a memorandum of cooperation signed between the Bank of Albania and the Financial Supervision Authority, a joint examination with this authority has been carried out on some banks concerning bank - insurance company relations in Albania.
A sound cooperation practice has been established with the Central Banking Authority of Kosovo. Joint trainings have been carried out, mainly in Tirana.
During 2006 the following examinations were carried out:
Table 5 Examinations Banks 14 full-scope examinations performed over 2007 33 thematic examinations* 17 credit registry examinations
Nonbank financial institutions 5 full-scope examinations
Savings-loan associations 1 full-scope examination
Foreign exchange bureaus 50 examinations * Here are included examinations for supervision purposes and those in cooperation with other authorities. Source: The Bank of Albania
3. Problems observed during the examinations
3.1 Banks
The banking activity has continued its growth even during 2007. This growth has been associated with deepening of financial intermediation, expansion of
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supplied products, and extension of services geographically, coverage of ever larger parts of the country’s territory and broadening of client base, both in existing locations and in new districts. A constant effort of banking operators to ensure a large client base has been noticed, enhancing the competition for all banking products supplied. No banks of special scope of activity have been pointed out, thus the same activity specifics have been maintained. Even during this year the lending activity in particular draws attention. It continues to grow significantly in absolute value, while the growth rate in relative terms has decreased. Lending has continued to support the economy, raising its specific share to liabilities, total assets and gross domestic product. This activity constitutes one of the most important activities of banks and has constantly had attention of the on-site supervision.
Generally, various bank behaviours have been noticed as concerns their internal development. A differentiated reaction of banks has been noted about different issues. Expansion of activity and type of products has brought about internal needs for change in some aspect, such as in structure, task allocation, development support with manuals and policies and coverage with personnel. Further development of lending activity has influenced on other structures and operations. The increased use of lending funds source has presented the need for a total revision of the investment nature. This phenomenon has undergone dynamic developments, putting banks in an active position, aiming at management of liquidity and realization of activity expectations. Shareholders’ pressures for profit maximization have encouraged banks to undertake more risk. So, besides lending, there have been largely used possibilities of profiting from foreign exchanges or diversifying investments in securities, compared with traditional choices of investing in low return placements.
Entrance of large banks with expanded international presence has brought about new developments in terms of management nature. Parent bank relations have been expanded from both, the financial viewpoint and the orientation of bank operations. Local banks have taken constant support in terms of observance of more developed standards of the banking activity, through trainings and making use of practices set up in home countries.
Deficiencies pointed out during on-site examination are summarized in structures adjustment to bank development, meaning the creation of new units, delegation of work authorities and their support by means of operational policies and work procedures. Some deficiencies have been noted in internal audit systems. The need to improve work quality, cover the whole activity and address and follow up problems has been noticed in internal audit unit. Priority has been constantly given to the attention of management in the direction of activity, in cases when it has not been sufficient.
On-site supervision has paid special attention to banks’ capitalization level. Along with the situation analysis, there is also required a rigorous observance of regulatory limits and forecasting of needs for capital and for finding sources. Client base enlargement related to both, obligations and lending, has been
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required, in order to reduce concentration risk. Credit risk diversification in various branches of the economy has also been part of recommendations issued.
Problems related to implementation of regulations. Generally good observance of the regulatory framework has been observed. Deficiencies have been present, but in most cases they have not had any material impact on risks exposure situation.
Violations are mostly noticed in the following regulations:
• the banking law: Violations have been observed especially in terms of exposure to connected persons and to significant risks. This is so due to changed limits in the new Law, since banks had undertaken the exposure prior to entry into force of the Law. • regulation “On credit risk management”: Risk level to borrowers has been constantly examined and in some cases, incorrect observance of this regulation has been noticed. Completion of documents in accordance with its requirements has been constantly required, following the ascertainment. • regulation “On open foreign-currency positions”: Some sporadic cases of non-observance of this Regulation were pointed out. However, they have been temporary situations, which have been improved rapidly. • regulation “On capital adequacy”. Non-observances have been mainly of technical nature and of interpretation of requirements. • regulation “On foreign exchange operations”: Remarks on implementation of this Regulation relate mainly with the purpose of transfers or the supporting documents. • regulation “On Money Laundering Prevention”: Deficiencies are related to prevention of suspicious transactions, establishment and observance of structures, staff training, and establishment of a database. • regulation “On using the communication and information technology at entities licensed by the Bank of Albania”: Violations of this Regulation are more frequent than the above-mentioned ones. This indicates the need of banks for more investment in improving the information and technology systems. These improvements should be made in terms of assessing the system, ensuring physical security, drafting an operational plan, documenting the activity and making a disaster recovery plan. Also, control on communication and information and technology systems by specialized companies has been constantly recommended. • regulation “On supervision of e-banking transactions”: Deficiencies in terms of this Regulation have to do with completion of necessary documentation and its term of delivery to the Bank of Albania. • Guideline “On transparency of banking services and operations”: Non-observance has to do mainly with giving timely information on the change of working conditions in respect of contracts.
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3.2 Nonbank financial institutions and savings and loan associations
This grouping includes two types of entities, non-bank financial institutions and savings and loan associations. The first may not collect deposits from the public, whereas the second may collect deposits as stipulated under the relevant law. Among the most frequent problems confronted during the examinations is the observance of prudential rates specified in the regulations drafted for their functioning. These prudential rates are mainly related to lending exposure levels and liquidity situation.
Another evidenced problem is the non-observance of accounting principles in accounting registers. Their periodical reporting has not always been accurate, containing inaccuracies even concerning entities’ data. In some cases, non- observance of legal requirements on account holding or with respect to the licence has been pointed out. Account holding has gone beyond the licensed activities, while lending has not been an object of the licence, or there are exceeded the lending thresholds required by law.
An important issue raised during examinations is the quality improvement of internal auditor’s work or its positioning in line with the functioning purpose. Pronounced deficiencies were noted in investment in communication and information technology, and in observance of the corresponding regulation. Some of those entities do not make use of a computer system for data recording or the existing one does not cover the work needs. In such cases, keeping of data manually has been frequently noticed.
During examinations, fulfilment of functioning structures based on written manuals or procedures is recommended, since incomplete application of the existing ones was noticed.
Other recommendations have aimed at enhancing measures to monitor and hedge against operational risk, fight against money laundering, improve the structure and the internal regulatory framework, implement rigorously the Regulation “On foreign exchange operations”, “On credit risk management”, “On money laundering prevention” “On reporting foreign exchange operations”.
3.3 Foreign exchange bureaus
There are carried out 50 examinations on these entities. Deficiencies in their work are recurrent and consist in lack of reporting, data inaccuracy, non- provision of foreign exchange invoices to clients; non-keeping of accounting or deficiencies in documentation required under the regulation on their operation. Sanctions have been imposed on problematic entities.
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D. BANKING SYSTEN AND NON-BANK DEVELOPMENTS
1. Economic environment
1.1 World economy
The world economy underwent a lower growth rate, following some-year extension. World economy performance risks have increased mainly over the second half of 2007. The basis of these risks stands in the deterioration of the financial position in Western markets, mainly in the American one. The American economy and some industrialised countries reflect slowdown signs, while the large economies of developing countries continued to play the main role in the world economy growth. High growth in China, India and Middle East has offset the US economic slowdown effect.
The US economy saw a decline of the economic growth rate during 2007, after a good performance over some consecutive years. This performance was impacted mainly by housing market situation and by the deterioration of residential investment trend. House price drop provided implications in contracting credit and liquidity in the economy. In the meantime, the economic activity of the Euro area continued to expand at a moderate pace during 2007, compared with the previous year. Gross Domestic Product grew by 2.7 percent in 2007, from 2.8 percent in 2006, according to the latest estimates of the European Commission. During this year there is noted a slowdown in industrial output, an increase in the services sector and an improvement in labour market conditions.
Rise of oil price and of some agricultural products has impacted on the real economy demand, as a result of purchase power reduction. The world oil demand has increased by about 1.4 percent against the previous year. In the meantime, the international market oil price almost doubled. The agro-food product prices have gone up as a result of the dry weather. On the demand side, prices may have gone up also as a result of the use of some agricultural products in the energy generating industry.
1.2 Region countries
During 2007 the economic growth of Greece is estimated at 4 percent. Greece has had a relatively high economic growth and a dropping of unemployment against the economy of the Euro area.
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Italy’s economy has been characterised by a lower performance than in the previous year and a reduction of investments and unemployment. The economic growth resulted slower than in the first half of 2007, as a consequence of a lower exports rise. The foreign demand has been influenced by the euro’s appreciation. Unemployment fell slightly at the year start and maintained this trend even during the second half of the year.
The economy of Former Yugoslavia Republic of Macedonia has recorded a better economic growth compared with 2006. This has been associated with increased inflationary pressures along the year and labour market improvement. The annual average inflation rate was 2.3 percent during 2007.
The economic activity of Turkey grew by a lower rate compared with last two years, in the presence of annual inflate rate reduction, whereas the fiscal situation has been deteriorated. Gross domestic product grew by 5.1 percent during 2007. The tightening monetary policy and the deterioration of lending worldwide have limited the domestic demand increase.
1.3 Economic environment of Albania
In 2007 the Bank of Albania implemented its monetary policy in a stable macroeconomic environment, with relatively high economic growth rates and accommodating monetary conditions. They ensured upward but still favourable interest rates, exchange rate stability and financial resources for the economy. The average annual inflation rate resulted to 2.9%. Core inflation recorded an annual increase by 2.6%, about 1.2 percentage points more than the average of four last years. Until July 2007, the annual inflation recorded rates within the lower half of the tolerance band, about 2-3%. In two following quarters of the year the annual inflation increased obviously, amounting to considerable rates of above 3%. This growth was due to the world crisis of foodstuff price hikes. Risks to price stability over a medium term horizon were assessed to have had an upward trend. These risks included: further rise of raw prices, mainly of foodstuffs; application of the expected energy price rise; constant and fast wage rise, not fully backed by productivity growth; concentration of budget spending at year-end; constant increased aggregate demand; deterioration of consumer and business expectations on inflation, as well as materialization of second round effects on wages and price setting, as a consequence of high raw prices and high inflation rates.
The economic growth for 2007 is estimated at 6.0 percent. Likewise in the previous years, the economic growth is ensured by upward performance of the sector of services, industry, transport and telecommunication. In the meantime, according to latest assessments, construction sector continues to be characterised by different problems, leading to a slowdown of production in this sector.
Domestic demand remained high during 2007, being reflected mostly in consumer loan enlargement and increased imports (more particularly rising
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imports for machinery and equipment). The whole economic activity of the country has been developed under the conditions of an environment with inflation under control, in spite of difficulties fuelled by the uninterrupted foodstuff price movements in the international market. Grain prices rose considerably, while the same performance was recorded by foodstuff items in general. Fiscal policy has positively contributed to the overall economy performance of 2007. Generally the fiscal policy may be regarded as tightening, highlighting a lower budget deficit than the planned one.
The sales index for the industry sector has recorded a growth of 25% during 2007, against 17% of the previous year. The highest annual growth was recorded in the extractive industry subsector (50.6%). Considerable growth has been also recorded by “energy, gas, steam and water” subsector (37%) against 2006 (0.6%).
The annual sales increase in construction sector during 2007 has been about two times lower than the annual growth over 2004 - 2006. The sales level in this sector has recorded its lower value over the last quarter (4.6%) or about 11 times lower than the annual increase of sales during the same period of 2006 (52%). The overall construction volume has been decreasing, while the new construction volume accounts for the highest decline during the last quarter of 2007, by 23.3%.
Gross Domestic Product for 2007 grew by 1.5%. Agriculture sub-branch output, accounting for 74% of the overall agricultural product, increased by 0.8% or about four times less than in the preceding year. The main contribution to product growth has been rendered by animal husbandry, unlike in 2006 when the main impact on the growth was given by high fruit production.
On a per annual basis, the transport sales sector fell slightly by 1.2%. During the fourth quarter of 2007, the transport and telecommunication sales sector declined by 11% compared with the preceding quarter. Reduction of this sector’s activity was influenced by reduction of sales in “post and communication” branch (14%) and in ‘transport’ branch (6.3 %).
2007 coincided with important reforms in the economy. Among them we highlight the credit registry completion, re-organisation and strengthening of financial sector supervision, better management of taxes and public spending, privatisation of Albtelecom, improvement of business climate through establishment of the national Registration Centre, and further reduction of customs duties on a number of products, in compliance with the obligations deriving from the free trade agreement with the European Union.
2. Main banking system highlights
2007 continues with generally positive and steady developments in the banking system. During this year, the banking system underwent striking changes in shareholders’ structure. Some banks of good reputation in the
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international arena are present even in Albania, enhancing the prospects for a more competitive and efficient development of the banking system, and for a larger and safer capital support. This view, along with the appearance for the first time of bank consolidation phenomenon through mergers, makes headway to optimizing synergies of the system. These integrating developments might have increased and strengthened even the Albanian banking system interdependence on global market dynamics. As a consequence, all in all we estimate that there is noticed a tendency towards smaller frequencies but with a larger impact of possible financial, regional or global crises on our banking system. In this light, we assess that the financial crisis springing mainly from subprime housing loans8, whose wave has not been soothed yet, has not impacted at all on our banking system. The banks operating in Albania are regarded as institutions, which have not had any direct exposure to American house loan market of low quality, while the impact from their possible indirect exposures seems to be totally non-material or non-existent.
The financial position of the banking system is assessed as a good one and reflects the following highlights:
• high levels and generally steady growth of profitability indicators. RoAA is estimated at 1.57 percent against 1.36 percent at end of 2006. NIM is estimated at 4.35 percent, against 4.22 percent; • net indicator sustainability of the loan portfolio quality (1.8 percent to 1.7 in the previous year) and an insignificant deterioration of gross indicator, due to more rapid increase of non-performing loans to total loans (3.4 percent, to 3.1 percent); • Stability of loan portfolio weight, when there is noncompliance between the loan currency and the currency in which the borrowers generate their income. Nonetheless, there are not yet signals for any concerning levels of non-performing loans for this portfolio, particularly under the conditions when the exchange rate has been steady; • Deterioration of the banking sector capabilities of covering with capital the possible losses from loans, assessing this from an obvious increase of net non-performing loans/regulatory capital ratio, from 6.8 percent to 11.2 percent. Anyways, the coverage capability is still at benign levels; • Capital adequacy above the minimum level defined by the Bank of Albania and the downward trend as a result of ever larger orientation of the system to risky assets (from 18 percent to 17.1 percent); • lower debt level against own equity and in consequence, a lower financial leverage level, from 14.8 percent to 13.2 percent; • limited market risks level; • increased activity in foreign currency, as an expression of a greater increase of liabilities/deposits in foreign currency and the loan portfolio; • increased depth of the banking intermediation in the optics of increased ratio of loan portfolio to total assets and increased total assets to GDP; • Constant extension of the banking activity volume, as an expression of
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gradual increase of total assets, operating expenses, operating income, banks’ network, etc; • increased new banking products to absorb inactive resources as much as possible and to increase the lending intensity; • Better liquidity situation, as an expression of benign levels of liquidity ratios and increased deposits volume; • Gradual reduction of assets and deposits concentration, even though their levels continue to remain far from the optimum level estimated according to Herfindahl index; • improvement of banking system efficiency compared with other economy sectors, as an expression of increased net share to GDP, from 0.8 percent to 1.1 percent.
These developments, along with increased paid in capital and increased net result, have offset the increased risk-weighted assets and have created a sufficient framework for maintaining banking system stability during 2007.
3. Banking system structure
3.1 Number of banks
Over 2007 the number of banks operating in the banking system was 17 (same as in the previous year). But, during this year the first bank merger occurred in the Albanian banking market. The merger of Sanpaolo IMI from Banka Intesa, Italy, which brought about the establishment of the Intesa Sanpaolo banking group, had as a consequence the merger of the Italian Albanian Bank with the American Bank of Albania, having Intesa Sanpaolo as their main shareholder. The financial merging effects started on January 1, 2008. So, from this date on the number of banks operating in Albania is down to 16.
Also, the change in the legal status of the First Investment Bank - Tirana Branch into an incorporated bank in Albania reduced the number of foreign bank branches operating in Albania compared to the increased number of subsidiaries. At the end of 2007, the number of foreign bank branches in Albania is two, the number of subsidiaries of foreign banks and of foreign financial groups was nine, the number of domestically-owned capital banks is two, whereas four banks are owned by other shareholders, physical persons, legal ones or banks.
3.2 Ownership structure by capital origin
During 2007 some important changed occurred in shareholders’ equity structure by capital origin. So, in July 2007, the Société Général group acquired 75 percent of the Popular Bank’s shares, which until that moment was a totally private domestically-owned bank. On June 2007, 80 percent of
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the shares of the American Bank of Albania, owned by the Albanian Enterprise Fund (capital of American Chart 2 Paid in capital structure origin), were transferred to Intesa Sanpaolo S.p.A, of the system by origin Italy. These developments and the increased paid 70 in capital during the year have raised the foreign 60 capital predominance and particularly the one 50 40 originating from countries of the European Union in percentage 30 to domestically-owned capital. At end of December 20 2007 foreign capital constitutes 88 percent of this 10 capital, against 9.4 percent of domestic origin
0 December 99 December 00 December 01 December 02 December 03 December 04 December 05 December 06 December 07 capital. Foreign capital share has gone upward by 3 percentage points against the previous year. In absolute value the foreign capital has increased USA by about ALL 6.6 billion or 22 percent, whereas European community Domestic government capital the Albanian capital has decreased by ALL 276.6 Other Domestic private capital million or 11.7 percent. Source: Bank of Albania
As we can see from the above chart showing capital Chart 3 Capital origin by peer groups, performance by origin, during 2007 the European December 2007 Union’s capital share to the total of the system has increased by 5.3 percent. In the meantime, the American capital share has decreased by 3 System percentage points and that of the private domestic capital has decreased by 2.4 percentage points. G1 As concerns the domestic state-owned capital, it is presented almost constant. In year-end 2007 the G2 Albanian government continued to be a shareholder at the United Bank of Albania (40% of the shares) G3 and at the ProCredit Bank, through the FEFAD Foundation (25% of the shares). 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 Domestic capital Foreign capital Analysed according to peer groups, the largest banks of the G3 group continue to be based on Source: Bank of Albania permanent totally foreign resources. The capital structure of G2 medium-sized banks and of G1 Chart 4 Number of employees (in per cent) small-sized banks is a combination of foreign and by peer groups Albanian capital, with the foreign capital occupying the major share, respectively 84 and 74 percent of 100% it. 80% 58% 54% 67% 63% 60% 3.3 Number of employees and bank 40% 33% 38% branches 23% 24% 20% 10% 13% 9% 9% The number of staff employed in the banking 0% 2004 2005 2006 2007 system for 2007 amounted to 5,155, up by about 23 percent against 2006. In 2007 about 58 percent G1 G2 G3 of the total number of bank employees work at bank branches and agencies. Even during this year the Source: Bank of Albania
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increased number of bank employees is related to the added number of bank branches and employees and to the banking activity expansion.
Table 6 Banking network extension indicator as at end 2007 No. of branches inside No. of agencies inside No. of branches No Banks the country the country outside the country 1 Raiffeisen Bank 989 2 National Commercial Bank 21 20 110 3 United Bank of Albania 3 1 4 Italian Albanian Bank 7 5 Italian Development Bank 4 6 Tirana Bank 39 4 7 Branch of National Bank of Greece 5 19 8 International Commercial Bank 5 9 Branch of Alfa Bank 23 1 10 American Bank of Albania 8 15 4 11 ProCredit Bank 24 1 12 Branch of First Investment Bank11 - - 13 Emporiki Bank 4 7 14 Credit Bank of Albania 2 1 15 Credins Bank 21 4 16 Popular Bank 33 17 Union Bank 12 12 18 First Investment Bank – Albania 4 1 T O T A L 306 93 5 Source: Bank of Albania
The increased number of banks and branches and their agencies on one hand, and the increased number of banks’ employees on the other, has significantly improved the supplying of the population with banking services and their quality. According to data of the table above, the average number of population per each bank has increased. The average number of population per each banking unit and per each bank employee results downward because of higher increasing paces of the number of branches and agencies and of the number of employees, in comparison to population growth rates.
Table 7 Coverage with banking services 2003 2004 2005 2006 2007 Number of banks 15 16 17 17 16 Number of employees 2,236 2,816 3,479 4,189 5,155 Number of branches 161 188 250 294 404 Average number of employees per: -bank 149 176 205 246 322 -banking unit 13.9 15.0 13.9 14.2 12.8 Average number of population 3,111,000 3,127,000 3,142,000 3,142,20012 3,170,04813 Number of population per: -bank 207,400 195,438 184,824 184,835 198,128 -banking unit 19,323 16,633 12,568 10,688 7,847 -bank employee 1,391 1,110 903 750 615 Source: Bank of Albania, INSTAT
3.4 Asset and liability structure
During 2007 the system assets grew by ALL 118.6 billion or 19 percent. This growth is estimated to be about 7.1 percent lower than their growth
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during 2006. The bank groups’ performance dynamics during 2007 was reflected in their weight to the total of the system. At the end of 2007 their evidenced weights are 3.4, 31.6 and 65 percent, respectively for G1, G2 and G3, against 4.8, 25.9 and 69.3 percent in the previous year.
Only during the last quarter, the banking system assets grew by ALL 42.8 billion or about 6 percent, from ALL 33.1 billion or 5 percent in the third quarter. The upward trend of the banking activity is explained by high increasing paces of G3 banks, G1 banks and the majority of G2 banks over this period.
The share of assets to Gross Domestic Product (GDP) and that of the loan portfolio to GDP for 2007 has increased, amounting to 75.9 percent and 29.9 percent respectively. The positive performance of these indicators was determined by the highest growth rates of assets of the system (December ’07 - December ’06 by 19 percent), against the growth of annual GDP (December ’07 - December ’06, by 8.9 percent). Increased indicators speak for increased intermediation in the banking sector and larger presence of this sector in the economic growth.
Table 8 Total asset share of the banking system to GDP Indicators in ALL bn. Dec ‘00 Dec ‘01 Dec ‘02 Dec ‘03 Dec ‘04 Dec ‘05 Dec ‘06 Dec ‘07 Total assets 270.8 318.5 339.3 373.6 426.4 496.6 624.3 742.9 Total assets/GDP 50.2 53.5 51.6 50.2 51.9 59.3 69.4 75.9 Total loans/GDP 5.3 4.7 5.9 6.8 8.5 15.3 22.0 29.9 Source: Bank of Albania, INSTAT
The banking system asset structure, against the same previous year period, has reflected the following changes:
• reduction in Albanian Government Treasury bill investments, by about ALL 37 billion or 22.7 percent; • increase in lending by ALL 94.5 billion or 47.7 percent, and; • increase in securities investment, Albanian Government treasury bills excluded, by All 41.4 billion or 45 percent. Investments in other securities include a significant share of Albanian Government bonds by 90.6 percent, followed by foreign government bonds by 3.9 percent, foreign banks and foreign financial institutions by 3.7 percent and 1.7 percent respectively. Compared with the previous year, there is highlighted the tendency to invest in Albanian government bonds, while the weight of this item at year-end 2006 constituted 82.5 percent. The other items have decreased in absolute value and in the weight to the total of this portfolio. The analysis of this portfolio indicates that virtually all banks have securities portfolio in lek and only three banks have portfolio in foreign currency. The weight of investments in foreign currency bonds (non-residents) is evidenced, on December ’07, at about 9.4 percent of fixed and variable income securities portfolio, from 17.5 percent at end 2006. Most of these securities are estimated as of low credit risk by international rating agencies. In the meantime, given the data on the type of currency in which they are issued14 and their residual term to maturity15, we assess that they do not constitute any significant risk in the framework of market risk.
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Table 9 Performance of main asset items of the banking system December 2004 December 2005 December 2006 December 07 Indicators: Amount* Weight** Amount* Weight** Change*** Amount* Weight** Change*** Amount* Weight** Change*** 1. Treasury and interbank transac- 308.9 72.4 292.2 58.8 -5.4 316.1 50.6 8.2 293.1 39.5 -7.3 tions. Of which: - Transactions with 37.1 8.7 46.1 9.3 24.3 55.4 8.9 20.2 67.1 9 21.1 the Central Banks - Treasury bills 195.4 45.8 175.4 35.3 -10.2 164.3 26.3 -6.3 127 17.1 -22.7 - Transactions with 66.5 15.6 60.4 12.2 -9.2 82.6 13.2 36.8 83 11.2 0.5 other banks 2. Operations with 70.1 16.4 127.8 25.7 82.3 198 31.7 55 292.5 39.4 47.7 customers (gross) 3. Securities trans- 29.8 7.0 60.4 12.2 102.7 92 14.7 52.3 133.3 17.9 44.9 actions 4. Other assets 3.6 0.8 3.5 0.7 -2.8 5.4 0.9 54.3 9.6 1.3 77.8 5. Fixed assets 7.2 1.9 7.3 1.5 1.4 9.5 14.8 30.1 11.1 1.5 16.8 Total assets 426.4 100 496.6 100 16.4 624.3 100 25.7 742.9 100 19 * In ALL bn.; ** in percentage; *** in percentage Banking system liability structure, against the same previous year period reflects the following changes of the main items: - “Interbank and treasury transactions” decreased by about ALL 5 billion or by about 10.6 percent; - “Operations with customers” and “Permanent resources” increased by about 19.9 percent and 35.6 percent. Source: Bank of Albania
Table 10 Performance of main banking system liability items December 2004 December 2005 December 2006 December 07 Indicators: Amount* Weight** Amount* Weight** Change*** Amount* Weight** Change*** Amount* Weight** Change*** 1. Interbank and 19.4 4.5 20.6 4.2 6.2 47.2 7.6 129 42.2 5.7 -10.6 treasury transactions 2. Operations with 375.8 88.1 437.5 88 16.4 525.5 84.2 20.1 630 84.8 19.9 customers (gross) 3. Other liabilities 4.2 1 2.8 0.6 -33.3 5.3 0.8 89.3 7.6 1 43.4 4. Permanent 27.1 6.4 35.6 7.2 31.4 46.1 7.4 29.5 62.8 8.5 35.6 resources Total assets 426.4 100 496.6 100 16.5 624.3 100 25.7 742.9 100 19 * in leks bn.; ** in percentage; *** in percentage Source: Bank of Albania
Chart 5 Share of peer groups to the system by total assets 80.0% 3.5 Concentration 70.0% 60.0% The banking system has performed well even 50.0% during 2007 in terms of allocating financial 40.0% 30.0% resources and assets among banks. This is reflected 20.0% even in the Herfindahl index, which measures the 10.0% degree of concentration of the system. 0.0% G1 G2 G3 Dec'05 7.1% 20.4% 72.5% The Herfindahl index to total assets and deposits Mar'06 4.5% 25.2% 70.3% Jun'06 4.5% 25.1% 70.4% presented a reduction against the same previous Sep'06 5.0% 26.3% 68.7% Dec'06 4.8% 25.9% 69.3% year period. The credit indicator has not evidenced Mar'07 2.8% 28.5% 68.6% any change, reflecting the greatest stability in years. Jun'07 3.0% 29.3% 67.7% Sep'07 3.4% 31.0% 65.6% However, if we consider longer periods of time, Dec'07 3.4% 31.6% 65.0% the tendency of these indices is towards optimal Source: Bank of Albania
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concentration level, though the latter one is still far from being achieved. Reduced banking system concentration level is attributed to reorganisation of this sector. Banks of G2 peer group are benefiting from loss of terrain of large banks of G3 peer group. This is testified also by the reduced share of the latter one to total assets of the system in the last two years16.
Table 11 H (Herfindahl) index of assets, deposits and loans concentration December December December December December September December ’02 ’03 ’04 ’05 ’06 ’07 ’07 H index (assets) 0.32 0.30 0.27 0.21 0.18 0.16 0.15 H index (deposits) 0.37 0.35 0.31 0.24 0.20 0.17 0.17 H index (credit) 0.17 0.15 0.11 0.10 0.11 0.11 0.11 Source: Bank of Albania
4. Managing banking activity risk
4.1 Credit risk
4.1.1 Lending activity
During the fourth quarter the banking system credit outstanding increased by about ALL 32.6 billion or 12.6 percent, from ALL 20.6 billion or 8.6 percent in the previous quarter. Over one year, the credit outstanding increased by ALL 94.5 billion or 47.7 percent (against the same previous year period). The main contribution to this increase has been rendered by seven banks of the system, which have evidenced credit increase by ALL 79.8 billion, constituting 84.4 percent of credit outstanding growth for the whole system. During the fourth quarter credit in ALL increased by ALL 5.3 billion or 7.1 percent, whereas credit in foreign currency recorded a growth of ALL 27.3 billion or about 14.8 percent.
Compared with the same previous year period, loan portfolio by currency increased by ALL 24.7 billion (44.3 percent) and ALL 69.8 billion (49.1 percent) respectively for credit in lek and credit in foreign currency. The largest contribution to credit outstanding growth during 2007 was rendered by G2 banks, followed by G3 banks, by ALL 50.8 billion (70.6 percent) and ALL 49.8 billion (44.9 percent) respectively. The large growth of credit outstanding of banks of G2 peer group is attributed even to the passing of one bank from G1 to G217.
In the meantime, credit outstanding growth for the fourth quarter highlights the peer groups of G2, G3 followed by G1, respectively by ALL 17.2 billion (16.3 percent), All 14.4 billion (9.9 percent) and ALL 1 billion (12.1 percent), from ALL 8.3 billion (8.5 percent), ALL 11.4 billion (8.4 percent) and ALL 367 million (5.2 percent) in the preceding quarter.
Notwithstanding the increased share of banks of G2 peer group to total credit outstanding of the system over last two years, the banks of G3 peer group continue to have the largest share to this portfolio.
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Dynamics analysis of loan portfolio structure Chart 6 Share of peer groups to total credit highlights a higher growth rate for the loan portfolio outstanding of the banking system (in %) extended to enterprises, by about 12.2 percent,
60.0 against household loan portfolio growth by 10.7 18 50.0 percent . In the meantime, 2007 highlights the 40.0 contrary of what is revealed by the panorama of this 30.0 quarter. Actually the loan portfolio to enterprises 20.0 has increased 38.1 percent, against 58.9 percent 10.0 increase of the household loan portfolio. However, 0.0 notwithstanding the positive developments in terms of increasing loans to households, influencing on Dec'05 Mar'06 Jun'06 Sep'06 Dec'06 Mar'07 Jun'07 Sep’07 Dec'07 the increased share of this portfolio to total loans G1 13.1 13.1 7.7 7.9 7.6 2.7 2.9 2.9 3.0 of the system, from 33 percent at year-end 2006 to G2 34.0 42.9 38.8 37.6 36.4 40.5 40.7 40.7 42.0 35.5 percent at year-end 2007, loans to enterprises 52.9 44.0 53.5 54.5 56.0 56.8 56.4 56.4 55.0 G3 constitute the most favourable segment, accounting for 62.5 percent of the loan portfolio as at year-end Source: Bank of Albania 2007.
Chart 7 Credit outstanding to enterprises and The fourth quarter has presented increased credit households (in % to total credit outstanding) 70.0 38.0 extended to the public sector by ALL 2.4 billion or 71 percent. Credit portfolio for this sector is reported at 36.0 68.0 ALL 5.8 billion, from about ALL 0.2 billion in 2006
34.0 and has a very high concentration level. 66.0 32.0 64.0 In recent years the credit structure by term 30.0 indicated a gradual shifting of short-term and 62.0 28.0 medium-term credit towards long-term one. This tendency indicates a better perception by the December'05 September'06 December'06 March'07 June'07 September'07 December'07 60.0 March'06 June'06 26.0 banking system of the investing environment, as well as the optimism of using short-term resources towards long-term assets, which may generate even Credit to enterprises (on the left) Credit to households (on the right) more income. Source: Bank of Albania
Table 12 Credit outstanding structure by terms, in percentage December March June September December March June September December `05 ’06 ’06 ’06 ’06 ’07 ’07 ’07 ’07 Short-term 33.2 33.0 32.1 31.5 30.8 31.1 30.9 30.2 31.3 Medium-term 30.6 29.9 30.9 31.6 30.8 29.9 28.9 27.7 25.1 Long-term 36.2 37.1 36.9 36.8 38.4 39 40.2 42.1 43.6 Source: Bank of Albania
Over the final quarter the loan portfolio dynamics by currencies witnessed a twice higher growth of foreign currency credit to ALL credit, respectively 14.8 percent against 7.1 percent. Referring to developments over 2007, there is noticed that over one-year period the ALL and forex loan portfolio growth has been more balanced. Growth of ALL loans is estimated to 44.3 percent and that of forex loans to 49.1 percent. In consequence, the weight of these portfolios to total credit outstanding accounts for 27.5 percent and 72.5
32 Bank of Albania Bank of Albania 33 2007 Supervision Annual Report Supervision Annual Report 2007
percent, for ALL credit and forex credit respectively, against 28 percent and 72 percent at end of 2006. This view ranks Albania among the countries of the region with the highest rate of loans in foreign currency.
Table 13 Credit outstanding structure by currencies (in %) December March June September December March June September December `05 ’06 ’06 ’06 ’06 ’07 ’07 ’07 ’07 Lek 24.4 25.5 27.5 28.9 28.1 27.6 28.9 28.9 27.5 Foreign currency 75.6 74.5 72.5 71.1 71.9 72.4 71.1 71.1 72.5 Source: Bank of Albania
The data indicate that of 32,400 borrowers in foreign currency, 16,917 (or about 52 percent) Chart 8 Credit outstanding volume of them have their income in lek. Even the foreign by terms, in ALL billion currency credit, when the borrower’s income is in 350.0 lek (the part of foreign currency credit unhedged 300.0 against foreign exchange risk) to total of foreign 250.0 currency credit is estimated as high, about 44.5 percent. However, compared with the year-end 200.0 2006 and the preceding quarter, when this part of 150.0 foreign currency portfolio constituted 44.7 percent 100.0 and 44.9 percent respectively, we have noticed 50.0
a slight reduction of its weight at year-end 2007. 0.0 December 02 March 03 June 03 September 03 December 03 March 04 June 04 September 04 December 04 March 05 June 05 September 05 December 05 March 06 June 06 September 06 December 06 March 07 June 07 September 07 December 07 In the meantime, the non-performing foreign currency credit, when the borrower’s income is in
leks, constitutes about 48 percent of the total non- Long-term credit Mid-term credit Short-term credit performing foreign currency credit. Source: Bank of Albania
Table 14 The share of foreign currency credit unhedged against foreign exchange risk (in percent) Mar. ’06 Jun.’06 Sept. ’06 Dec.’06 Mar.’07 Jun. ’07 Sept.’07 Dec.’07 The part of forex credit 49.7 49.2 43.9 44.7 46.4 44.9 44.9 44.5 unhedged against forex risk Source: Bank of Albania
Concerning the uncovered foreign currency portfolio, the allocation according to the purpose Chart 9 Credit outstanding volume by currencies, in ALL bn. of use distinguishes the main share of the real estate sector19 by about 54.6 percent, followed by the 350.0 divisions “for trade” by 24.7 percent, “for business 300.0 development” by 17.8 percent and “consumer” by 250.0 2.7 percent. 200.0 150.0 4.1.2 Asset quality 100.0 50.0
0.0 The fourth quarter has recorded non-performing December 02 March 03 June 03 September 03 December 03 March 04 June 04 September 04 December 04 March 05 June 05 September 05 December 05 March 06 June 06 September 06 December 06 March 07 June 07 September 07 December 07 loan portfolio growth in the banking system by about ALL 1.1 billion or 12.2 percent, from ALL 1.4 billion
or 19.2 percent in the previous quarter. Compared Credit outstanding in foreign currency with the same period of 2006, this portfolio went Credit outstanding in ALL up by about ALL 3.8 billion or 62.3 percent. We Source: Bank of Albania
32 Bank of Albania Bank of Albania 33 2007 Supervision Annual Report Supervision Annual Report 2007
estimate that considerable upward paces of credit Chart 10 Performance of non-performing credit constantly extended by the banking system may be outstanding of the banking system foreseen as a potential for further deterioration of its 12,000.0 5.0 4.5 quality in the future. 10,000.0 4.0 3.5 8,000.0 The indicator that measures the system’s credit 3.0 quality (gross) is estimated at 3.4 percent as at end 6,000.0 2.5 2.0 of 2007, without evidencing any change from its 4,000.0 1.5 level in the third quarter of the year. This indicator 1.0 2,000.0 was 3.1 percent for 2006, indicating its non-positive 0.5 performance, though the worsening of the indicator is
0.0 December 03 March 04 June 04 September 04 December 04 March 05 June 05 September 05 December 05 March 06 June 06 September 06 December 06 March 07 June 07 September 07 December 07 0.0 deemed insignificant.
The indicator “non-performing loans/(net) credit Non-performing credit outstanding (in mln ALL, on the left) outstanding”, which measures the net size of credit Non-performing credit/Credit outstanding (in %, on the right) risk exposure is estimated at 1.8 percent, from 1.7 Source: Bank of Albania percent in the previous quarter. This ratio increased by 0.44 percentage points20 in comparison with the same previous year period. Chart 11 Non-performing loans to credit outstanding of the previous year (in %) A more realistic view of credit portfolio performance Non-performing loans in (n) period/ Credit outstanding in (n-1) period (one year difference) and credit risk rate may be given by comparing non-
7 performing credit outstanding to total of the portfolio
6 devoid of new loans effect, along one-year period
5 and estimated quarterly.
4 3 The above figure confirms a higher level of non- 2 performing loans to total loans and with significant 1 fluctuation in the earliest part of the period under 0 December 04 March 05 June 05 September 05 December 05 March 06 June 06 September 06 December 06 March 07 June 07 September 07 December 07 analysis. However, starting by the end of the third quarter of 2006, the indicator seems stabilised around the level of 5 percent and we believe that it depicts an effective loan portfolio management by the banking system. Source: Bank of Albania In comparison to previous quarter, the loan structure by quality presented a slight increase of “standard” loans and a reduction of “special mention” ones. The other categories are presented in relatively similar levels as those of the preceding quarter. Compared with credit rating of year-end 2006, there is evidenced a reduction of the share of “standard”, “doubtful” and “lost” loans21 and an increased share of “special mention” and “substandard” loans.
Table 15 Credit rating in % to credit outstanding 2005 2006 2007 Credit rating Q IV Q I Q II Q III Q IV Q I Q II Q III Q IV Standard loans 94.1 93.2 92.4 92.5 93.5 92.9 93.0 91.2 91.9 Special mention loans 3.6 3.8 3.9 4.3 3.4 3.9 3.9 5.5 4.8 Substandard loans 0.8 1.1 1.4 1.6 1.1 1.3 1.3 1.6 1.7 Doubtful loans 0.5 1.0 1.5 0.7 0.9 0.9 0.9 0.8 0.8 Loss loans 1.0 0.9 0.8 0.9 1.1 1.0 0.9 1.0 0.8 Source: Bank of Albania
34 Bank of Albania Bank of Albania 35 2007 Supervision Annual Report Supervision Annual Report 2007
Reduction of “provisions for covering non- performing loans/non-performing loans” ratio Chart 12 Provisions for non-performing loans during 2007 is due to higher rate of increase of non-performing loans than the rate of increase of Performance of “Provisions for non-performing loans/ non-performing loans” ratio provisions for non-performing loans. This speaks for 12,000.00 58
56 positioning of non-performing loans in high classes 10,000.00 of “Non-performing loans” rating. Hence, at year- 54 8,000.00 end 2006 this ratio was evidenced at 56.3 percent 52 and at the end of 2007, it resulted to about 47 6,000.00 50 48 percent. The value of this ratio also speaks for a 4,000.00 46 2,000.00 non-performing portfolio of the system ranked on 44 average in the “doubtful” category. 0.00 42 Mar'06 Jun'06 Sep'06 Dec'06 Mar'07 Jun'07 Sep'07 Dec'07
Household loan portfolio and enterprise loan Provisions for non-performing loans (1) (in ALL mln, on the left) Non-performing loans (2) (in ALL mln, on the left) portfolio evidence deterioration as compared with Ratio (1)/(2) (in %, on the right) the previous year. The “non-performing loans/credit Source: Bank of Albania outstanding” ratio respectively to households and to enterprises is estimated at 3 percent and 3.6 percent, Chart 13 Non-performing credit outstanding from 2.2 and 3.5 percent in year-end 2006. This by sectors tendency indicates worsening, particularly of the 8,000.0 8.0 7.0 household loan portfolio, though the value of the 7,000.0 6,000.0 6.0 ratio for this portfolio appears lower than the one for 5,000.0 5.0 enterprises. The preceding quarter, unlike the fourth 4,000.0 4.0 quarter of the year, presented the levels 2.8 and 3.7 3,000.0 3.0 percent, which indicates corporate loan portfolio 2,000.0 2.0 1,000.0 1.0 improvement and deterioration of households one 0.0
0.0 March 03 June 03 September 03 December 03 March 04 June 04 September 04 December 04 March 05 June 05 September 05 December 05 March 06 June 06 September 06 December 06 March 07 June 07 September 07 December 07 over the fourth quarter of the year.
The fourth quarter presents the ratios “non- Non-performing loans to enterprises (in ALL mln, on the left) performing loans in ALL/credit outstanding in ALL” Non-performing loans to households (in ALL mln, on the left) Non-performing loans to enterprises/credit to enterprises and “non-performing loans in foreign currency/ (in %, on the right) Non-performing loans to households/credit to households credit outstanding in foreign currency” at the (in %, on the right) levels of 3.9 and 3.1 percent, from 3.3 and 3.4 Source: Bank of Albania percent in the previous quarter. At end of 2006, Chart 14 Non-performing credit outstanding these indicators were estimated to 2.8 and 3.2 by currencies percent. This development indicates respectively a 7,000.0 8.0 deterioration of the lek portfolio and an improvement 6,000.0 7.0 5,000.0 6.0 of the foreign currency one for last two quarters, as 5.0 4,000.0 well as an obvious deterioration of the lek portfolio 4.0 3,000.0 in the time frame of one year. 3.0 2,000.0 2.0 The indicators that measure the foreign currency 1,000.0 1.0
0.0 March 03 June 03 September 03 December 03 March 04 June 04 September 04 December 04 March 05 June 05 September 05 December 05 March 06 June 06 September 06 December 06 March 07 June 07 September 07 December 07 portfolio quality hedged against foreign exchange 0.0 rate risk and the unhedged one against foreign exchange rate risk as an expression of the ratios “foreign currency non-performing loans (the Non-performing credit outstanding in ALL (ALL mln, on the left) Non-performing credit outstanding in foreign currency borrower’s income is in foreign currency)/total (ALL mln, on the left) Non-performing credit in ALL/total credit in ALL (in %, on the right) of foreign currency loans (borrower’s income is Non-performing credit in foreign currency/ total credit in foreign currency (in %, on the right) in foreign currency)” and “foreign currency non- Source: Bank of Albania
34 Bank of Albania Bank of Albania 35 2007 Supervision Annual Report Supervision Annual Report 2007
performing loans (the borrowers’ income is in ALL)/ total of foreign currency loans (the borrowers’ income is in ALL)” are estimated at 3.0 percent and 3.4 percent. These indicators are reported at 3.5 percent and 3.3 percent for the previous quarter, as well as 3.6 percent and 2.7 percent for year-end 2006. The last quarter of 2007 seems to confirm an overturn of the quality indicator of both loan portfolios, in the favour of improving the quality of the portfolio hedged against foreign exchange rate risk. Qualitative developments of the second indicator should not be backed by exchange rate dynamics, which is deemed steady. Therefore, we estimate that the performance of this indicator may be casual or related to factors that may have generally influenced the total loan portfolio. However, further performance remains to be tested in the future.
Finally, the comparability of the main indicator that measures the loan portfolio quality vis-à-vis the region countries indicates a quality of the loan portfolio in the Albanian banking system, at best levels of the region.
Table 1622 Region Non-performing loan/Total loans developments on lending Albania** 3.4% quality Bulgaria 2.2% Serbia 21.4% Cyprus 6.1% Macedonia 6.4% Turkey* 3.6% Romania 8.4% Source: “South Eastern Europe & Mediterranean Emerging Market Economies Bulletin”, November’07 (BOG).
4.2 Liquidity risk
4.2.1 Liquidity ratios
During 2007 the banking system liquidity situation continued to be satisfactory. Liquidity indicators analysis depicts that liquid assets occupy virtually half of total assets. GAP values of liquidity are within controllable limits and short-term assets cover the major part of same maturity liabilities.
Notwithstanding the growth of liquid assets by 2.8 percent during 2007, their share to total assets has had a pronounced downward trend. At end of December 2007, the liquid assets constituted almost 50 percent of the assets of the system, from 58 percent in the previous year or 63 percent at end 2005.
From the viewpoint of peer groups, during this year the banks of G3 peer group reflected the highest share of liquid assets to total assets, about 55 percent. This share is presented at relatively lower levels in banks of G2 and G1 peer groups, at 38 percent and 49 percent respectively.
The assessment of adequacy of banking system liquid assets, according to some shock scenarios assuming a massive withdrawal of deposits at 10
36 Bank of Albania Bank of Albania 37 2007 Supervision Annual Report Supervision Annual Report 2007
percent, 20 percent and 30 percent, speaks for an impact on liquid assets at 17 percent, 35 percent Chart 15 Performance of liquid asset and 52 percent. As a consequence it is assessed that composition in years the system’s liquid assets level is generally adequate for generating resources. 2007 4% 3% 34% 22% 36%
23 As at end 2007, the security investment share 2006 4%2% 46% 23% 26% outpaced by 2 percentage points that of treasury bills,
which for some periods from now had dominated 2005 3% 1% 56% 19% 19% on total liquid assets. The item “transactions with financial institutions” has reflected more or less 2004 3% 1% 64% 22% 10% stability over years. Two other elements, with little share to liquid assets of the system, monetary assets 0% 50% 100% and free reserves have had a slightly upward trend. Monetary assets Free reserves with CB Transactions with financial institutions T-bill Securities At the end of 2007 assets of one-month maturity Source: Bank of Albania accounted for 72 percent of same maturity liabilities. In spite of the reduced value of the ratio over last period, its value continues to be high.
Indicator Table 17 Performance December 2005 December 2006 December 2007 (in ALL million) of short-term assets to 1. Short-term assets 166,364 198,936 206,940 short-term liabilities of the 2. Short-term liabilities 207,852 268,878 288,119 banking system (1)/(2) ratio (in %) 80 74 72 Source: Bank of Albania
Maturities of banks’ liabilities and claims had mismatches over certain periods of time in 2007 December-end. These mismatches are larger for segments of a maturity term of until 10 days, with a short position by about ALL 90 bn.; and from 1 to 5 years with a long position by ALL 146 bn. Mismatches come mainly from different maturity structures of placed deposits and extended loans, which means that medium-term or long-term assets (mainly loans) are financed from Chart 16 Asset liability structure by short-term liabilities (mainly deposits). In concrete residual maturity (in ALL billion) terms, only 30 percent of investments in medium- term and long-term assets are financed from same 300 maturity resources, whereas the rest of them, by 70 200 percent are financed from short-term liabilities. 100 - At system level, the liquidity indicators estimated -100 -200 according to monthly and quarterly gap present up to 10 days- 1 - 3 3 - 6 6 - 9 9 months-- 1 - 5 over 5 satisfactory and improved values, compared with 10 days1month months months months 1 years years years
year-end 2006. Asset-liability monthly gap has been Assets 103 104 68 72 61 72 176 91
narrowing its short position during first three quarters Liabilities 193 95 116 96 76 89 29 49
of the year, to be increased in the fourth quarter, to Gap (90) 9 (47) (24) (15) (17) 146 42 ALL -81 billion. The reduced weight of this gap to total assets is a result of higher asset growth rate (by Assets Liabilities Gap 40 percent). Source: Bank of Albania
36 Bank of Albania Bank of Albania 37 2007 Supervision Annual Report Supervision Annual Report 2007
Also the quarterly gap has moved in the same direction as the monthly gap, enlarging its short position, by about ALL 14 billion compared with December 2006. Its ratio to total assets has reflected slight improvement of assets from -18.3 percent to -17.3 percent at end of December 2007.
Table 18 Monthly and quarterly maturity gap of the banking system December March June September December Indicator ’06 ’07 ’07 ’07 ’07 Monthly maturity gap (in ALL mln) -69,942 -63.601 -61,404 -54,495 -81.179 Quarterly maturity gap (in ALL mln) -114,082 -94,852 -119,024 -106,445 -128,613 Monthly maturity gap / total assets (in %) -11.2 -9.8 -9.2 -8.2 -10.9 Quarterly maturity gap /total assets (in %) -18.3 -14.6 -17.8 -15.2 -17.3 Source: Bank of Albania
Under the conditions of a not very active money market and virtually lack of capital market, customer deposits continue to remain the primary source of generating funds to the system. Chart 17 Performance of total deposits At the end of 2007 their weight to total liabilities of (in ALL million) and their growth rate (in percentage) during 2002-2007 the system is about 93 percent or 2 percentage points higher than at end 2006. 700,000 25
600,000 20 Since 2002, total deposits of the system have only 500,000 increased. Their growth rate has reflected downward 15 400,000 trends only during 2003-2004, whereas in the last 300,000 10 couple of years the growth rate has gained stability. We 200,000 estimate that Bank of Albania’s prudential monetary 5 100,000 policy, coupled with banking network extension
- 0 and new products supply in the market, have been December December December December December December 2002 2003 2004 2005 2006 2007 determinant factors of deposit stability in the system in the course of 2007. Total deposits Annual growth Annual growth performance Source: Bank of Albania During 2007 the total of deposits was increased by about ALL 104 billion. Time deposits increased more, by about ALL 88 billion and current accounts by Chart 18 Deposit structure by availability ALL 30 billion, whereas demand deposits underwent a reduction. The changes taking place in 2007 2%0% increased the time deposit share by two percentage 19% points, compared to reduced demand deposit share.
7% 82 percent of deposits belong to households, whereas the share of deposits by private and public sectors is 14 percent and 4 percent respectively. About 40 percent of the deposits of the system have a
72% residual maturity of shorter than one month and only 4 percent of them have a higher maturity than one Current account year. Demand deposits Other Time deposits Certificates of deposits In terms of peer banks, the three peer groups have Source: Bank of Albania marked increased deposits along the year. The highest
38 Bank of Albania Bank of Albania 39 2007 Supervision Annual Report Supervision Annual Report 2007
contribution to their growth was rendered by deposits of G3 and G2 peer groups, by an increase of ALL Chart 19 Deposit structure by final maturity 52 billion or 14 percent and ALL 43 billion or 31
percent. Also the deposits of G1 peer group have 4% 0% increased by about ALL 3 billion or 34 percent. 25% 40% Performance analysis of deposits by currencies speaks for an underlined tendency of shifting from ALL deposits to foreign currency deposits.
Albanian banking system reflects a high degree 14% of deposit concentration, where 4 largest banks 17% account for about 70 percent of their total. If deposit concentration is analysed from the depositors’ 6-12 months < 1 month 1-5 years 1-3 months viewpoint, it is noticed that it is rather high in small- over 5 years 3-6 months sized banks of G1peer group. In 4 banks of this Source: Bank of Albania peer group, the share of 50 big depositors to total of deposits is higher than 50 percent. Chart 20 Performance of deposit share in ALL and in Loans made by parent banks constitute an foreign currency to total deposits (in percentage) important financing source of some foreign bank 80 branches or subsidiaries. During 2007 these funds 70 resulted to almost ALL 28 billion or about double 60 of the value of the previous year and their share to 50 total liabilities of the banking system has increased 40 from 2.5 percent to 4.2 percent. We estimate that 30 increased financing by parent banks constitutes a 20 positive event for the system because fixed funds 10 increase, but at the same time direct interdependence 0 December 03 June 04 December 04 June 05 December 05 June 06 December 06 June 07 December 07 on foreign market developments also increases.
Deposits in ALL/total deposits Loans extended by residential financial institutions Deposits in foreign currency/total deposits were another financing source for banks of the Source: Bank of Albania system during 2007. Banks addressed to interbank market mainly for meeting their short-term liquidity needs. This market is predominated by daily and weekly transactions, whereas monthly and quarterly transactions are very rare.
Finally, the Bank of Albania, combining the instruments of open market operations, has managed well the liquidity situation, encouraging banks to be active in the interbank market. During 2007 the average monthly volume of interbank transactions increased, whereas the share of these funds to total liabilities of the system continues to be rather low, to about 1 percent.
4.3 Market risks
Market risk continues to be limited in the banking system, since the banks of the system are not much involved in trading activity. The low weights of
38 Bank of Albania Bank of Albania 39 2007 Supervision Annual Report Supervision Annual Report 2007
monthly and quarterly gap values of assets –liabilities sensitive to interest rate, respectively to -9.4 percent and -3.3 percent, reveal a low exposure of the system to interest rate volatility.
Regulatory capital requirement for market risks is low and totally satisfied by the regulatory capital of the system over the year. Hence, the requirement for covering interest rate risk is approximately 3.5 percent of the regulatory capital of the system for end of 2007 and it is estimated only by one bank. The requirement for hedging against exchange rate fluctuations is lower, almost 1 percent of the regulatory capital of the system and encompasses all the banks of the system, excluding two branches of foreign banks. The overall system coverage rate by 144 percent at end of December is obviously higher than the limit rate by not less than 100 percent.
Also the risk related to securities portfolio of the system is low. 90 percent of the securities portfolio of the system is composed of Albanian government bonds, whereas the rest is composed of bonds issued by foreign governments or foreign financial institutions. All the banks of the system have a portfolio of the Albanian Government bonds and only three of them have bonds issued in foreign currency. Most of securities of this portfolio are classified as “held to maturity” and so it is not much exposed to frequent price changes, as a result of market interest rate volatility.
5. Capital adequacy
5.1 Shareholders’ equity
Year-end 2007 recorded a growth of about 34.3 percent of the shareholders’ equity of the system, compared with end of 2006. Capital-adequacy ratio is reported 17.1 percent or 0.9 percentage points lower than in December 2006 and 0.4 percentage points lower than in the third quarter of 2007. During 2007, the shareholders’ equity of the system grew 34.3 percent, from 27.7 percent this growth was in 2006.
According to peer groups of the system, the three groups, G3, G2 and G1 have increased their shareholders’ equity during this year, respectively by ALL 10 billion or 44.8 percent, ALL 3 billion or 27.3 percent and ALL 635 million or 11.2 percent.
The performance of the shareholders’ equity of the system over the year increased the G3 peer group’s share to 57 percent to the total of the system or by four percentage points, that of G2 to 32 percent or by two percentage points, whereas the G1 peer group’s share dropped to 11 percent.
40 Bank of Albania Bank of Albania 41 2007 Supervision Annual Report Supervision Annual Report 2007
Table 19 Shareholders’ equity structure of the system and its components performance in years December 2005 December 2006 September 2007 December 2007 Indicators ALL mln % ALL mln % ALL mln % ALL mln % Own equity 33,013.8 100 42,162 100 53,502.7 100 56,630.8 100 Paid in capital24 29,420.3 77.4 34,768 71.5 40,245.5 66.2 41,121.7 63.6 Share premium 1.8 0.0 363.5 0.9 1,401.1 2.6 1,401.1 2.5 Reserves 1,432.9 4.3 3,309.4 7.8 4,165.7 7.8 4,192.3 7.4 Revaluation difference -3,852.3 -4,611.5 -4,831.3 -5,088.1 Retained profit/loss -184.3 1,281 3 4.711.3 8.8 4,437 7.8 Profit/loss of the current year 6,195.5 18.8 7,051.3 16.7 7,811.0 14.6 10,566.7 18.7 Source: Bank of Albania
Excluding the revaluation differences, which continue to be negative, the other components of the shareholders’ equity have positively impacted on it.
The paid in capital continues to be the most important element of the shareholders’ equity, though its weight has been decreasing over latest periods of time. During 2007, 10 banks of the system increased their paid in capital, rising the whole paid in capital of the system by ALL 6.4 billion or 18 percent.
The retained profit of the system increased by about ALL 3.2 billion, compared with end of 2006.
At December-end 2007 the profit for the system is estimated at about ALL 2.75 billion higher than in the previous year, with about 80 percent of this growth attributed to improvement of the net result of large banks, G3 peer group.
The components, share premiums25 and reserves had an upward effect on the shareholders’ equity during 2007, by ALL 1 billion and ALL 882 million respectively.
Negative revaluation reserves were deepened by ALL 257 million during the year. The USD’s and the euro’s depreciation, in which most of banks of the system hold the paid in capital, against the lek, has been a determinant factor influencing their growth.
The financial leverage of the system, i.e. the ratio of assets to total shareholders’ equity, at end of December 2007 is 13.2 percent, from 14.8 percent at end of 2006. The lower value of this ratio at end of December 2007 indicates that during this year the system is marginally based less on debt than on shareholders’ equity for asset financing. G3 and G2 reflect high values of the said ratio, at 15 percent and 12 percent. The contrary happens with small-sized G1 banks, which are not generally competitive in the market and have a limited extension. These banks, more than those of two other groups, base their expansion on own funds, which reflects also the low financial leverage by about 4 percent.
40 Bank of Albania Bank of Albania 41 2007 Supervision Annual Report Supervision Annual Report 2007
5.2 Capital adequacy
Upon entry into force of the new Regulation “On operational risk management at foreign bank branches”26, two branches of foreign banks in Albania27 are excluded from the obligation of calculating the capital-adequacy ratio. Therefore, during the fourth quarter, the values of these two banks are not included in the total regulatory capital of the system and in total assets and off-balance sheet items.
Regulatory capital
Total regulatory capital of the banking system is reported at ALL 46 billion as at December-end 2007. Compared with year-end 2006 its value rose by ALL 7.2 billion or 15.6 percent. If we exclude the negative effect of non- inclusion of two branches of foreign banks in its calculation, the regulatory capital has incresed by ALL 12 billion or 39 percent.
According to peer groups, during 2007 the regulatory capital of G1 peer group increased by about ALL 550 million or 10 percent, that of G2 peer group increased by ALL 3.6 billion or 44 percent28, whereas the regulatory capital of G3 peer group grew by about ALL 8.7 billion or 44.5 percent.
Core capital continues to dominate the system’s regulatory capital composition, though its share has slightly decreased, from 98 percent in 2005 to 95 percent in 2006 and 94 percent at year-end 2007. The system’s supplementary capital continues to be limited and is composed totally of the subordinated debt issued from four banks of the system.
In December-end 2007 net overdues share to regulatory capital of the system accounts for 11.2 percent, from 6.8 percent at December-end 2006, owing to high increase by about 196 percent of net overdues. Therefore, the system’s capability of covering potential loan losses with regulatory capital turned out to be significantly limited.
Table 20 Performance of December 2006 March 2007 June 2006 September 2007 December 2007 net overdues to regulatory 6.8 7.4 7.9 8.5 11.2 capital ratio (in %) Source: Bank of Albania
Total of assets and off-balance sheet items
Total of risk weighted assets and off-balance sheet items increased by about ALL 54 billion or 25 percent during 2007. Not taking into account the negative effect of two branches of foreign banks, their growth would be about ALL 86 billion or 47 percent.
The data in the table below depict that all classes of risk-weighted assets have increased. We highlight the growth of riskier assets by ALL 17 billion or 9.3 percent and of moderate risk assets by ALL 1.4 billion or 8.7 percent.
42 Bank of Albania Bank of Albania 43 2007 Supervision Annual Report Supervision Annual Report 2007
At the end of 2007, the loan portfolio value for seven banks of the system has crossed the limits specified in the Regulation on “Credit Risk Management” to the total of the system by ALL 21.4 billion. This value, which while computing assets and off-balance sheet items rated according to risk is weighted by 150 percent higher, is about 14 percent higher than that of the previous quarter, while in 2006 December-end these assets were not accrued.29
According to bank groups, total risk-weighted assets and off-balance sheet items for G3 rose by ALL 59.4 billion or 49 percent, for G2 by ALL 20.9 billion or 39 percent30, and for G1 by ALL 5.8 billion or 75 percent.
Table 21 Performance of risk-weighted assets of the banking system by years Indicator (in ALL million) December 2004 December 2005 December 2006 September 2007 December 2007 Risk-free assets 271,217 292,452 340,775 332,977 324,678 Low risk assets 71,384 71,480 79,720 99,120 88,391 Moderate risk assets 8, 893 11,759 17,500 23,030 18,877.5 High risk assets 70,806 122,320 180,161 218,036 196,945 Assets weighted by 150 percent n/a n/a n/a 18,736 21,441 Total risk-weighted assets & off- 94,801 148,757 215,775 291,274 270,456 balance sheet items31 Source: Bank of Albania
Capital-adequacy ratios for the system as at end 2007 is 17.1 percent or 0.9 percentage points lower than for end 2006 and 0.4 percent lower than in the previous quarter. The reduction is due to higher growth rates of the total of assets and off balance sheet items vis-à-vis the regulatory capital growth. The behaviour analysis of capital adequacy ratio, as a consequence of non- involvement of two branches of banks, indicates that under unchangeable conditions the capital adequacy for the banking system would have been calculated at higher levels32.
Capital adequacy ratio in % Banking system G1 G2 G3 Table 22 Performance of December 2007 17.1 45.1 15.8 15.5 capital adequacy ratio by September 2007 17.5 44.5 15.5 16.8 bank groups June 2007 16.9 48.5 15.1 15.6 March 2007 17.5 55.2 16.0 15.8 December 2006 18.0 41.3 15.9 16.0 December 2005 18.6 35.0 19.4 14.4 December 2004 21.6 47.3 17.8 17.3 Source: Bank of Albania
6. Profitability indicators
6.1 Net result and its structure
The net result of the banking system for the last quarter of 2007 is reported at about ALL 2,755.64 million compared with ALL 2,948 million in the previous quarter. This indicator accounts for 6.7 percent lower than in the previous quarter, though it is estimated at 4.3 percent higher than the quarterly
42 Bank of Albania Bank of Albania 43 2007 Supervision Annual Report Supervision Annual Report 2007
average of the year. Compared with the same period of the previous year, the net result stands at about 18.3 percent higher. Compared with preceding periods, the net result of this period is estimated more dependant on the result from other activities than from the core activity, as an expression of the significant increased ratio between the net results from other activities and from the core activity.
The banking system performance over 2007, assessed from the viewpoint of net result performance, has been evidently higher than in 2006. Net result is estimated at 41.8 percent higher and reflects the consistent growth of the volume of operations, as an expression of the increased volume of net income from other operations by about 29.9 percent, while even the operating expenses have increased by 20.3 percent. The share of higher interest-bearing assets has increased, as an expression of constant orientation of the banking system to higher risk assets, which is reflected even in the increased share of the loan portfolio, from 31.5 percent to 39.1 percent. Only the net result from interests has increased by 27 percent. Loan portfolio growth, but not only it, has associated the increased own funds of banks and their share to total liabilities. This development has supported the generation of cost free funds, which have a significant impact on income and expenditure structure.
Table 23 Performance of Indicators December ‘07 September ‘07 December ‘06 core elements of net result Net result on interests 7,199.34 7,424.81 5,621.90 (non-cumulative) in ALL Net result on other operations 1,877.72 1,319.15 1,431.93 million Operating expenses 4,600.86 3,998.36 3,599.74 Provisioning expenditures 922.86 1,075.11 443.83 Credit provisioning expenses 921.62 1,047.24 461.61 Net result (after tax) 2,755.64 2,947.61 2,329.47 Source: Bank of Albania
Compared with the previous quarter, the analysis of the principal components of income and expenditures revealed that the banking system performance was determined by high operating expenses, about ALL 603 million (or 15.1 percent more) followed by the lower net result on interests, about ALL 225 million (or 3.1 percent less). It is worth mentioning that the net result on interests is reported lower, due to higher and beyond-the-trend interests paid for deposits. The contrary has occurred with interests received from clients, whose increase is almost insignificant for this quarter and beyond any previous trends33. On the other hand, rapid growth of net result on other operations, by about ALL 559 million (or 42.3 percent) and the reduction of provisioning expenses by about ALL 126 million (or 12 percent) has obviously offset the negative effects of increased operating expenses and reduced net result on interests.
An element that has negatively and significantly impacted on net result is income tax. Though income before taxes for the fourth quarter is a little lower compared to the third quarter, the income tax is estimated at about ALL 137 million or 18.6 percent more34.
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Performance of individual banks, estimated for a number of banks with a negative net result, only for the fourth quarter is recorded same as in the previous quarter. Three banks report net negative result, of which two belong to G2 and one to G1 peer group. In cumulative terms or at the end of 2007 there are noticed four banks with a negative net result. Most of these banks belong to small-sized banks.
6.2 Profitability indicators
The performance of main profitability indicators, respectively return on average assets (RoAA) and return on average equity (RoAE), compared with the previous quarter is estimated virtually unchanged for the RoAA and a bit lower for the RoAE. Compared with the previous year, a greater growth is noticed, particularly for the RoAA. The relative growth of the RoAA for the year is some times higher than the growth of the RoAE. These developments indicate a more rapid growth of net result of the banking system, particularly for average assets more than for average equity.
RoA (not on average assets)35 compared with RoA of the European Union, results at 1.42 percent against 0.65 percent. Compared with Greece, the RoA for the Albanian banking system turns out to be lower, about 18 basis points36. The RoE indicator is 18.66 percent in Albania against 17.19 percent in the EU and 20.6 percent in Greece. We believe that this panorama for high returns of the Albanian banking system, though involvement in risky assets is limited against the EU area, indicates that the banking system intermediation margin in Albania is still high and there is much room for enhancing the competition.
Indicators December ‘07 September ‘07 December ‘06 Table 24 Core profitability RoAA 1.57 1.58 1.36 indicators in percentage RoAE 20.74 21.00 20.17 (cumulative) Source: Bank of Albania
Analysing the RoAA indicator by peer groups, it comes out that G3 peer group continues to have a higher profitability for 2007. The RoAA indicator for G3 is estimated at about 1.74 percent (from 1.68 percent and 1.64 percent respectively at the end of third quarter and second quarter of 2007); for G2 it is estimated to 1.35 percent (from 1.48 percent and 1.45 percent) and for G1 it results negative, by 0.25 percent (from -0.22 percent and - 1.02 percent). G3 performance continues to be estimated at a steady growth, whereas RoAA for G2, though considered benign, is estimated at the lowest levels for 2007.
RoAA for every bank of G3 peer group, even in the end of the year continued to be assessed as more centred towards the average of the group rather than for other banks of the system. In the meantime, the RoAA for G2 banks is obviously more volatile across the group. RoAA for G2 varies from
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2.74 percent to -0.08. RoAA behaviour for banks of this group, with some banks displaying a steady RoAA and some others having volatile RoAA levels sensitively not only within the group but also from one period to another, has been recurrent even in the past. Under the conditions when RoAA performance for banks of the peer group continues to be influenced by extreme and volatile values of the RoAA, we assess that even the stability of the RoAA for this group is envisaged to be more fragile and somewhat more chaotic compared with larger banks.
The small-sized bank group is frequently subject of the change of the RoAA side from one period to another or of large movements, either in the positive or negative side. However, the latest data of the year and of the third quarter speak for a positioning of the RoAA for this group around the level of 0.25 percent on the negative side. This situation generally confirms the impossibility of some banks of the group to generate a sufficient profit.
Box: ROA interpretation under risk viewpoint
Return on equity is a basic indicator commonly used in assessing profitability of banks or of the whole banking system. A higher ROE is generally interpreted as a positive development when the shareholders’ equity has not decreased, likewise a lower ROE should not necessarily be interpreted as a negative phenomenon37. Therefore, under a prudential viewpoint the indicator should be cautiously interpreted, since it can express changes related to rising degree of risk rather than an increase of profitability or a falling degree of risk rather than a reduction of profitability.
ROE is broken down into four indicators related to one-another: profit margin, risk corrected income, risk taken and financial leverage.
Where
NI Net income
OI Operating income38
RWA Average risk-weighted assets39
TA Total of average assets
E Average shareholders’ equity
And
(1) Estimates the margin between revenues and costs Growth is deemed a positive development
46 Bank of Albania Bank of Albania 47 2007 Supervision Annual Report Supervision Annual Report 2007
(2) Estimates the risk-weighted efficiency Growth is deemed a positive development
(3) Estimates the inclination towards risk Growth is deemed a negative development40.
(4) Estimates the financial leverage. Growth is deemed a negative development
A higher ROE as a consequence of increased profit margin indicator (the first indicator), constitutes a reduction of financial insecurity, because it reveals a larger difference between income and costs/expenditures. An increase in the risk corrected income indicator (the second indicator) may be deemed a positive development, since it represents more the income on risk weighted assets. An increased exposure to risk through the indicator estimating risk tendency (the third indicator) may be interpreted as a development that infringes the financial robustness and finally the increased financial leverage (the fourth indicator) may also be interpreted as a loss of financial robustness, since it implies an increase of relative debt value and in consequence, increased risk .
ROAE calculations for 2006 show the level of 20.17 percent. This indicator is broken down into the following component values::
ROAE calculations for 2007 show the level of 20.75 percent. This indicator is broken down into the following component values:
ROAE for 2007 increased by about 60 basis points or 0.6 percent. This increase is not regarded as very significant. The analysis reveals that the ROAE growth comes as a consequence of the growth of the first component indicating profit margin rise (positive) and of the component indicating exposure to risk (negative). In the meantime, there is evidenced a reduction of the second component indicating the efficiency (negative) and a reduction of the last component estimating the performance of the financial leverage (positive). From the qualitative viewpoint, we notice a balancing in components development. Two are on the positive side and two on the negative side, against the ROAE effect. From the quantitative viewpoint, of both indicators leading to the growth, it is noticed that the main impact on the growth was provided by the component indicating risk tendency. The combination of factors determining the ROAE depicts that the ROAE growth over 2007 may be interpreted somehow more as a loss of the financial robustness of the banking system rather than as a growth of its profitability.
The banking system profitability from the core activity and the equilibrium dynamics between collection of interest-payable liabilities and investment in interest-bearing assets is depicted in both following tables:
Indicators Dec. ‘07 Sept. ‘07 Dec. ‘06 Table 25 Indicators of Interest income / average income bearing assets (1) 7.72 7.68 7.05 profitability from core activity Interest expenses / average income bearing assets (2) 3.37 3.31 2.83 in percentage (cumulative) Net interest margin (NIM)[(1) – (2)] 4.35 4.37 4.22 Source: Bank of Albania
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End of 2007 presents an indicator of the net interest margin (NIM), comparable to the previous quarter and higher than at the end of 2006. Compared with the previous period, though the NIM has remained virtually unchanged, a slight and uniform growth of both NIM components is noted. This performance is determined by approximately the same growth of interest income and interest expenses, against end of September, by 37 percent and 38 percent respectively. The dynamics of NIM components over the last quarter of the year has not reflected the dynamics and expectations for change in the base interest rate for foreign currencies, especially for the USD and the Euro41, while the base interest rate in ALL has been more stabilized. Under these conditions and taking into account the system balance to invest in interest bearing assets and to generate interest payable liabilities (the table below), we assess that under a normal situation, the NIM performance in the near future will be stable, while its components may reflect a downward trend. The conclusion may also be supported by less likelihood for a considerable growth of high risk asset share.
Compared with end of 2006, the NIM growth is evident. The main argument explaining this fact is based on the growth of high risk assets or loan portfolio, whose share has increased from 31.9 percent to 39.1 percent. However, we estimate that even the changed deposit structure in the favour of foreign currency deposits, from 38.7 percent to 42.8 percent, under the conditions when generally the interest rates in foreign currency are lower than those in ALL, and also the insignificant growth of own funds share, have influenced the NIM growth, by decreasing the growth pace of the second component.
Table 26 Average indicators Indicators Dec. ‘07 Sept. ‘07 Dec. ‘06 of profitability in ALL million Average income bearing assets (1) 670,104.54 642,101.94 556,061.61 (quarterly average) Average expense bearing liabilities (2) 614,643.50 590,466.34 513,047.56 Average assets (3) 721,498.55 689,841.85 598,393.94 (1)/(3) 0.93 0.93 0.93 (2)/(3) 0.85 0.86 0.86 Source: Bank of Albania
End of 2007 continues with stability in banking system capabilities of investing in interest-bearing assets and collecting interest-payable liabilities. This fact is expressed in the spread between both ratios unchanged over time (the table above). The dynamics of expense bearing liabilities and income bearing assets has maintained the same pace as the dynamics of total average assets. In view of this we believe that the banking system capacity to invest in interest bearing assets and to collect interest payable liabilities will be balanced even in the future.
Finally, the efficiency indicator for the last quarter of the year testifies an obvious deterioration compared with the previous quarter. This performance was determined by a larger growth of operating expenses to gross income. Compared with the last quarter of 2006, the efficiency indicator has not undergone any changes.
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Indicator December `07 September `07 December `07 Table 27 Efficiency indicator Operating expenses42 4,600.86 3,998.36 7,053.83 (non-cumulative) in ALL Operating income 9,077.06 8,743.96 3,599.74 million Efficiency (1)/(2) 0.51 0.46 0.51 Source: Bank of Albania
A constant and long-term observation of efficiency dynamics points out that within a period of one year (in cumulative terms), the banking system efficiency has meliorated from 0.52 to 0.49.
7. Non-bank financial institutions
Though with a small share to the total financial system, a number of non- bank financial institutions perform their activity in Albania.
Actually, the Bank of Albania licenses, regulates and supervises the activity of the following institutions, classified as non-bank (institutions performing financial intermediation activities and other financial intermediaries closely related to financial intermediation but not classified as deposit-takers, excluding here insurance companies and pension funds) according to the “Monetary and Financial Statistics Methodology”43 of the Bank of Albania:
• Financial Union of Tirana Ltd; • Albanian Post-Office, Jnt.Stk; • “Credins” Association Jnt.Stk., Tirana; • Mountain Area Financing Fund; • “AK- Invest” Jnt.Stk; • opportunity Albania (name changed from “Albanian Partner in Microcredit” jnt.stk., to “Opportunity Albania”, by official paper No. 1709 of 15.05.2008); • “Albanian Union of Savings and Loans” Tirana; • “Jehona” Union of savings and loan associations, Tirana; • Foreign exchange bureaus.
Actually, the share of these institutions to total assets of the banking and financial system is rather low and is estimated for year-end 2007 at 2.1 percent and 0.48 percent respectively for non-bank financial institutions and savings and loan associations, from 2.13 percent and 0.43 percent for 2006. In the meantime, the banking system continues to represent the prevailing share to the system by 97.43 percent of total assets of the financial system as at end 2007.
Loans constitute the main share to total assets of non-bank financial institutions and savings-loans associations. They are estimated to about 44.87 percent of the total balance sheet of non-bank financial institutions and about 92 percent of the total balance sheet of savings and loan associations. Other financial intermediaries where foreign exchange bureaus are included perform lending activities.
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Savings and loan associations, on the basis of the nature of their activity, which involves accepting deposits from members of associations, are not included either in bank group or in non-bank entities, but are classified as other depository corporations. They are subject to licensing and supervision of the Bank of Albania and are a constituent part of unions of savings and loan associations, which must report to the Bank of Albania on the financial position and prudential rates, on an individual basis and in a summarised way for the whole network of savings and loan associations, members of the Union.
During 2007, excluding the second quarter, the total assets of non-bank financial institutions (including herein even those entities that are not licensed by the Bank of Albania and therefore are not subject to supervision by the BoA), have constantly increased in absolute and relative terms, compared with the previous year. Also the savings and loan associations have presented a constant growth during 2007. During the first semi-annual the recorded growth was by 7.8 percent and during the second one it was by 24.1 percent.
Table 28 Asset structure Dec.’06 March ’07 June ’07 Sept. ’07 Dec. ’07 Banking system assets (in ALL mln) 624,279.28 648,339.59 667,013.92 700,078.00 742,855.10 Assets of non-bank financial institutions (in ALL mln)44 13,655.70 13,988.84 12,756.53 13,308.44 14,492.24 Growth of assets of non-bank financial institutions (in %) 13.5% 2.4% -8.8% 4.3% 8.9% Assets of the SLAs45 (in ALL mln) 2,733.66 - 2,945.58 - 3,656.58 Growth of assets of the SLAs (in %) 19% - 7.8% - 24.1% Source: Bank of Albania
Notwithstanding higher level of loans reported by non-bank entities in absolute terms, in relative terms to total balance sheet, the savings and loan associations have reported about 92 percent of total assets invested in lending activity. In the meantime, in 2007 they presented a loan portfolio of a better quality than that of non-bank institutions whose loan portfolio quality indicator on gross basis accounted for 5.91 percent at end 2007, against 1.46 percent for the savings and loan associations.
Table 29 Assets quality Indicators46 NBFI SLA TOTAL Total loans (ALL mln) 5,096.35 3,370.40 8,466.75 Total loans/total assets (in %) 44.87% 92% 56% Non-performing loans (ALL mln) 301.3 49.2 350.5 Non-performing loans /credit outstanding (in %) 5.91% 1.46% 4.1% Source: Bank of Albania
The structure of income and expenditure statement over 2007 for non-bank financial institutions, excluding those entities that are not licensed by and therefore are not supervised by the Bank of Albania, recognises the largest share of other income from activity to total income (by 42.77 percent of total income, from 45.05 percent their share was presented at the end of 2006 ); followed by interest income (by 31.36 percent, from 28.26 percent at the end of 2006), and commission income (by 19.41 percent from 20.83 percent). The above indicates the rising contribution of income from interests
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and from other activities to total income of these institutions and a decreased contribution of commission income. The expenditure structure is dominated by overall operating expenses that constitute about 49.57 percent of the total expenses, from 53.85 percent their share was presented at the end of 2006. Most of overall operating expenses continue to be occupied by personnel expenses, which in December ’06 were about 34.43 percent to total expenses and in December ’07 they were about 33.74 percent. Expenses on interests and commissions are at 6.71 percent and 0.26 percent respectively.
Net result of these institutions in 2006 totalled ALL 542 million. In the meantime, during 2007 the net result of all these institutions is estimated at about ALL 385 million, which indicates a reduction in the net result by 157 million or about 29 percent.
Net result of savings and loan associations is about ALL 31.6 million at end 2007 or about 77.5 percent higher than in 2006, thus recording the level of about ALL 72.3 million, from about ALL 40.8 million in the previous year.
Generally, the non-bank institutions observe the Regulation “On prudential rates of non-bank institution”, with the exception of one entity, which has infringed this regulation in terms of asset quality and liquidity indicator.
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E. CREDIT REGISTRY
1. Overview
During 2007 the Bank of Albania was actively committed to finalising the project for establishing a Credit Registry, within the framework of supervisory function. The Credit Registry represents an important development of financial infrastructure in Albania. It constitutes the electronic database on the Albanian banking system borrowers and treats information and data related to credit exposure of any borrower and connected persons. The Credit registry has two main goals:
• Strengthening and improving the banking system supervision in Albania. In this context, the Credit Registry supplies an additional and extremely useful instrument to deepen the analysis in real time, not only in terms of assessing the overall loan portfolio quality, but also for avoiding credit concentration by banks and borrowing entities, making a detailed evaluation of exposure of banks and borrowing entities to financing according to currencies, making a detailed assessment of collateral types and guarantees used, highlighting the links existing among different borrowing entities, evidencing connected persons, etc; • Assessing and minimising the credit risk the banking system is faced with, which increases lending with responsibility, and serves as an additional instrument in credit risk management. It aims at increasing the possibilities for performing safe lending transactions, by making available information on the borrower, encouraging efficiency and security of the lending process. Under concrete terms, the Credit Registry makes available to commercial banks the information needed for judging soon enough the loan applicant’s solvency and creditworthiness, cutting the time needed for deciding on granting a loan, thus rising credit quality and reducing credit cost. On the other hand, the borrowers with a positive credit history avail themselves of faster services and lower credit interest rates.
The credit registry system was designed and developed pursuant to the Law No. 9662 of 18.12.2006 “On Banks in the Republic of Albania”, Law No. 8517 of 22.07.1999 “On protecting personal data” and was put into operation within the specified time frame, i.e., on December 31, 2007.
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To achieve this objective, an ad-hoc work group was created. The ad- hoc work group got acquainted with credit registries operating in different countries of the region and in Western Europe, with the purpose to select the most effective project under our banking market conditions. Also, the work group was constantly consulted and advised by foreign specialised experts provided by the International Monetary Fund.
During this year the Work Group defined the technical specifications of the project and compiled the specific regulatory framework for Credit registry operation. Concretely, there was drafted and approved the Regulation “On operation of Credit Registry at the Bank of Albania”, which stipulates the basic criteria and rules for organising and operating the Credit Registry at the Bank of Albania, and the Guideline “On the procedure for issuing a report on the borrower and reviewing data retained at the Credit Registry”. The fees for using information maintained at the Credit Registry were also specified.
The Bank of Albania paid special attention to communication with the public, publishing informative brochures during project implementation and making necessary clarifications to the media.
2. Main characteristics of the Credit Registry
• participation of commercial banks in the Credit Registry by entering information according to Bank of Albania specified format is compulsory. These institutions make available information about their clients in the database of the Registry, and in exchange, they avail of the opportunity to use the database for all the borrowers of the system. Information on the borrower may be positive and/or negative. This means that besides data on punctuality of the borrower to pay off his/her financial obligations to lenders, the register will also disclose additional information related to personal data of the borrower, the main direction of his/her business, properties and collaterals declared by him/her, his/her connections to other borrowers, etc. This type of information completes the borrower’s profile, better addresses the needs of different lenders for information, meliorates decision-making and finally it potentially improves the borrower’s opportunities to be granted a loan or punishment of bad borrowers. • Credit Registry shall constitute all loans, irrespective of their value. In this way, this register enables the encompassing of all the data, even on small borrowers who operate mainly in small- and medium-sized enterprises. • Banks will be the only users at the beginning. However, the Bank of Albania’s goal is to include as users of the Credit Registry during a second stage, even other non-bank financial institutions operating in lending area. In this way, the database will be expanded with new borrowers, extending the borrowers’ community to all lending institutions. • information contained in the database shall be protected and used pursuant to the requirements under the Law “On protection of personal
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data “ and other effective laws and by-laws. At any case, to avoid any misinterpretation of information contained in the Register, the borrowers are allowed to address, through a clearly defined procedure, to the Bank of Albania to check information existing about them in the Register and to request necessary changes. • From the viewpoint of technical project implementation, there is enabled the extension of the number of users and interfacing of the Register’s database with other public registers, according to institutions’ interests. At the same time, this interfacing is likely to be carried out even by means of similar private registers, if they will develop in the future. Naturally under these cases, the regulatory framework will clearly determine the users, their rights and responsibilities.
3. Reports and information designed by the Credit Registry
Credit registry system aims at developing a broad level of products for internal and external use.
Reports designed by the Registry enable the collection of following data:
• According to credit types; • According to credit classification in respective currencies; • According to economy sectors; • According to type and legal status of the borrower; • non-performing and written-off loans by banks; • etc.
Such reports are an efficient and fast instrument, since they are ensured in real time, helping to pinpoint early the problems relating to credit, its trend and concentration according to banks, credit types, economy sectors, borrower’s status, etc., as well as they serve as an additional instrument to analyse non-performing loans by banks in particular and by the banking system in general.
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F. OTHER
1. HOUSING LOANS. FINANCIAL STABILITY IMPLICATIONS
1.1 housing loan market in Albania
Recent years have witnessed a significant house price hike, mainly in various urban and tourist areas, particularly in Tirana. It is fair to pose the question of their financing, at a time when prices vary from 500-1500 euro per m2 in Tirana, whereas the average wage of an employed is about 250 euro a month. Probably the answer goes beyond the official statistics line and money created from informal economy and remittances may serve as a financing source. However, we believe that also the extension of housing loan mainly from the banking system could partially serve as an argument. This constitutes even the optics of the following treatment.
1.2 housing market and credit market; data and facts
During the last year real estate credit grew steadily up at high levels. In the end of 2007 housing loans constituted about 22.4% of the banking system portfolio and within the year the figure went up by 82%, against 20% and 59% estimated for 2006. Housing loan portfolio growth is higher than the total loan portfolio growth for 2007, while during 2006 the growth was considerable. Referring to the share of real estate credit to total household loan portfolio, 2007 indicates a relatively higher share against 2006, or 62% to 60%. Compared with countries of Eastern and South-eastern Europe, most of which have already joined the European Union over last two years, the loan portfolio growth in Albanian banking system seems to have caught up the growth rates of the Baltic Republics, which are high.
In Albania’s case, we deem that one of the reasons may be even the small accrual base and in consequence, the catching-up effect. Compared with countries with a consolidated economy and very developed banking system, mainly the 12 countries of the EU, the loan portfolio growth in our banking system is very high.
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Table 47 30 Housing loan indicator in some EU member states Housing loan per resident (in eur) Housing loan growth per home (%) Housing loans stock per home (eur mld) UK 23,560 9.5 1,414 Germany 14,100 0.5 1,163 France 8,316 16.5 503 Netherlands 29,887 11.9 487 Spain 11,050 23.6 476 Italy 4,167 18.1 244 Portugal 7,546 11.7 79 Greece 4,101 33.4 45 EU 15 13,011 10.4 5,015 EU 25 11,184 10.7 5,140 Source: Quarterly Reviews of European Mortgage Federation
Currently48, the housing loan level accounts for about 6.9% of Gross Domestic Product or about Eur 173 loan per resident, from 4% and Eur 96 loan per resident. The last indicator results obviously lower than the average level of the EU, and is still far from the levels of the countries that have joined the EU some years ago. However, compared with any country like Romania, surprisingly this indicator seems higher for Albania and maybe this is due to specific features that Romania’s residential real estate developments might have carried over from the past49.
Table 3150 Housing loan Housing loan to Housing loan per Housing loan Housing loan indicator in Albania and in GDP (%) resident (in eur) growth (%) stock (Eur mld) some new EU member states Leetonia 19.6 1,088 97.2 2.5 Lithuania 7.7 552 80.2 2.2 Estonia 24.8 1,944 74.5 2.6 Czech Rep. 6.2 589 63.4 6 Slovenia n/a 651 62.7 1.3 Poland 5.4 384 51.9 14.6 Slovakia 8.2 572 40.1 3 Hungary 10.5 912 21.3 9.2 Russia 0.2 35 152 5 Bulgaria 4.8 130 97.2 1 Romania 1.8 67 76 1.4 Croatia 11.3 856 31 3.8 Albania 51 6.9 173 82 0.5 Source: Quarterly Reviews of European Mortgage Federation
During 2007 the new housing loans account for about ALL 35.4 billion or 49% of the new household loans, against ALL 21 billion or 50% for 2006. Similar to 2006, even the 2007 developments indicate a very positive performance of real estate loans. The principal reasons that have supported this performance would be, but not limited to, as follows:
• rapid price rise for flats in the recent years. According to information from real estate market agents, most of them believe in a price rise on average above 16% during 2007 against 20% in 200652. The current high price level which varies from euro 500-1500, steers the demand to finance the residential real estate purchase, under the conditions when the accumulation from income flow generally turns out to be
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insufficient. Therefore, the flat price acceleration is a factor that steers real estate loans. In this context, it should be taken into consideration that in developed markets, the correlation of house price to housing loan is strong and existent. Both indicators impact reciprocally on each- other. • increased lending to purchase a house is influenced by both sides of the market: by banks’ willingness to make use of new credit market segments, and by public demand for credit. Particularly in recent years the households’ interest to obtain a loan has been increasing. This tendency represents, besides the economic factors, even a change in their social behaviour, which is reflected in satisfying the needs and desires to raise the well-being. The data speak for the creation of a new culture, which is likely to gain stability in the future, as it has been testified even in countries with an advanced banking system. Also, we assess that the upward promotion of banks’ products to finance residential real estate purchases makes this reality more tangible and credible. • under the pressure of a higher competition, banks have sought to use new loan market spaces, addressing even to housing credit market. Currently this market is dominated by five banks, mainly by large- and medium- sized banks53, which share among them about 80% of the housing loan market. The weight of this portfolio for these banks taken separately varies from about 21%, to 47% of the total loan portfolio, against 18% to 40% in the end of 2006. In the meantime, we emphasise that for many banks, housing loans help in diversifying loan portfolio and maintaining the lender’s quality, and constitute a lower cost of their capital54. • Surveys have indicated that purchasing a house, under the conditions of lack of a capital market, is deemed a good investment possibility for many households.
Banks in Albania extend housing loans at fixed and variable interest rates, which are generally conceived as of interest for a certain period, after which variable interest rates are applied. They vary by loan currency and within the same currency by counterparty’s risk profile. Currently, the average housing loan rate is between 7.7 % and 12.6%55. Data show that most of banks extend housing loans in euro. We believe this fact is related to house prices in euro, but also because the base interest rate in this currency, at least referring to the period till end of 2007, was significantly lower and later on comparable to usd56, and lower than in ALL.
Banks extend loans covering on average 80 % of the collateral value pledged for obtaining a credit. This indicator is at comparable levels with those of advanced countries and with an enlarged housing loan portfolio, while the terms for the settlement of a housing loan vary from 5 years to 20 years, against a settlement period generally above 20 years in developed countries.
Indicators that have to do with the geographical distribution of housing loans speak for an underlined asymmetry and a concentration mainly in
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Tirana area and in coastline areas, in Durres and Vlora. Data show that over 69% of loans are concentrated in Tirana and about 12% in coastline areas. These indicators speak for a greater dynamics of the housing market in these areas, compared with other regions of Albania and in consequence, even for high prices. Also, we underline that a considerable part of the demand for house in these regions, particularly in coastline areas, is encouraged by second-house purchases.
1.3 housing market and credit market development in the future. Financial stability implications
The housing market development is estimated relatively impossible, if the banking sector does not follow liberal and supporting financial policies. Generally the households do not accumulate sufficient savings, while frequently we face an asymmetry between the demand and supply for house, due to various reasons. This panorama often causes a constant house price rise, which naturally can not be faced with personal or family savings. Over long- term periods, the relative house prices tend to go up by a relatively similar rate to gross domestic product per capita growth. Concerning advanced countries, for example for years 1971 -2003 there results an average figure at 1.75% a year (Shelburne and Palacin). Taking into account constant income growth in Albania, which is projected to be as such even in the coming years, as well as abstracting other factors, the forecast may indicate a further rise of average house price level. These developments may encourage the housing loan demand, under the conditions when interdependence between price rise and housing loan demand is lately observed even in Albania.57
But, the housing loan availability is related to long-term funds availability from the banking system. Currently, the deposit structure presents a profile, according to which about 96% of them coincides with a short-term maturity58 or less than one year. In the meantime, the housing loans consist in long run, depicting an obvious maturity mismatch59. This fact restricts the banking system’s ability to contribute to a gradual and prudential housing market growth. Also, sufficient support from the banking system should be co- associated even with a steady demand. This relation depends above all on lending cost, financing terms or their change, individual abilities to serve the debt on the basis of future money flow perception, as well as current living conditions or population age. Particularly the latter ones may be deemed supportive for positive development in the housing market and housing loan market in Albania.
The housing loan performance and housing market development are closely related to legal infrastructure and institutions’ efficiency, creating the necessary environment and playing a significant role in good performance of housing loans, besides the banking system and economic factors. In this context, we should emphasise that real estate register is presented as problematic. An insufficient documentation, inaccurate records, or disagreements and conflicting claims on property are highlighted among the long variety of
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problems. Official evidences indicate that a considerable number of legal processes on civil causes have to do with disagreements related to property issues. Furthermore, even trials in general are not reliable to really support and help creditors own the collateral. These trials have their own features in different regions of Albania, but related to the result they are often over- extended and a number of appeals follow-up, until reaching any potential fair decision. Moreover, the process continues as problematic because the execution office is assessed as having a low performance. Finally, there does not exist a formal and efficient market for trading the real estates and therefore, even the dwellings. This means that the collateral price, if it were to be sold in the best case, it would be in creditor’s disfavour and would not reflect the fair market value.
Notwithstanding the current difficulties, the housing loan market is still regarded as a developing market and as having potential for extension in the future. This fact was confirmed even by commercial banks for 2006 and onward. Loan portfolio diversification, overall good housing loan portfolio quality because of some reasons, and demand for credit, are believed to promote banks towards being active in this market in the future. Also, the upward tourism profile image for Albania will encourage not only the domestic demand, but also the foreign one to invest in residential real estates. This development may continue with further rise of the demand for credit for this purpose.
The strengthening of the legal state and the struggle against informal economy may provide a qualitative impulse for the sustainable growth of the housing loan level and may formalise construction sector in the future. However, the struggle against informal economy, particularly under the conditions of a rapid reduction of financing in construction sector by informal financial sources, might provide implications for the financial stability. A source would be price volatility in real estate market, and in consequence even that of houses60, under the conditions when orientation and flexibility of the Albanian banking system to make use of new possibilities is not known for sure.
From the viewpoint of the financial stability, the most volatile macroeconomic environment in transition economies, potentially even in Albania, may cause a more evident fluctuation of house prices, as their price, similar to that of any other means, depends even on the present expectation for the future income flow (Shelburne and Polacin). For example, if the forecasting on economic growth and future income is improved, under the conditions when house supply is essentially fixed over short-term periods, the changed demand from income reviewing may lead to a relatively rapid house price rise. This situation may be reversed when the adjustment effect on the supply side or a non- good performance of the economy is felt, meaning a house price decrease, which may frequently be exaggerated. This moment may also constitute a critical point for the adequacy of the banking system guarantees related to housing loan quality. Even in developed economies, where the forecasting for economic growth and income is more stable, volatility is noticed in the house prices in the long run. For example, in Great Britain the change of
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the nominal and annual house price fluctuated from -10% to 30% in 1988 – 2000 (Cambell and Cocco).
Extending loans in foreign currency is a prevailing feature of credit in Albania, while borrowers’ income is usually generated in ALL. Under these conditions, an interest rate rise, coupled with lek’ s likely depreciation, would transfer interest rate and foreign exchange rate risk to an indirect credit risk of the banking system. This panorama, which may be associated also with breaking of macroeconomic equilibrium, may lead to housing credit quality deterioration or households’ insolvency. Under such situation, banks would have to cover possible losses from collateral execution. This process would turn out to be as much difficult from both the institutional viewpoint and the deformations one, which may cause a supply for block sales of collateral houses in market prices.
Concluding, we underline that housing loan market carries over important implications closely interrelated with many sectors of the economy and financial markets. Housing loan portfolio performance in particular, constitutes an important contribution to financial stability dynamics. Non-good performance of a certain segment of housing loans in USA that started in the second half of 2007, targeted to borrowers of doubtful credence, caused stagnation beyond the real estate sector and with global effects. It was turned into a serious confidence crisis within the banking sector, a confidence crisis against the potential borrowers beyond the banking sector, overall lack of security in the market, disbalances in some macroeconomic indicators and in consequence economic growth reduction. However, actually in Albania this market remains to be explored, with premises for the future, towards approximation to advanced European levels.
2. Albanian banking system position related to IFRS
2.1 the overall structure and legal framework that regulates the implementation of the IFRS
Legal regulation for implementation of the IFRSs is done under the Law No. 9228, dated 29.04.2004 “On accounting and financial statements” (amended). The new law on accounting aims at using the International Financial Reporting Standards for economic units of public interest and simplified reporting requirements for the SMEs. The Law has stipulated the National Council of Accounting as the responsible authority of the state for translating and disclosing the IFRSs. During May 2008, the translation of international financial reporting standards was completed and with decision of the Minister of Finances of 05.05.2008, these standards were announced and made compulsory for implementation as from January 1, 2008.
As concerns banking institutions, it should be highlighted that until now their accounting practices have been regulated under the “Banking Accounting
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Manual”. This manual has been drafted by the Bank of Albania and has been approved with the decision of the Council of Ministers on 30.12.1998. At the time of its drafting (with the assistance of foreign experts) and approval, it may be stated that it was largely in accordance with the international accounting standards (IAS) version disclosed in 1998. Since then, the standards have been enriched and the banking activity has become more diversified.
2.2 iFRS implementation approach
During 2007 the Bank of Albania, through its Supervision Department, has carried out an intensive activity in terms of preparations for IFRS implementation. We are briefly presenting some of the main focuses of work in this direction:
a. There was drafted and delivered to commercial banks an assessment questionnaire on the degree of knowledge on international accounting and financial reporting standards, as well as on the difficulties the banks may confront in their activity for their complete implementation as required by law. The questionnaire revealed some important conclusions, which are presented in the following:
- related to preparations for IFRS implementation, virtually all banks present a satisfactory level. However, the preparation level varies among banks, which may be outlined in two large groups. The most active banks, those owned by or belong to a banking group with headquarters in the European Union, are audited and prepare the financial reporting as part of the group and in accordance with the EU’s legislation requirements. In general, it may be stated that these banks have broader knowledge of these standards and are relatively more prepared for their implementation. The fact that specialised structures of the parent banks or of the banking group support this process is a better guarantee for correct implementation of IFRSs.
In the meantime, a more restricted level of knowledge is noted in banks that are not part of any banking group or in those which lack the support from specialised parent bank structures. Related to these banks, it is worth mentioning that headway is made in terms of preparations for implementing the IFRS and for expanding the knowledge on them.
- of special importance are even the conclusions on difficulties the banks themselves have identified in terms of IFRSs implementation. One of the standards assessed to present most difficulties in terms of IFRS implementation is the IAS 39, related to market value assets evaluation. In reality, some restrictions have been used in applying IAS 39.
b. Supervision Department has started a constant communication with individual banks, with the aim to reach accurate conclusions on the situation in which banks and their structures are found, in relation to available capacities and difficulties that may derive from complete
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standards implementation. Related to this issue we have communicated with and have also received positive response of external auditing companies.
Our dialogue with banks, in certain cases has been associated with the requirement for intensification of staff training programs. Also, through periodic examinations and direct contacts with bank management structures, we have requested from banks the drafting of assessment materials for the effect of keeping bank accounting according to IAS/IFRS, and for analysing the main changes to the existing Banking Accounting Manual.
c. During 2007 it was aimed at broadening and improving knowledge on supervision in terms of international accounting and financial reporting standards. This was intended to be achieved through individual and massive trainings for the whole Supervision Department, which will continue even during 2008.
d. Supervision Department was also focused on preparing an assessment on changes existing between the Banking Accounting Manual and the IFRSs. We have had a fruitful communication with external auditing companies even about these issues.
2.3 potential impacts of the IFRSs on banks’ financial statements
a. Banking Accounting Manual does not reflect changes in the International Accounting Standards 1998. IAS 30, Explanatory Notes to Financial Statements, IAS 32, Financial Instruments: Introduction and Explanation, IAS 39, Financial Instruments: Recognition and Measuring are not treated. Therefore, Banking Accounting Manual has important distinctions from IFRSs, particularly related to recognition, measuring and explaining financial instruments and the nature of risk degree deriving from these instruments. This may impede users of bank financial statements in obtaining a correct and real presentation of banks’ financial statements.
b. Scheme of creating reserve funds for loans makes an obvious distinction between Banking Accounting Manuals and IAS 39. According to the Banking Accounting Manual, banks should define loan classification under five categories, based on a matrix that specifies minimum provisioning rates for each category (Standard – 1%; Special Mention – 5%; Sub-standard – 20%; Doubtful – 50%; and Loss loans – 100%). Though this approach may be regarded as appropriate for prudential reasons, it is not in accordance with IAS 39, which requires that credit assessment/estimate must be calculated as a difference between credit accounting value and present value of future forecasted currency flows.
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c. Recognition of unrealised gains for available for sale securities. Pursuant to stipulations of the Banking Accounting Manual, securities classified as available for sale are estimated at market value. Prudence principle is applied for these securities, which implies that not profits but losses that pass from the capital are recognised, whereas the IAS 39, being based on the market value, recognises these gains, though they may be unrealised. Hence, current stipulations of the Banking Accounting Manual provide a more prudential consideration in terms of unrealised gain recognition for available for sale securities.
d. According to IFRS, shareholders’ equity should be held at historical cost. The Banking Accounting Manual requires that banks re-evaluate their capital using current exchange rate, which leads to creation of a difference because of exchange rates. This revaluation difference is also included in the regulatory capital estimate and in consequence even in calculating the capital adequacy ratio. Such an accounting treatment changes from the treatment according to IFRSs, which require that capital must be considered as a “non-monetary asset” and therefore, should be measured at historical cost. The converting is performed by using the exchange rate on the transaction date and in consequence, no effect deriving from exchange rate changes is recorded.
e. Non-recognition of accrued interest on non-performing loans is not in accordance with the methodology of discounting future flows according to IAS 39. According to the existing regulatory framework, banks suspend recognition of accrued interest on non-performing loans (sub- standard, doubtful, lost). Though this suspense of interest accrual is rational under the prudence context, it is not in accordance with the IAS 39 (refer to IAS 39, guideline on (AG) implementation, Section 93).
f. Banking commissions are recognised at the moment of benefit, while according to IFRS their recognition in statements of income and expenditures should be carried out using the effective interest rate method. According to the Banking Accounting Manual, commissions related to lending activity are recognised in the statements of income and expenditures as income and expenditures not from interest, at the moment they take place respectively. This methodology is not in line with IAS 39 methodology for measuring financial instruments, which requires that commissions are postponed and amortised in the statement of income and expenditures, as income and expenditures from interests, using the effective interest rate of the instrument.
g. Forex forward contracts are not recorded in financial statements. The Banking Accounting Manual requires that forex forward contracts are regarded as off-balance sheet items. Therefore, gains or losses from forex forward contracts are booked on the payment date. This methodology is not in line with IAS 39, which requires that all derivative instruments, forex forward contracts included, are measured at fair value, where the differences in value are recorded in the income and expenditure statements or in the capital statement.
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Box: International financial reporting standards and prudential supervision
IFRSs, particularly standard IAS-39, present accounting principles that have a considerable impact on the measurement and nature of elements, which are used to measure the regulatory capital. These elements, according to directives for a safe and sound supervision, should fulfil some specified features. They should be stable, ready to absorb losses, accurate and reliable from the quantitative viewpoint and the measurement way. Therefore, the Basle Committee has prepared and recommended some prudential filters, which aim at neutralising the undesirable impact of IFRS implementation in the capital position. Some of them are as follows:
a. Gain or loss on financial instrument portfolio, classified as available for sale.
Non-inclusion of unrealised gains in capital, though the institution’s capability of realising these gains in the future is unsecure. A concrete case is the securities classified as available for sale. The unrealised gains of these securities affect bank’s capital, while they do not fulfil the features to be part of regulatory capital, as above stated.
b. Own credit risk
Financial institutions should not recognise gains caused by change of own credit risk and that may impact on regulatory capital. Deterioration of portfolio and credit quality of a financial institution may lead to decreased value of securities the institution has issued and in consequence, to increased gain/loss, in case the institution uses the fair value option for the measurement of its liabilities. Such a situation is absurd. It does not reflect the economic reality and presents misuse of the financial position.
Also, the implementation of the IFRSs raises the concern related to financial stability, as a consequence of increased volatility of the financial position of financial institutions. Responding to these concerns, a number of broad discussions between the Basle Committee on Banking Supervision and the highest international authority have taken place.
Under concrete terms, the problems going with IAS 39 in terms of creating reserve credit funds, spring from the conflict between priorities of supervisors and accounting authorities. According to accounting experts, priority consists in reflecting the financial position genuinely and at any time. In this sense, only losses from assets are recognised, which are materialised or for which there are objective evidences that are materialising. According to supervisors, priority is given to ongoing prudence and a forward-looking evaluation is encouraged for longer periods than a certain moment (the moment when the measurement is made) of losses, encompassing current losses as well. Risks and losses are not caused in bad times, but they are increased in good times and are materialised in bad times.
Under this context, we may state that IAS 39 authorises credit provisions only in the event there exists an identifying loss, leaving aside the dynamic provisioning concept, which is based on creating provisions at the moment of credit origin, based on potential loss. IAS 39 permits only creation of discretionary provisions and does not accept the principle of creating overall reserve funds. In consequence, this standard encourages procyclic behaviour on the side of banks: low levels of reserve funds under economic boom situations and vice-versa under the conditions of economic
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recession, banks will tend to overestimate risk, associating it with provisioning increase, lending restrictions…., etc.., in consequence, further worsening of economic situation. In essence, this behaviour of the system leads to increased amplitude of the economic cycle and therefore to breaking of financial stability.
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G. aNnEx
aNnEx 1. ORGANISATIONAL CHART OF THE BANKING SUPERVISION DEPARTMENT (dated December 31, 2007)
DIRECTOR Credit Register Office MR. INDRIT BANKA (4 employees)
DEPUTY DIRECTOR DEPUTY DIRECTOR MR. BLEDAR SHELLA MRS. MIRANDA RAMAJ CHIEF OF ON-SITE CHIEF OF LICENSING, AND OFF-SITE DIVISION REGULATIONS AND STANDARDS DIVISION
On-site Unit Off-site Unit Licensing Unit Regulations, and Standards Unit (21 employees) (4 employees) (3 employees) (4 employees)
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Annex 2. Each bank’s specific share to the banking system
Each bank’s specific share to the banking system Total balance Shareholders’ Credit BANKS Treasury bills Total deposits sheet equity outstanding (Indicator in %)
ITALIAN ALBANIAN BANK 3.7 3.4 3.0 6.3 3.9 Raiffeisen Bank 31.9 26.3 20.2 43.7 34.6 United Bank of Albania 0.7 2.0 0.6 0.0 0.6 ITALIAN DEVELOPMENT BANK 0.4 1.6 0.7 0.0 0.3 NATIONAL COMMERCIAL BANK 13.4 9.1 9.8 16.0 14.8 TIRANA BANK 9.1 12.5 14.4 5.0 8.1 INTERNATIONAL COMMERCIAL BANK 0.7 2.0 0.5 0.4 0.6 AMERICAN BANK OF ALBANIA 10.6 8.8 10.6 2.4 10.9 PROCREDIT BANK 4.0 4.1 4.9 3.9 4.1 EMPORIKI BANK 2.8 3.8 6.0 0.8 1.4 NATIONAL BANK OF GREECE (TIRANA BRANCH) 4.2 3.0 8.3 1.0 2.2 ALPHA BANK - ALBANIA 7.1 9.4 10.6 8.5 7.1 FIRST INVESTMENT BANK (TIRANA BRANCH) 0.3 1.8 0.2 0.1 0.2 CREDIT BANK OF ALBANIA 0.3 2.1 0.2 0.1 0.1 CREDINS BANK 4.8 3.2 5.5 3.7 4.9 POPULAR BANK 5.0 5.3 3.6 7.9 5.2 UNION BANK 1.1 1.7 0.9 0.3 0.9 TOTAL 100.0 100.0 100.0 100.0 100.0
Annex 3. Assets and liabilities
In ALL million DESCRIPTION December 2006 December 2007 TOTAL ASSETS 624,279.28 742,855.10 Treasury and interbank transactions 316,086.02 293,066.38 Cash in hand 13,827.08 16,008.58 Transactions with the Central Bank 55,378.49 67,059.74 Required reserve of central bank 48,395.08 56,684.97 Other 6,983.41 10,374.77 Treasury bills and other bills eligible for refinancing with CB 164,281.58 127,036.95 Treasury bills 164,281.58 127,036.95 Other bills eligible for refinancing 0 0 Reserve funds for other eligible bills for refinancing with CB 0 0 Transactions with banks, credit institutions and other financial institutions 82,598.86 82,961.12 Current accounts 3,994.97 2,624.92 Deposits with banks, credit institutions and other financial institutions 76,221.71 77,263.21 Loans 1,219.39 1,159.25 Other 1,162.80 1,913.74 Operations with customers (gross) 196,864.51 290,554.49 Loans to private sector and individuals 186,571.90 273,495.65 Short-term loans 50,497.23 73,928.02 Medium-term loans 60,491.61 72,871.73 Long-term loans 37,312.40 63,746.48 Real estate loans 38,223.24 62,871.24 Finance lease contracts 47.41 78.19 Loans to public administration 0.00 0 Current accounts 0.00 0 Loans 0 0 Other accounts 0 0
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Other customer accounts 10,292.62 17,058.84 SECURITIES TRANSACTIONS 91,954.16 133,317.37 income securities 91,764.78 133,317.37 Variable income securities 189.37 0 Securities purchased and sold under REPO 0 0 Paid collateral 0 0 Received premiums 0 0 PROVISIONS (3,404.37) (4,634.13) Provisions for covering losses from loans (principal) (3,344.55) (4,497.99) Provisions for covering losses from loans (accrued interests) (59.82) (136.14) Investment provisions 0 0 OTHER ASSETS 5,353.94 9,637.85 Other assets 3,039.27 3,525.30 Agent transactions 1,331.94 4,563.39 Inter-office accounts 73.34 90.76 Suspense, difference and position accounts 909.39 1,458.07 Suspense accounts 895.72 1,426.62 Position accounts 13.67 31.45 Value added tax 0 0.32 ASSETS 9,514.51 11,102.38 Investments on participation equity 93.77 12.37 Affiliates 619.25 92.25 assets (net) 8,801.49 10,997.76 ACCRUED INTERESTS 7,910.51 9,810.76 Accrued interests (Class 1) 5,090.49 5,214.69 Accrued interests (Class 2) 1,097.11 1,904.10 Accrued interests (Class 3) 1,722.91 2,691.97 Total assets in foreign currency 276,109.34 347,272.96 Total assets of non-residents 103,747.94 98,662.21
In ALL million DESCRIPTION December 2006 December 2007 TOTAL LIABILITIES 624,279.28 742,855.10 TREASURY AND INTERBANK TRANSACTIONS 47,184.40 42,153.94 Central Bank 1,273.84 344.35 Treasury bills and other eligible bills 8,850.00 1,507.77 Current account 2,558.55 2,282.88 Deposits from banks and other financial institutions 8,261.39 8,649.16 Loans 14,424.16 28,151.41 Other 11,816.46 1,218.37 OPERATIONS WITH CUSTOMERS 520,281.86 621,818.92 Public administration 3,875.48 3,103.64 Current account 3,601.01 2,620.11 Demand deposits 0 0 Time deposits 71.50 354.71 Loans 202.96 128.81 Other 0 0 Private sector 516,406.38 618,715.28 Current account 89,356.99 119,549.75 Demand deposits 53,608.77 41,635.48 Time deposits 360,305.54 445,739.76 Other 12,522.46 11,328.50 Certificate of deposits 612.63 461.79 SECURITIES TRANSACTIONS 0.00 0.00 Debts represented by securities 0 0 Securities sold under REPO 0 0 Collateral on securities transactions 0 0 Premiums on financial instruments 0 0
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OTHER LIABILITIES 5,325.23 7,647.61 Other liabilities 2,571.77 2,840.76 Agent transactions 366.83 406.36 Inter-office accounts 384.64 2,148.60 Suspense, difference and position accounts 2,001.94 2,251.89 Difference accounts 1,997.25 2,221.52 Position accounts 4.69 30.37 Value added tax = (form. 21) 46 0.05 0.01 PERMANENT RESOURSES 46,107.85 62,771.35 Grants and public financing 2.63 0.00 Discretionary provisions 2,384.86 3,675.10 Provisions for risk and expenses 2,232.04 3,510.70 Discretionary provisions 152.82 164.40 Subordinated debt 1,558.15 2,465.46 Shareholders’ equity 42,162.22 56,630.78 Paid in capital 34,768.44 41,121.73 Share premiums 363.53 1,401.09 Reserves 3,309.40 4,192.33 Difference of revaluation (4,611.47) (5,088.09) Retained earnings (loss) 1,280.98 4,437.05 Current year profit (loss) 7,051.34 10,566.67 ACCRUED INTERESTS 5,379.93 8,463.28 Accrued interest (Class 1) 111.75 132.21 Accrued interest (Class 2) 5,243.67 8,294.89 Accrued interest (Class 3) = (form 21) 339 + 3429 0 0 Accrued interest (Class 5) 24.51 36.19 Total liabilities in foreign currency 274,890.07 348,530.30 Total liabilities of non-residents 39,847.37 45,367.28
Annex 4. Basic financial indicators
BASIC FINANCIAL INDICATORS (in percentage, if not otherwise stated) Indicators 31 December 2007 Regulatory capital to risk weighted assets 17.1 Basic regulatory capital to risk weighted assets 16.0 Basic regulatory capital to total assets 5.8 Regulatory capital to total assets 6.2 Shareholders’ equity to total assets 7.6 Net non-performing loans from provisions to basic regulatory capital 12.0 Net non-performing loans from provisions to regulatory capital 11.2 Net non-performing loans from provisions to shareholders’ equity 9.1 Return on equity 20.7 Open foreign-currency position to basic regulatory capital 1.8 Open foreign-currency position to regulatory capital 1.7 Open foreign-currency position to shareholders’ equity 1.4 Liquid assets to total assets 49.8 Liquid assets to short-term liabilities 55.6 Return on assets 1.6 Non-performing loans to total loans 3.4 Net interest income to gross income 92.7 Operating expenditures to gross income 54.9
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Annex 5. Bank network extention indicators as at end 2007 and the number of employees
Bank network extention indicators as at end 2007 and the number of employees No. of branches No. of agencies No. of branches Number of No. Banks in the country in the country outside Albania employees 1 Raiffeisen Bank 9861 1,373 2 NATIONAL COMMERCIAL BANK 21 20 162 519 3 United Bank of Albania 3 1 56 4 ITALIAN ALBANIAN BANK 7 66 5 ITALIAN DEVELOPMENT BANK 4 41 6 TIRANA BANK 39 4 437 7 NATIONAL BANK OF GREECE (TIRANA BRANCH) 5 19 251 8 INTERNATIONAL COMMERCIAL BANK 5 56 9 ALPHA BANK - ALBANIA 23 1 171 10 AMERICAN BANK OF ALBANIA 8 15 4 400 11 PROCREDIT BANK 24 1 711 12 EMPORIKI BANK - ALBANIA 4 7 158 13 CREDIT BANK OF ALBANIA 2 1 33 14 CREDINS BANK 21 4 275 15 POPULAR BANK 33 360 16 UNION BANK 12 12 166 17 FIRST INVESTMENT BANK - ALBANIA 4 1 82 T O T A L 306 93 5 5,155
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Annex 6 List of licensed entities
Banks and branches of foreign banks licensed by the bank of albania
1. RAIFFEISEN BANK Jnt.Stk. Licence No.2/1998, dated 11.01.1999 Approved with the Bank of Albania Supervisory Council Decision, No. 163, dated 11.12.1998 Certificate No. 2 “On Deposit insurance” Director: Oliver WHITTLE Address: Bulevardi “Barjram Curri”, European Trade Center, Tiranë Tel.: 226 699, 224 540, 222 669, 225 416 Fax: 275 599, 223 587, 223 695, 224 051
2. UNITED BANK OF ALBANIA Jnt.Stk. Licence No.3/1998, dated 11.01.1999 Approved with the Bank of Albania Supervisory Council Decision, No. 165, dated 11.12.1998 Certificate No. 3 “On Deposit insurance” Director: Abdul Waheed ALAVI Address: Bulevardi “Dëshmorët e Kombit”, No.8, Tirana, Albania Tel: 22 84 60, 22 38 73, 22 74 08 Fax: 22 84 60, 22 83 87
3. ITALIAN DEVELOPMENT BANK Jnt.Stk. Licence No.5/1998, dated 11.01.1999 Approved with the Bank of Albania Supervisory Council Decision, No. 164, dated 11.12.1998 Certificate No. 4 “On Deposit insurance”. Director: Libero CATALANO Address: Bulevardi “Deshmorët e Kombit”, Ndërtesa Kullat Binjake, Tiranë Tel: 280 351 / 2 / 3 / 4 / 5 Fax: 280 356 Email: [email protected]
4. NATIONAL COMMERCIAL BANK Jnt.Stk. Licence No.6/1998, dated 11.01.1999 Approved with the Bank of Albania Supervisory Council Decision, No.162, dated 11.01.1999 Certificate No. 5 “On Deposit insurance” Director: Seyhan PENCAPLIGIL Address: Bulevardi “Zhan D’Ark”, Tirana, Albania. Tel: 250 955 Fax: 250 956
5. TIRANA BANK Jnt.Stk Licence No.7, dated 12.09.1996 Approved with the Bank of Albania Supervisory Council Decision, No.9, dated 12.09.1996 Certificate No. 6 “On Deposit insurance” Director: Dimitrios FRANGETIS Address: Rruga “Deshmoret e 4 Shkurtit”, PO BOX 2400/1, Tirana Tel: 269 616 / 7 / 8, 233 441, 42, 43, 44, 45, 46, 47 Fax: 233 417, 369 707 E-mail: [email protected]
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6. NATIONAL BANK OF GREECE - TirANA BRANCH Licence No.8, dated 25.11.1996 Approved with the Bank of Albania Supervisory Council Decision, No.4, dated 14.03.1996. Certificate No. 7 “On Deposit insurance” Director: Ioannis LEIVADITIS Address: Rruga e Durrësit, Godina “Comfort”, Tirana, Albania. Tel: 274 802, 274 822 Fax: 233 613 E-mail: [email protected]
7. INTERNATIONAL COMMERCIAL BANK Jnt.Stk Licence No.9, dated 20.02.1997 Approved with the Bank of Albania Supervisory Council Decision, No.9, dated 30.04.1996 Certificate No. 8 “On Deposit insurance” Director: Mahendra Sing RAWAT Address: Qendra e Biznesit, Rruga “Murat Toptani”, Tirana, Albania. Tel: 254 372, 256 254 Telfax: 254 368 E-mail: info@icbank – Albania.com
8. ALPHA BANK - ALBANIA Licence No.10, dated 07.01.1998 Approved with the Bank of Albania Supervisory Council Decision, No.01/03/96, dated 27.12.1997 Certificate No. 9 “On Deposit insurance” Director: Andreas GALATOULAS Address: Bulevardi “Zogu I”, Nr.47, Tirana, Albania. Tel: 233 359, 340 476, 240 477 Telfax: 232 102
9. AMERICAN BANK OF ALBANIA Jnt.Stk. Licence No.11, dated 10.08.1998 Approved with the Bank of Albania Supervisory Council Decision, No.105, dated 10.08.1998 Certificate No. 10 “On Deposit insurance” Director: Lorenzo RONCARI Address: Rruga “Ismail Qemali” Nr.27, P.O. Box 8319, Tirana, Albania. Tel.: 248 753 / 4 / 5 / 6, 276 000 Telfax: 248 762 E-mail: [email protected] Website: www.albambank.com Internet banking: www.ambankalb.com
10. PROCREDIT BANK Jnt.Stk. Licence No.12, dated 15.03.1999 Approved with the Bank of Albania Supervisory Council Decision, No.22, dated 03.03.1999 Certificate No. 11 “On Deposit insurance” Director: Frieder WOEHRMANN Address: Rruga “Sami Frashëri”, Tirana e Re, P.O. Box. 2395, Tirana, Albania Tel: 271 272 / 3 / 4 / 5 Telfax: 271 276 E-mail: [email protected] Website: www.procreditbank.com.al
11. EMPORIKI BANK - ALBANIA Jnt.Stk Licence No. 14, dated 28.10.1999 Approved with the Bank of Albania Supervisory Council Decision, No.105, dated
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19.10.1999 Certificate No. 13 “On Deposit insurance” Director: George CARACOSTAS Address: Rruga e Kavajës, Nr. 59, “Tirana Tower”, Tirana, Albania Tel: 258 755/56/57/58/59/60 Telfax: 258 752 E-mail: [email protected]
12. CREDIT BANK OF ALBANIA Jnt.Stk. Licence No. 15, dated 28.08.2002 Approved with the Bank of Albania Supervisory Council Decision, No.66, dated 28.08.2002 Certificate No. 14 “On Deposit insurance” Director: Kamal Abdel MONEIM Address: Rruga “Perlat Rexhepi”, Al-Kharafi Group Administration Building, Kati 1&2,Tirana, Albania. Tel.: 272 168; 272 162 Fax: 272 162 E-mail: [email protected]
13. CREDINS BANK Jnt.Stk. Licence No. 16, dated 31.03.2003 Approved with the Bank of Albania Supervisory Council Decision, No.22, dated 26.03.2003 Certificate No. 15 “On Deposit insurance” Director: Artan SANTO Address: Rruga ‘’Ismail Qemali’’, Nr.21, Tirana, Albania. Tel: 234 096, 233 912, 258 252 Fax: 222 916 Website: www.bankacredins.com E-mail: [email protected]
14. PopulAr Bank Jnt.Stk Licence No.17, dated 16.02.2004 Approved with the Bank of Albania Supervisory Council Decision, No. 06, dated 11.02.2004 Certificate No. 16 “On Deposit insurance” Director: Henri Maus de Rolley Address: Bulevardi “Dëshmorët e Kombit”, Twin Towers, Kulla 1, Kati 9, Tirana, Albania. Tel: 280 442/3, 272 788, 272 789, 272 790, 272 791 Fax: 280 441, 272 781 Mobile 068 (69) 20 60 974 E-mail: [email protected] Website: www.bpopullore.com
15. UNION BANK Jnt.Stk. Licence No.18, date 09.01.2006 Approved with the Bank of Albania Supervisory Council Decision, No. 101, dated 28.12.2005 Certificate No. 17 “On Deposit insurance” Director: Gazmend KADRIU Address: Bulevardi “Zogu I”, pallati 13 katësh, përballë stacionit të trenit Tel: 250 653 / 258 081 Fax: 250 654 / 272 880 E-mail: [email protected] Website: www.unionbank.com.al
16. FIRST INVESTMENT BANK, ALBANIA Jnt.Stk Licence No. 19, dated 06.07.2007.
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Approved with the Bank of Albania Supervisory Council Decision, No.35, dated 27.06.2007 Certificate No. 12 “On Deposit insurance” Director: Bozhidar TODOROV Address: Bulevardi “Dëshmorët e Kombit”, Kullat Binjake, Kulla 2, Kati 14, Tirana Tel: 256 423 / 4, 280 210 Fax: 256 422
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Non-bank financial institutions
A. NON-BANK FINANCIAL INSTITUTIONS LICENSED BY THE BANK OF ALBANIA
1. FINANCIAL UNION OF TIRANA LTD Licence No.1, dated 08.12.1999, for conducting the following financial activities: - Providing payment and receivable services; - Intermediary services in the conduct of monetary transactions; - Acting as a financial agent or advisor. Director: Niko Leka; Edmond Leka Address: Rruga “Reshit Çollaku”, pallati “Shallvare”, Sh.2, Nr.28, Tirana, Albania. Tel: + 355 4 250 653 Fax: + 355 4 250 654 E-mail: [email protected]; www.unionfinaniar.com
2. ALBANIAN POST-OFFICE JNT.STK. Licence No.3, dated 18.04.2001, as a “Non-bank financial institution” for conducting the following financial activities: - Providing payment and receivable services; - Acting as a financial agent or advisor. Director: Arqile Goreja Address: Rruga “Reshit Çollaku” , Nr.4, Tirana, Albania. Tel: 222 315
3. “CREDINS” ASSOCIATION Jnt.Stk. Licence No. 4, dated 13.06.2001, as a “Non-bank financial institution” for conducting the following financial activities: - Extending loans; - Providing payment and receivable services; - Intermediary services in the conduct of monetary transactions (foreign currency included); - Offering guarantees; - Acting as a financial agent or advisor (excluded herein the services set forth in points 3/a and 3/b of Article 26 of the Law “On Banks in the Republic of Albania”, No. 8365, dated 02.07.1998 Director: Elion Martini Address: Rruga “Deshmorët e 4 Shkurtit”, Tirana, Albania. Tel: 222 916; 234 096
4. “MOUNTAIN AREAS FINANCE FUND” Licence No.5, dated 29.03.2002, as a “Non-bank financial institution” for conducting the following financial activities: - Extending loans Founded by the Decision of the Council of Ministers of the Republic of Albania (Pursuant to decision No. 560, dated 02.12.1999 of the Council of Ministers, the Council of Ministers of the Republic of Albania is the founder of the Mountain Areas Finance Foundation). Director: Bajram Korsita Address: Rruga “Dervish Hima”, nr.4, Tirana, Albania Tel: 250 633 E-mail: [email protected]
5. “AK – Invest” Jnt.Stk. Licence No.7, dated 03.12.2003, as a “Non-bank financial institution” for conducting the following financial activities: - Providing payment and receivable services; - Intermediary services in the conduct of monetary transactions (foreign currency included);
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- Acting as a financial agent or advisor. Director: Ilir Adili Address: Rruga “Ded Gjon Luli”, Nr.2/3, Tirana, Albania. Tel: 240 147 E-mail: [email protected]
6. ALBANIAN PARTNER IN MICROCREDIT JNT.STK. Licence No.9, dated 06.06.2007, as a “Non-bank financial institution” for conducting the following financial activities: - Extending loans; - Providing payment and receivable services; - Foreign exchange for its account; - Providing other guarantees (which are not nominated banking guarantees). Director: Charles Ertzinger Address: Rruga “Gjin Bue Shpata”, Nr.7/1, Tirana, Albania. Tel: 268 180
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B. Nonbank financial institutions whose LICENCE has been REVOKED BY THE BANK OF ALBANIA
1. DINERS CLUB ALBANIA LTD. Licence No. 2, dated 09.10.2000 as a “Non-bank financial institution” for conducting the following financial activity: - Intermediary services in the conduct of monetary transactions Director: Eni Koço Administrator:Edmond Leka Address: Bulevardi “Zogu I”, pallati 13 katësh, përballë stacionit të trenit, Tirana
2. TIRANA LEASING JNT.STK. Licence No. 08, dated 08.11.2004 as a “Non-bank financial institution” for conducting the following financial activity: - financial leasing Director: Fatos Aliaj Address: Rruga “Ismail Qemali”, pallati “Samos Tower”, kati II, zyra 2/1 B, Tirana Tel: 258 434 / 454 / 458 Fax: 258 397
3. ALBAKREDIT LTD. LicencE NO. 6, datED18.04.2003 as a “Non-bank financial institution” for conducting the following financial activities: - Providing payment and receivable services; - Intermediary services in the conduct of monetary transactions (foreign currency included). Administrator: Hajredin Toca Address: Rruga “Ded Gjo Luli:, Nr. 5, Tiranë Tel.: 230 956 Fax: 228 929
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UNIONS OF SAVINGS AND LOAN ASSOCIATIONS
1. “JEHONA” SAVINGS AND LOAN ASSOCIATIONS UNION, TIRANë Licence: No.1, dated 27.06.2002. Address: Rruga “Kajo Karafili”, nr.26/1 Chairman of the Board of Directors: Vojsava Rama. Tel: 224 469, 269 450
2. “albanian savingS and lOAN union” SAVINGS AND LOAN ASSOCIATIONS UNION, Tiranë Licence: No.2, dated 09.08.2002. Address: “Zayed Business Center”, rruga “Sulejman Delvina”, Tirana e Re, Tiranë. Chairman of the Board of Directors: Mrs. Zana Konini Tel. 251 910 E-mail: [email protected]
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SAVINGS AND LOAN ASSOCIATIONS
1. “MËSUESI” SAVINGS AND LOAN ASSOCIATION, Tiranë Licence No. 1, dated 01.07.2002 Member of “JEHONA“ SLA Union
2. “RIZGJIMI” SAVINGS AND LOAN ASSOCIATION, Tiranë Licence No. 2, dated 01.07.2002 Member of “JEHONA“ SLA Union
3. “AFADA ” SAVINGS AND LOAN ASSOCIATION, Tiranë Licence No. 3, dated 01.07.2002 Member of “JEHONA“ SLA Union
4. “BLETËRRITËSIT ” SAVINGS AND LOAN ASSOCIATION, Korçë Licence No 5, dated 01.07.2002 Member of “JEHONA“ SLA Union
5. “BREGAS ” SAVINGS AND LOAN ASSOCIATION, Korçë Licence No. 6, dated 01.07.2002 Member of “JEHONA“ SLA Union
6. “FITORJA” SAVINGS AND LOAN ASSOCIATION, Prrenjas Licence No. 12, dated 01.07.2002 Member of “JEHONA“ SLA Union
7. “GRAMSHI” SAVINGS AND LOAN ASSOCIATION, Lushnje Licence No. 13, dated 01.07.2002 Member of “JEHONA“ SLA Union
8. “HABA” SAVINGS AND LOAN ASSOCIATION, Tiranë Licence No. 14, dated 01.07.2002 Member of “JEHONA“ SLA Union Merged with ANSPA SLL since 15.03.2005
9. “KANDAVIA” SAVINGS AND LOAN ASSOCIATION, Librazhd Licence No. 15, dated 01.07.2002 Member of “Jehona” SLA Union Merged with “Shqiponja“ SLA and “Egnatia“ SLA since 31.03.2004
10. “KORÇARJA” SAVINGS AND LOAN ASSOCIATION, Korçë Licence No. 17, dated 01.07.2002 Member of “Jehona” SLA Union Merged with Bulgarec SLA, Plasë SLA and Mesonjetorja SLA
11. “KRUJA” SAVINGS AND LOAN ASSOCIATION, Krujë Licence No. 18, dated 01.07.2002 Member of “Jehona” SLA Union
12. “METAJ” SAVINGS AND LOAN ASSOCIATION, Fier Licence No. 20, dated 01.07.2002 Member of “Jehona” SLA Union
13. “ORIK” SAVINGS AND LOAN ASSOCIATION, Vlorë Licence No. 21, dated 01.07.2002 Member of “Jehona” SLA Union
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14. “PIRG” SAVINGS AND LOAN ASSOCIATION, Korçë Licence No. 22, dated 01.07.2002 Member of “Jehona” SLA Union
15. “RINGJALLJA” SAVINGS AND LOAN ASSOCIATION, Vlorë Licence No. 24, dated 01.07.2002 Member of “Jehona” SLA Union Merged with Besa SLA and Shpresa SLA, according to official paper No. 4/1, dated 02.02.2006
16. “SHËNDETI” SAVINGS AND LOAN ASSOCIATION, Tiranë Licence No. 25, dated 01.07.2002 Member of “Jehona” SLA Union
17. “SHKËNDIJA” SAVINGS AND LOAN ASSOCIATION, Elbasan Licence No. 26, dated 01.07.2002 Member of “Jehona” SLA Union
18. “STROPSKA” SAVINGS AND LOAN ASSOCIATION, Pogradec Licence No. 29, dated 01.07.2002 Member of “Jehona” SLA Union Merged with “Përparimi- Nizhavec” SLA, Pogrades.
19. “SYNEI” SAVINGS AND LOAN ASSOCIATION, Kavajë Licence No. 30, dated 01.07.2002 Member of “Jehona” SLA Union
20. “TEUTA” SAVINGS AND LOAN ASSOCIATION, Durrës Licence No. 31, dated 01.07.2002 Member of “Jehona” SLA Union
21. “URA E KUÇIT” SAVINGS AND LOAN ASSOCIATION, Berat Licence No. 32, dated 01.07.2002 Member of “Jehona” SLA Union Merged with “Shpiragu” SLA, Berat
22. “VOLOREKA” SAVINGS AND LOAN ASSOCIATION, Pogradec Licence No. 33, dated 01.07.2002 Member of “Jehona” SLA Union
23. “YLLI I KUQ” SAVINGS AND LOAN ASSOCIATION, Korçë Licence No. 34, dated 01.07.2002 Member of “Jehona” SLA Union Merged with “Drita” SLA and “Gurëbardh” SLA since 15.07.2005.
24. “VELÇE” SAVINGS AND LOAN ASSOCIATION, Vlorë Licence No. 36, dated 29.08.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
25. “KALLM” SAVINGS AND LOAN ASSOCIATION, Fier Licence No. 37, dated 29.08.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
26. “KURORA E ELBASANIT” SAVINGS AND LOAN ASSOCIATION, Elbasan (Changed from “BANJE E SIPERME”) Licence No. 39, dated 29.08.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
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27. “MOLLAS” SAVINGS AND LOAN ASSOCIATION, Elbasan Licence No. 40, dated 29.08.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
28. “PASHTRESH” SAVINGS AND LOAN ASSOCIATION, Elbasan Licence No. 41, dated 05.09.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
29. “GJINAR” SAVINGS AND LOAN ASSOCIATION, Elbasan Licence No. 42, dated 05.09.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union Merged with”Lleshan” SLA
30. “KUQAN” SAVINGS AND LOAN ASSOCIATION, Elbasan Licence No. 45, dated 05.09.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union Merged with “Shirgjan”, “Mjekes”, “Bujqës” and “Bathes” SLAs.
31. “SHUSHICË” SAVINGS AND LOAN ASSOCIATION, Elbasan Licence No. 46, dated 05.09.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
32. “BESTROVË” SAVINGS AND LOAN ASSOCIATION, Elbasan Licence No. 49, dated 05.09.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
33. “SHALËS” SAVINGS AND LOAN ASSOCIATION, Elbasan Licence No. 51, dated 05.09.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
34. “OSHËTIMË” SAVINGS AND LOAN ASSOCIATION, Vlorë, Licence No. 52 dated 23.09.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
35. “BABICË E VOGËL” SAVINGS AND LOAN ASSOCIATION, Vlorë, Licence No. 53 dated 23.09.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
36. “NOVOSELË” SAVINGS AND LOAN ASSOCIATION, Vlorë, Licence No. 54, dated 23.09.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
37. “ROMANAT” SAVINGS AND LOAN ASSOCIATION, Durrës Licence No. 55, dated 23.09.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
38. “JUBE” SAVINGS AND LOAN ASSOCIATION, Durrës Licence No. 56, dated 23.09.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
39. “ARDENICË” SAVINGS AND LOAN ASSOCIATION, Lushnje Licence No. 58, dated 23.09.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
40. “VAJKAN” SAVINGS AND LOAN ASSOCIATION, Fier Licence No. 54, dated 23.09.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
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41. “LLAKATUND” SAVINGS AND LOAN ASSOCIATION, Vlorë Licence No. 60, dated 23.09.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
42. “GRABIAN” SAVINGS AND LOAN ASSOCIATION, Vlorë Licence No. 61, dated 23.09.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
43. “MAZREK” SAVINGS AND LOAN ASSOCIATION, Tiranë Licence No. 62, dated 23.09.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
44. “MUSTAFA KOÇAJ” SAVINGS AND LOAN ASSOCIATION, Tiranë Licence No. 63, dated 23.09.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
45. “SHPAT ISUF MUÇAJ” SAVINGS AND LOAN ASSOCIATION, Tiranë Licence No. 64, dated 23.09.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
46. “PINAR” SAVINGS AND LOAN ASSOCIATION, Tiranë Licence No. 65, dated 23.09.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
47. “FUSHAS MUMAJËS” SAVINGS AND LOAN ASSOCIATION, Tiranë Licence No. 66, dated 23.09.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
48. “QEHA” SAVINGS AND LOAN ASSOCIATION, Tiranë Licence No. 67, dated 23.09.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
49. “DOBRESH” SAVINGS AND LOAN ASSOCIATION, Tiranë Licence No. 68, dated 23.09.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
50. “INIBA” SAVINGS AND LOAN ASSOCIATION, Tiranë Licence No. 71, dated 25.09.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
51. “FUSHË-PREZË” SAVINGS AND LOAN ASSOCIATION ,Tiranë Licence No. 72, dated 25.09.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
52. “MËNIK” SAVINGS AND LOAN ASSOCIATION, Tiranë Licence No. 73, dated 25.09.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
53. “MULLET” SAVINGS AND LOAN ASSOCIATION, Tiranë Licence No. 74, dated 25.09.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
54. “ZALL-HERR” SAVINGS AND LOAN ASSOCIATION, Tiranë Licence No. 75, dated 25.09.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
55. “BARËZEZ” SAVINGS AND LOAN ASSOCIATION, Tiranë
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Licence No. 76, dated 25.09.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
56. “DAIAS” SAVINGS AND LOAN ASSOCIATION, Tiranë Licence No. 77, dated 25.09.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
57. “PETRELË” SAVINGS AND LOAN ASSOCIATION, Tiranë Licence No. 78, dated 25.09.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
58. “MANGULL” SAVINGS AND LOAN ASSOCIATION, Tiranë Licence No. 79, dated 25.09.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
59. “PINET” SAVINGS AND LOAN ASSOCIATION, Tiranë Licence No. 80, dated 25.09.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
60. “BERZHITË” SAVINGS AND LOAN ASSOCIATION, Tiranë Licence No. 81, dated 25 .09.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
61. “MARIKAJ” SAVINGS AND LOAN ASSOCIATION, Tiranë Licence No. 82, dated 25.09.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
62. “ALLGJATË” SAVINGS AND LOAN ASSOCIATION, Tiranë Licence No. 83, dated 25.09.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
63. “KAMÇISHT” SAVINGS AND LOAN ASSOCIATION, Lushnje Licence No. 84, dated 25.09.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
64. “BUBULLIMË” SAVINGS AND LOAN ASSOCIATION, Lushnje Licence No. 85, dated 25.09.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
65. “GORRE” SAVINGS AND LOAN ASSOCIATION, Lushnje Licence No. 87, dated 25.09.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union Merged with Bishqethem SLA
66. “DRITHAS” SAVINGS AND LOAN ASSOCIATION, Vlorë, Licence No. 88, dated 25.09.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
67. “PALASË” SAVINGS AND LOAN ASSOCIATION, Vlorë Licence No. 89, dated 07.10.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
68. “MAMINAS” SAVINGS AND LOAN ASSOCIATION, Durrës Licence No. 90, dated 07.10.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
69. “RRAPËZ” SAVINGS AND LOAN ASSOCIATION, Lushnje
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Licence No. 91, dated 07.10.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union Merged with “Pirre” SLA , Lushnje, since 01.12.2004.
70. “PANAJA” SAVINGS AND LOAN ASSOCIATION, Vlorë Licence No. 92, dated 07.10.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union.
71. “HOLTA” SAVINGS AND LOAN ASSOCIATION, Gramsh Licence No. 93, dated 07.10.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
72. “GJERGJAN” SAVINGS AND LOAN ASSOCIATION, Elbasan Licence No. 94, dated 07.10.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
73. “GJONME” SAVINGS AND LOAN ASSOCIATION, Elbasan Licence No. 95, dated 07.10.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
74. “GRAMSH” SAVINGS AND LOAN ASSOCIATION, Gramsh Licence No. 96, dated 07.10.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
75. “SHPRESA” SAVINGS AND LOAN ASSOCIATION, Gramsh Licence No. 97, dated 10.10.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
76 “FIER 2002” SAVINGS AND LOAN ASSOCIATION, Fier Licence No. 98, dated 28.10.2002 Member of “Jehona” SLA Union.
77. “BUCIMAS” SAVINGS AND LOAN ASSOCIATION, Pogradec Licence No. 99, dated 28.10.2002 Member of “Jehona” SLA Union.
78. “LESHNICË” SAVINGS AND LOAN ASSOCIATION, Pogradec Licence No. 100, dated 28.10.2002 Member of “Jehona” SLA Union.
79. “TREGAN” SAVINGS AND LOAN ASSOCIATION, Elbasan Licence No. 101, dated 27.11.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
80. “BELËSH“ SAVINGS AND LOAN ASSOCIATION, Elbasan Licence No. 102, dated 27.11.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
81. “LUZI I MADH” SAVINGS AND LOAN ASSOCIATION, Kavajë Licence No. 103, dated 27.11.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
82. ”BAGO” SAVINGS AND LOAN ASSOCIATION, Kavajë Licence No. 104, dated 27.11.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
83. “RADË” SAVINGS AND LOAN ASSOCIATION, Durrës
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Licence No. 105, dated 05.12.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
84. “HAMALLAJ” SAVINGS AND LOAN ASSOCIATION, Durrës Licence No. 106, dated 05.12.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
85. “TIRANA KREDIT” SAVINGS AND LOAN ASSOCIATION, Tiranë Licence No. 107, dated 05.12.2002 Member of “Jehona” SLA Union. Merged with Valias SLA
86. “RRUSHKULL” SAVINGS AND LOAN ASSOCIATION, Durrës Licence No. 110, dated 24.12.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
87. “FIER SEMAN” SAVINGS AND LOAN ASSOCIATION, Lushnje Licence No. 111, dated 24.12.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
88. “FRAKULL E MADHE” SAVINGS AND LOAN ASSOCIATION, Fier Licence No. 112, dated 24.12.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
89. “DAULLAS” SAVINGS AND LOAN ASSOCIATION, Fier Licence No. 113, dated 24.12.2002 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
90. “KALLM I VOGËL” SAVINGS AND LOAN ASSOCIATION, Fier Licence No. 114, dated 10.01.2003 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
91. “LEKAJ” SAVINGS AND LOAN ASSOCIATION, Kavajë Licence No. 115, dated 10.01.2003 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
92. “ALLKAJ” SAVINGS AND LOAN ASSOCIATION, Lushnje Licence No. 116, dated 10.01.2003 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
93. “TOSHKËZ” SAVINGS AND LOAN ASSOCIATION, Lushnje Licence No. 117, dated 30.01.2003 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
94. “KAFARAJ” SAVINGS AND LOAN ASSOCIATION, Fier Licence No. 118, dated 19.02.2003 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
95. “GOSË” SAVINGS AND LOAN ASSOCIATION, Kavajë Licence No. 120, dated 23.06.2003 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
96. “HIMARË” SAVINGS AND LOAN ASSOCIATION, Vlorë Licence No. 122, dated 23.06.2003 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
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97. “KOTE” SAVINGS AND LOAN ASSOCIATION, Vlorë Licence No. 123, dated 23.06.2003 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
98. “ARMEN” SAVINGS AND LOAN ASSOCIATION, Vlorë Licence No. 124, dated 23.06.2003 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
99. “PERLAT” SAVINGS AND LOAN ASSOCIATION, Durrës Licence No. 125, dated 15.07.2003 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
100. “REMAS” SAVINGS AND LOAN ASSOCIATION, Lushnje Licence No. 126, dated 16.07.2003 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
101. “MIZË” SAVINGS AND LOAN ASSOCIATION, Lushnje Licence No. 127, dated 04.08.2003 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
102. “DUKAT-RADHIMË” SAVINGS AND LOAN ASSOCIATION, Vlorë Licence No. 128, dated 03.11.2003 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
103. “MJELLMA-HUDENISHT” SAVINGS AND LOAN ASSOCIATION, Pogradec Licence No. 129, dated 03.11.2003 Member of “Jehona” SLA Union.
104. “GJEÇ KODËR” SAVINGS AND LOAN ASSOCIATION, Tiranë Licence No. 130, dated 26.11.2003 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
105. “MËRTISH” SAVINGS AND LOAN ASSOCIATION, Lushnjë Licence No. 131, dated 26.11.2003 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
106. “MASHAN” SAVINGS AND LOAN ASSOCIATION, Gramsh Licence No. 132, dated 26 .11.2003 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
107. “PAPËR” SAVINGS AND LOAN ASSOCIATION, Elbasan Licence No. 133, dated 26.11.2003 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
108. “KUKUR” SAVINGS AND LOAN ASSOCIATION, Gramsh Licence No. 134, dated 07.01.2004 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
109. “BLETA” SAVINGS AND LOAN ASSOCIATION, Pogradec Licence No. 135, dated 03.03.2004 Member of “Jehona” SLA Union.
110. “VAQARR” SAVINGS AND LOAN ASSOCIATION, Tiranë Licence No. 136, dated 01.04.2004 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
111. “GRACEN” SAVINGS AND LOAN ASSOCIATION, Elbasan
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Licence No. 137, dated 23.06.2004 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
112. “SKENDERBEGAS” SAVINGS AND LOAN ASSOCIATION, Gramsh Licence No. 138, dated 23.06.2004 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
113. “DARZEZË” SAVINGS AND LOAN ASSOCIATION, Fier Licence No. 139, dated 12.07.2004 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
114. “SPILLE” SAVINGS AND LOAN ASSOCIATION, Kavajë Licence No. 140, dated 12.07.2004 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
115. “GOSTIMË” SAVINGS AND LOAN ASSOCIATION, Elbasan Licence No. 141, dated 12.07.2004 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
116. “JADORA” SAVINGS AND LOAN ASSOCIATION, Shkodër Licence No. 143, dated 17.11.2004 Member of “Jehona” SLA Union
117. “QARR - BISHAN” SAVINGS AND LOAN ASSOCIATION, FIER Licence No. 145, dated 28.04.2005 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
118. “KRUTJE” SAVINGS AND LOAN ASSOCIATION, LUSHNJE Licence No. 146, dated 29.07.2005 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
119. “TIRONA” SAVINGS AND LOAN ASSOCIATION, TIRANË Licence No. 147, dated 05.12.2005 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
120. “SHKAFANE” SAVINGS AND LOAN ASSOCIATION, DURRËS Licence No. 148, dated 16.01.2006 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
121. “LIBRAZHD” SAVINGS AND LOAN ASSOCIATION, LIBRAZHD Licence No. 149, dated 10.11.2006 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
122. “HELMAS” SAVINGS AND LOAN ASSOCIATION, KAVAJË Licence No. 150, dated 22.11.2006 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
123. “LUKOVË” SAVINGS AND LOAN ASSOCIATION, VLORË Licence No. 151, dated 14.12.2006 Member of “Unioni shqiptar i kursim-kreditit” SLA Union
124. “ÇERMË” SAVINGS AND LOAN ASSOCIATION, Lushnje Licence No. 152, dated 12.01.2007 Member of “UNIONI SHQIPTAR I KURSIM-KREDITIT” SLA Union
125. “ELBASAN” SAVINGS AND LOAN ASSOCIATION, Elbasan Licence No. 153, dated 18.04.2007
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Member of “UNIONI SHQIPTAR I KURSIM-KREDITIT” SLA Union 126. “DYRRAH” SAVINGS AND LOAN ASSOCIATION, Durrës Licence No. 154, dated 27.04.2007. Member of “UNIONI SHQIPTAR I KURSIM-KREDITIT” SLA Union
127. “SEMAN” SAVINGS AND LOAN ASSOCIATION, Fier Licence No. 155, dated 21.05.2007 Member of “UNIONI SHQIPTAR I KURSIM-KREDITIT” SLA Union
128. “PAJOVA E RE” SAVINGS AND LOAN ASSOCIATION, Elbasan Licence No. 156, dated 05.12.2007 Member of “UNIONI SHQIPTAR I KURSIM-KREDITIT” SLA Union
129. “MALI I BARDHË” SAVINGS AND LOAN ASSOCIATION, Berat Licence No. 157, dated 17.12.2007 Member of “UNIONI SHQIPTAR I KURSIM-KREDITIT” SLA Union
130. “BASHKËSIA” SAVINGS AND LOAN ASSOCIATION, Durrës Licence No. 158, dated 17.12.200. Member of “UNIONI SHQIPTAR I KURSIM-KREDITIT” SLA Union
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FOREIGN EXCHANGE BUREAUS LICENSED BY THE BANK OF ALBANIA
1. “JOARD” LTD, Foreign Exchange Bureau, Tirana Licence: No. 1, dated 01.10.1999 Address: Rruga “Ded Gjon Luli”, Nr.2, Tiranë Cambists: Josif Kote Tel: 233 158
2. “AMA” LTD, Foreign Exchange Bureau, Durrës Licence: No. 2, dated 01.10.1999. Address: Rruga “Tregtare”, Lagjja 3, Durrës Cambists: Mirlinda Ceka, Ilir Hoxha Tel: 225 183, 220 340 Mobile: 068 20 33 030
3. “ARIS” LTD, Foreign Exchange Bureau, TIRANA Licence: No. 3, dated 01.10.1999. Address: Rruga “Luigj Gurakuqi”, Tiranë Cambists: Ardian Goci Tel: 488 867
4. “UNIONI FINANCIAR TIRANA” LTD, Foreign Exchange Bureau Licence: No. 4, dated 01.10.1999 Address: Rruga “Reshit Çollaku”, “pallati Shallvare”, Shk. 2/18, Tiranë Administrator: Niko Leka Cambists: Arjan Lezha (Agency manager), Albert Sara, Dhimitër Papadhopulli, Genta Angjeli (Agalliu), Piro Teti, Flora Simixhi, Petrika Mano (Agency manager), Lindita Shala, Mirela Bakalli, Anila Demiri, Emili Bakalli (Nako), Astrit Sfërdelli, Mirela Kaiku, Erisa Emiri. Tel: 250 653
5. “AGLI” lTD, Foreign Exchange Bureau, TIRANA Licence: No. 5, dated 01.10.1999. Address: Agency 1: Rruga “Islam Alla”, Nr.1, Tiranë Agency 2: Rruga e Kavajës, pranë Pastiçeri “Rinia”, Tiranë Cambists: Kujtim Nina, Agim Cani, Selim Luli Tel: 50 885
6. “EXCHANGE” lTD, Foreign Exchange Bureau, TIRANA Licence: No. 08, dated 24.11.1999. Address: Rruga e Durrësit, Nr. 170, Tiranë Cambist: Ervis Myftari Tel: 238 344 Tel/fax: 238 345
7. “UNISIX” ltd, Foreign Exchange Bureau, KORÇA Licence: No. 09, dated 26.11.1999. Address: Bulevardi “Republika”, pallati 4, Korçë Cambists: Pandi Cunoti, Ernest Golka, Nikolin Bicka, Eli Bode Tel: 0824 3624, 0825 4925 Mobile: 069 20 85637
8. “ILIRIA ‘98” ltd, Foreign Exchange Bureau, TIRANË Licence: No. 12, dated 25.02.2000. Address: Sheshi “Skënderbej”, Teatri i Kukullave, Tiranë
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Cambists: Edmond Ymeri, Ali Topalli, Ilir Janku Tel: 248 82
9. “SERXHIO” ltd, Foreign Exchange Bureau, ELBASAN Licence: No. 14, dated 07.04.2000. Address: Lagjja “Luigj Gurakuqi”, Rruga ”11 Nëntori”, pallati 70, Nr.14, Elbasan. Cambists: Amarildo Canoku Tel: 054 545 66
10. “ALBTUR” ltd, Foreign Exchange Bureau, TIRANë Licence: No. 15, dated 07.04.2000. Address: Bulevardi “Zogu I”, pallati 32, Shk.1 (përballë Bankës Tirana), Tiranë Cambists: Albert Rahmani, Artur Rahmani Tel/fax: 235 820
11. “R & M” ltd, Foreign Exchange Bureau, TIRANë Licence: No. 16, dated 22.05.2000. Address: Rruga “Punëtorët e Rilindjes”, pallati 182, Tiranë Cambists: Edmond Stepa, Miranda Stepa Tel: 251 963
12. “T & E” ltd, Foreign Exchange Bureau, DURRËS Licence: No. 18, dated 11.06.2000. Address: Lagjja 4, Rruga “9 Maji”, Durrës Cambist: Shpëtim Hysa
13. “SHIJAK 2000” ltd, Foreign Exchange Bureau, SHIJAK Licence: No. 19, dated 24.11.2000. Address: Lagjja “Popullore”, Shijak. Cambists: Nazmi Ademi, Farije Ademi Tel: 068 20 485 58; 057 130 76; 057 121 93 Fax: 052 721 93
14. “MANUSHI” ltd, Foreign Exchange Bureau, TIRANA Licence: No. 22, dated 18.04.2001. Address: Bulevardi “Zogu I”, Qendra e Biznesit VEVE, Tiranë Cambist: Roland Manushi Tel: 228 986
15 “UNIONI SELVIA” ltd, Foreign Exchange Bureau, TIRANA Licence: No. 23, dated 21.05.2001. Address: Rruga “Sami Frashëri”, pallati 11, shk. 4, ap.29, Tiranë Cambists: Denis Merepeza Tel: 068 22 86 475
16. “KALENJA” Ltd, Foreign Exchange Bureau, TIRANë Licence: No. 24, dated 29.06.2001. Address: Rruga “Kavajës” (pranë Ambasadës Turke), Tiranë Cambists: Hair Shametaj, Rudina Shametaj
17. “TILBA” ltd, Foreign Exchange Bureau, ELBASAN Licence: No. 25, dated 30.09.2001 Address: Bureau 1: Lagjja “Kongresi I Elbasanit, Bulevardi “Qemal Stafa”, pallati nr.19, Elbasan Cambist: Kristaq Bako Address: Bureau 2: Lagjja “Luigj Gurakuqi”, pallati. 38, shk. 3, kati I, Elbasan Cambist: Vjollca Bako
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Tel: 054 40534 Mobile: 069 20 83 135
18. “ANAGNOSTI” Ltd, Foreign Exchange Bureau, TIRANë Licence: No. 26, dated 31.10.2001 Address: Bureau 1: Bulevardi “Zogu I”, pallati 97, Shk.3, Ap 28, Tiranë Cambists: Jani Anagnosti, Odise Anagnosti, Edlira Anagnosti Tel: 069 20 90 523 (Jani Anagnosti) Bureau 2: Rruga “Kajo Karafili”, Nr.11 Tirana Cambist: Fredi Cami Tel: 233 242 Mobile: 069 20 90 523
19. “KO-GO” ltd, Foreign Exchange Bureau, TIRANë Licence: No. 27, dated 12.11.2001 Address: Rruga “Vaso Pasha”, pallati16, Shk.2, Ap. 9, Tiranë Cambists: Përparim Goxhaj Tel: 038 20 24 230
20. “ALB- FOREX” ltd, Foreign Exchange Bureau, TIRANë Licence: No. 28, dated 22.11.2001. Address: Bureau 1: Rruga “Abdyl Frashëri, Nr.3, Tiranë Cambists: Mirel Topçiu Address: Bureau 2: Rruga “Dëshmorët e 4 Shkurtit”, pallatet e Shallvareve, shkalla 7, kati përdhe, Tiranë Cambist: Melsi Çami Tel: 270 541 Cel: 069 20 85 561
21. “L&N” ltd, Foreign Exchange Bureau, TIRANë Licence: No. 29, dated 22.11.2001 Address: Bureau 1: Rruga “Muhamet Gjollesha”, ish-Gjelltorja tek sheshi ATATURK, Tiranë Cambist: Leonora Mihalcka Tel: 268 393, 270 720 Address: Bureau 2: Rruga e Durrësit, përballë ish Ambasadës Jugosllave, Tiranë Cambists: Myzafer Velaj, Dashurije Rumbullaku Tel: 235 590
22. “EXHANGE ALOG” ltd, Foreign Exchange Bureau, TIRANë Licence: No. 31, dated 22.11.2001 Address: Rruga “Mine Peza” (përballë Selisë së Vatikanit), Tiranë Cambists: Almida Sterio, Eduard Andoni, Elida Hasamemi.
23. “BASHKIMI 2001” ltd, Foreign Exchange Bureau, TIRANë Licence: No. 35, dated 12.12.2001 Address: Rruga e Kavajës (Pastiçeri “Rinia”), Tiranë Cambists: Bashkim Shametaj, Luan Shametaj, Ilir Mesini Tel: 038 20 24 601
24. “ARJON 2002” ltd., Foreign Exchange Bureau, ELBASAN Licence: No. 36, dated 14.12.2001. Address: Lagjja “Kongresi i Elbasanit”, Bulevardi ”Qemal Stafa”, pallati 9-katësh, Elbasan Cambists: Arben Kovaçi, Besnik Lulja, Alfred Kapxhi Tel: 054 42 119, 054 578 27 Mobile: 068 40 14 110
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25. “ALAKTH” ltd., Foreign Exchange Bureau, TIRANë Licence: No. 42, dated 18.01.2002. Address: Rruga “Dibrës”, Nr.105/1, Tiranë Cambists: Kosta Papa, Arben Memko, Lorenc Konomi, Thoma Konomi, Aleko Plaku Tel: 038 20 26 363
26. “TRI URAT” ltd., Foreign Exchange Bureau, ELBASAN Licence: No. 44, dated 05.02.2002. Address: Lagjja “29 Nëntori”, pranë Filialit të Postës Elbasan. Cambists: Fahri Sanco, Ismail Bejta Tel: 038 22 62233; 038 21 331 84
27. “BESA 2001” ltd., Foreign Exchange Bureau, TIRANë Licence: No. 46, dated 15.02.2002. Address: Rruga “Myslym Shyri”, Nr.25, Tiranë Cambists: Belul Lleshi, Vladimir Avda, Mimoza Avda Tel: 233 172 Mobile: 068 2133879, 068 2087 951
28. “HYSEN-C” ltd., Foreign Exchange Bureau, LAÇ Licence: No. 50, dated 23.04.2002 Address: Lagjja nr.3, përballë Komisariatit të Policisë, Laç Cambist: Cen Hyseni, Violeta Hyseni, Miranda Palaj, Albana Zhuzhi, Jonida Thanasi Tel: 068 20 24 688
29. “Taxi Ekspres” ltd, Foreign Exchange Bureau, Tiranë Licence: No. 52, dated 20.05.2002 Address: Bureau 1: Rruga “Sami Frashëri”, nr. 11 (pranë shkollës “Edith Durhan”, Tiranë Bureau 2: Bulevardi “Bajram Curri”, rruga “Lekë Dukagjini”, No. 5 (pranë European Trade Center), Tiranë Cambists: Arben Sharra, Sokol Kaleci, Brikena Tole, Manjola Kume, Elona Zyra Tel: 223231 Mobile: 038 20 46 099, 038 22 505 66
30. “GLEAR” ltd., Foreign Exchange Bureau, SHIJAK Licence: No. 55, dated 23.07.2002. Address: Lagjja “Kodër”, Shijak, Durrës Cambists: Argjend Calliku, Afërdita Calliku Tel: 057 12657 Mobile: 068 20 505 15.
31. “POSTA SHQIPTARE” Jnt.Stk., Foreign Exchange Bureau, TIRANË Licence No. 56, dated 28.08.2002. Address: Rruga “Reshit Çollaku”, nr.4 Tiranë, Tel: 259 770, 266 559, 250 702; 222 315
32. “ESLULI” ltd., Foreign Exchange Bureau, TIRANë Licence: No. 58, dated 17.10.2002 Address: Rr. “Reshit Çollaku”, pallati “Shallvare”, Shk.4/1, Tiranë Cambists: Selim Luli, Kleomen Gjiknuri Tel: 271 160; 271 438
33. “Deni&Kristi-2002” ltd., Foreign Exchange Bureau, Tiranë Licence: No. 61, dated 02.06.2003 Address: Rruga “Myslym Shyri”, pallati 60, Ap.3, Tiranë Cambist: Maksim Çeku
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Tel: 269 576, 266 494
34. “YLDON” ltd., Foreign Exchange Bureau, Tiranë Licence: No. 62, dated 03. 06.2003. Address: Bureau 1: Rruga “Qemal Stafa”, pallati 382/2/2, Tiranë Bureau 2: Bulevardi. “Bajram Curri”, European Trade Center, Tiranë Cambist: Ylli Ndroqi, Enkeleda Selamaj, Suela Marku, Imelda Ahmeti Tel: 43 476 Moblie: 069 20 95 681
35. “I.S.N.” ltd., Foreign Exchange Bureau, Tiranë Licence: No. 66, dated 06.05.2004. Address: Rruga e Kavajës, pallati 3, kati I, Tiranë Cambists: Nexhmi Uka, Salandi Brojaj Mobile: 069 20 32 727
36. “Ariaba” ltd., Foreign Exchange Bureau, Tiranë Licence: No. 67, dated 07.06.2004. Address: Rruga “Abdyl Frashëri” pranë Librit Universitar, Kati I, Shk.5, Tiranë Cambists: Agim Xhemo, Astrit Hado, Flamur Denaj Tel/fax: 246 199
37. “Albacredits” ltd., Foreign Exchange Bureau, Tiranë Licence: No. 68, dated 13.07.2004 Address: Rruga “Dede Gjon Luli”, Nr. 5, Tiranë Cambists: Ermira Skënderi, Engjëll Skënderi, Burhan Kodra Mobile: 068 20 62 916/917 Tel/fax: 237 840
38. “ALB-KREDIT” ltd., Foreign Exchange Bureau, Tiranë Licence: No.69, dated 19.07.2004. Address: Rruga e Durrësit, Nr. 2, Tiranë Cambists: Arben Cani, Vasil Marto, Rudina Muskaj, Valbona Kadriu, Teuta Koltarka, Hajredin Toca, Doloreza Arapi Tel/fax: 274 840, 228 928 / 9 Adress: Bureau in Peshkopi: Bulevardi “Nazmi Rushiti”, Peshkopi, Dibër Cambist: xhetan Krrashi, Dritan Lala
39. “OMEGA” ltd., Foreign Exchange Bureau, Tiranë Licence: No. 72, dated 20.12.2004 Address: Rruga “Abdyl Frashëri”, pallati 1, shk. 2, ap. 10, Tiranë Cambists: Mihallaq Peko, Ylli Meshau Mobile: 068 20 50 909 Tel/fax: 261 956
40. “Elba 2005” ltd., Foreign Exchange Bureau, Tiranë Licence: No. 73, dated 28.04.2005 Address: Bulevardi “Bajram Curri”, Pallatet Agimi, nr. 16, Tiranë Cambists: Kujtim Elbasani Mobile: 068 22 06 194 Tel/fax: 237 866, 274 382.
41. “Jonada – 05” ltd., Foreign Exchange Bureau, Tiranë Licence: No. 74, dated 27.06.2005 Address: Rruga e Kavajës, pallati 185, shk. 2, ap. 09, Tiranë Cambists: Liliana Zyfi, Pëllumb Zyfi
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Mobile: 069 27 56 654 Tel/fax: 257 157
42. “BASHA – N.B.” ltd., Foreign Exchange Bureau, ELBASAN Licence: No. 75, dated 08.07.2005 Address: Lagjja “Shenkoll”, rruga “Thoma Kaleshi”, pallati 110, shk. 1, kati i parë, Elbasan Cambists: Nashifer Basha, Çlirim Basha Mobile: 069 20 77 640 Tel: 054 425 65
43. “I & K 2005” LTD, Foreign Exchange Bureau, LEZHË Licence: No. 77, dated 09.09.2005 Address: Lagjja “Besëlidhja”, pallati 73, Lezhë Cambist: Ilir Malaj
44. “EUROTOURS” ltd., Foreign Exchange Bureau, TIRANë Licence: No. 78, dated 17.10.2005 Adress: rruga “Reshit Çollaku”, nr. 2/18, pallatet “Shallvare”, Tiranë Cambists: Albert Cara, Ilir Stafa, Dhimitër Papadhopulli
45. “A.B.I. EXCHANGE” ltd., Foreign Exchange Bureau, TIRANË Licence: No. 79, dated 17.02.2006 Address: Bulevardi “Zog I”, Godina “Zëri i Popullit”, Tiranë Cambists: Ilir Doçi, Suela Dedaj Mobile: 068 20 54 116
46. “REGENCY INTERNATIONAL CASINO TIRANA” ltd., Foreign Exchange Bureau, Tiranë Licence: No. 80, dated 06.03.2006 Address: Rruga “Dëshmorët e 4 Shkurtit”, Parku Rinia, Tiranë Cambists: Florjan Lami; Suzana Aliu; Aides Goga; Murat Haruni, Gjergji Selala, Marsela Elmazaj, Vjollca Nurka, Leonard Gjonaj, Elvis Marku, Donald Mihal, Albana Sherifi, Armand Çadra, Ermelind Hystuna, Elis Nerguti, Razie Selimi, Valbona Halili, Kostandina Mejdi, Elona Martiro Tel: 271 190, 274 907, 274 742, 274 739 E-mail: [email protected]
47. “ARBËR F” ltd., Foreign Exchange Bureau, TIRANë Licence: No. 81, dated 07.03.2006 Address: Rr “Kavajës”, pallati 3 kati i parë, ose ish Gudeni, Tiranë Cambists: Florina Jaho, Bukurosh Jaho Tel: 248 384 Mobile: 068 2218 652
48. “EURO 2006” ltd., Foreign Exchange Bureau, DURRËS Licence: No. 82, dated 12.04.2006 Address: Lagjja 12, Rruga “Dëshmorët”, Durrës Cambists: Hysni Baganaçi, Medi Dyrmishi Tel: 05 238 156 Mobile: 068 26 18 699
49. “VOSKOP” ltd., Foreign Exchange Bureau, KORÇË Licence: No. 83, date 13.04.2006 Address: Lagjja nr. 7, Blloku “8 Nëntori”, Korçë Cambists: Anesti Leska, Rexhep Mankolli
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50. “KRISTIAN 2002” ltd., Foreign Exchange Bureau, LEZHË Licence: No. 84, dated 31.05.2006 Address: Lagjja “Besëlidhja”, përballë Degës së Bankës Raiffeisen, Lezhë Cambist: Sandër Marashi
51. “PRE-LAND” ltd., Foreign Exchange Bureau, LEZHË Licence: No. 85, dated 31.05.2006 Address: Lagjja “Skenderbej”, ish lokali “Gjahtari”, Lezhë Cambists: Roland Kola
52. “SHQIPONJA VL” ltd., Foreign Exchange Bureau, VLORË Licence: No. 86, dated 16.06.2006 Address: Pallati i Kulturës “Labëria”, përballë portit detar, Vlorë Cambists: Vjollca Musaraj Tel: 03 324 642
53. “BONVOYAGE” ltd., Foreign Exchange Bureau, DURRËS Licence No. 87, dated 20.06.2006 Address: Lagjia 11, Bulevardi kryesor “Durrahu”, Ap.243, Durrës Cambists: Petrit Shtaro, Rexhep Sulejmani Tel: 052 38 116; 052 3 7 3 89
54. “ANICHRI” ltd., Foreign Exchange Bureau, TIRANË Licence No. 88, dated 20.04.2007. Address: Rr. “Vaso Pasha”, Nr. 10, përballë Bar “Rovena” (ish-blloku) Tiranë. Cambists: Ilir Gurashi, Lenije Murataj, Juliana Hajro Mobile: 0682072625
55. “BROQI” ltd., Foreign Exchange Bureau, TIRANË Licence No. 89, dated 20.04.2007. Address: Rruga “Kavajës”, përballë Kishës Katolike, Tiranë Cambists: Nikollë Broqi, Dhurata Murrizi Mobile: 068 20 26 731 Tel: 261 142.
56. “HENRY” ltd., Foreign Exchange Bureau, ELBASAN Licence No. 90, dated 19.06.2007 Address: lagja “28 Nëntori”, pranë hotel “Skampa”, Elbasan Cambists: Albert Buzo, Sotiraq Buzo Mobile: 068 20 46 884
57.“KOMPLEKSI TURISTIK RABOSHTA ” ltd., Foreign Exchange Bureau, SHKODËR Licence No. 91, dated 26.06.2007. Address: Lagja “Vasil Shanto”, përballë xhamisë, Shkodër Cambists: Përparim Raboshta, Jetmira Raboshta Mobile: 069 20 61 199
58. “ÇELA 2005” LTD., FOREIGN EXCHANGE BUREAU LUSHNJE Licence No. 92, dated 26.06.2007. Address: Lagja “Çlirim”, Lushnje Cambists: Bledar Çela, Mondi Cejne Mobile: 069 20 66 657, 068 20 12 394
59. “ARTUR 07” LTD., FOREIGN EXCHANGE BUREAU FIER Licence No. 93, dated 26.06.2007. Address: Rruga “Esat Dishnica”, No. 9, Fier Cambists: Artur BEQO
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60. “PACILI&GJIRITI” LTD., FOREIGN EXCHANGE BUREAU KORÇË Licence No. 94, dated 06.07.2007. Address: Bulevardi. “Edith Durham”, pranë hotel Turizmit, Korçë Cambists: Dylber Gjiriti, Jorgaq Pacili Mobile: 069 21 70 171
61. “TROKA” LTD., FOREIGN EXCHANGE BUREAU FIER Licence No. 95, dated 16.07.2007. Address: Lagja “Apollonia”, pallati i ri, përballë Raiffeisen Bank, Fier Cambists: Xhevair Troka Mobile: 068 20 35 413
62. “MEL – FAT” LTD., FOREIGN EXCHANGE BUREAU FIER Licence No. 96, dated 17.07.2007. Address: Lagja “Apollonia”, rruga “Brigada XI Sulmuese”, Fier Cambists: Meleq Myrtaj, Fatmir Ymeri Mobile: 068 23 07 507
63. “VËLLEZËRIT VALUTË” LTD., FOREIGN EXCHANGE BUREAU LUSHNJE Licence No. 97, dated 17.07.2007. Address: Lagja “Çlirim”, rruga “Qemal Stafa”, nr. 5, Lushnje Cambists: Tomor Qorri, Fatmir Qorri Mobile: 069 20 65 595, 068 40 60 061
64. “FYBEK” LTD., FOREIGN EXCHANGE BUREAU FIER Licence No. 98, dated 17.07.2007. Address: Lagja “8 Shkurti”, pallati. 9, ap. 5, Fier Cambists: Ilir Seitaj, Sokol Seitaj Mobile: 0682068193
65. “EXCHANGE DEA” LTD., FOREIGN EXCHANGE BUREAU FIER Licence No. 99, dated 17.07.2007. Address: Lagja “Apolonia”, sheshi “Fitorja”, Fier Cambists: Saimir Zeneli, Fatmir Kamberi, Fatmir Brahimi Mobile: 0692099425, 0682024127
66.“KAMZA UNION” LTD., FOREIGN EXCHANGE BUREAU TIRANË Licence No. 100, dated 17.07.2007. Address: Koder Kamëz, Tiranë. Cambists: Lindita Stafa, Anila Kola, Zef Gjoni Mobile: 0684043909 Tel: 200 569
67. “LAPRAKA UNION” LTD., FOREIGN EXCHANGE BUREAU TIRANË Licence No. 101, dated 17.07.2007. Address: Zyra 1: Rruga Lord Bajron, Laprakë, Tiranë Zyra 2: Kamëz Qendër. Zyra 3: Qendër Vorë, ish mapot e vjetra Zyra 4: Fushë Krujë. Cambists: Rreshit Beja, Lulzim Beja, Hanke Beja, Hyre Beja Mobile: 0692044312 Tel: 269 354, 200 426, 600 477, 632 001
68. “EXCHANGE BERTI 2007” SH.P.K ELBASAN Licence No. 102, dated 24.07.2007. Address: Lagja “Aqif Pasha”, pallati. 31, Elbasan
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Cambists: Robert Tashkollari Mobile: 0692111490
69. “ANSA UNION” LTD., FOREIGN EXCHANGE BUREAU TIRANE Licence No. 103, dated 25.07.2007. Address: Rruga “Durrësit”, pallati. 81, shk. 4, Tiranë Cambists: Magdalena Leka, Gëzim Leka, Elda Dengeri, Blerina Pojani, Ylli Guda Mobile: 0682740073 Tel: 271 530 (tel-fax), 238 623
70. “KLEO” LTD., FOREIGN EXCHANGE BUREAU VLORË Licence No. 104, dated 31.07.2007. Address: Lagja “Osman Haxhiu”, rr. ”Demokracia”, prane Sahatit, Vlorë Cambists: Murat Hysenaj, Gëzim Shehaj, Dhimitraq Tangu, Shezai Xhaferaj Mobile: 0692056558 Tel: 03 328 155(tel-fax)
71. “MOENA” LTD., FOREIGN EXCHANGE BUREAU FIER Licence No. 105, dated 31.07.2007. Address: Lagja “29 Nëntori”, rruga ”Dervish Hekali”, Fier Cambists: Enver Lamaj, Namik Hasani, Mondi Likaj Mobile: 0684021577 Tel: 03 424 428(tel-fax)
72. “ZENO & DHIMO” LTD., FOREIGN EXCHANGE BUREAU FIER Licence No. 106, dated 31.07.2007. Address: Lagja Apollonia, rruga ”Brigada II S” pranë Raiffeisen Bank, Fier Cambists: Dhimitraq Doko, Zenun Gjini Mobile: 0692070262, 0682151504
73. “BALLA CHANGE” LTD., FOREIGN EXCHANGE BUREAU DURRËS Licence No. 107, dated 31.07.2007. Address: Rruga ”Prokop Meksi”, lagja 4, Durrës Cambists: Agron Balla, Artur Ballanca, Diana Balla, Agim Balla Mobile: 0682060428
74. “ADKO” LTD., FOREIGN EXCHANGE BUREAU LUSHNJE Licence No. 108, dated 31.07.2007. Address: Lagja “Loni Dhamo”, ish hotel Myzeqeja, Lushnje Cambists: Adil Mukaj, Koli Sako Mobile: 0684021108, 0682244795 Tel: 03 526 484
75. “I.SULEJMANI & SH.MYRTEZA” LTD., FOREIGN EXCHANGE BUREAU FIER Licence No. 109, dated 31.07.2007. Address: Lagja “1 Maj”, rruga ”Jani Bakalli”, pranë poliklinikës qendrore, Fier Cambists: Islam Sulejmani, Shkelqim Myrteza Mobile: 0683415790, 0692436588
76.“MATI UNION” LTD., FOREIGN EXCHANGE BUREAU LAÇ Licence No. 110, dated 02.08.2007. Address: Bulevardi kryesor, Laç Cambists: Mustafa Martinaj Mobile: 0682037713
77.“A.K” LTD., FOREIGN EXCHANGE BUREAU LEZHË Licence No. 111, dated 02.08.2007.
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Address: Lagja “Besëlidhja”, Lezhë Cambists: Amerlon Reçi Mobile: 0682023607 Tel; 0215 4951
78. “UNION B” LTD., FOREIGN EXCHANGE BUREAU BERAT Licence No. 112, dated 07.08.2007. Address: Lagja 30 Vjetori, Berat Cambists: Sali Hoxha Mobile: 0682074488
79. “KOÇIU” LTD., FOREIGN EXCHANGE BUREAU GJIROKASTËR Licence No. 113, dated 03.09.2007. Address: Lagja “18 Shtatori”, Gjirokastër Cambists: Lutmir KOÇIU, Rebani KOÇIU Mobile: 069 20 90 935
80. “LANA” LTD., FOREIGN EXCHANGE BUREAU TIRANË Licence No. 114, dated 04.09.2007. Address: Rruga “Irfan Tomini”, pallati. 8/1, shk. 2, apt. nr.2 (pamja nga sheshi), Tiranë Cambists: Krenar Alimerko, Ixhlale Alimerko, Nevila Shabanaj, Amarilda Liço Tel/fax: 244 278, Tel.: 269 613 Cel: 069 20 33 512
81. “BESTINA” LTD., FOREIGN EXCHANGE BUREAU URA VAJGURORE, BERAT Licence No. 115, dated 04.09.2007. Address: Lagja “18 Nëntori” (pranë Postës), Ura Vajgurore, Berat Cambists: Besim Guraj, Klementina Guraj Tel.: 036 12717 Cel: 068 20 86 105
82. “N&B UNION” LTD., FOREIGN EXCHANGE BUREAU TIRANË Licence No. 116, dated 04.09.2007. Address: Rruga e Dibres, pallati. 507, Tiranë Cambists: Nexhmi Ferhati, Shkelqim Turku Telefon: 66 898
83. “ARGI 07” LTD., FOREIGN EXCHANGE BUREAU BERAT Licence No. 117, dated 04.09.2007. Address: Lagja “22 Tetori”, Berat Cambists: Arben Yzbashi, Albana Yzbashi, Adriatik Avdylaj Tel.: 032 35746 Faks: 032 372888 Cel: 069 20 82 803
84. “EKSPRES J&E” LTD., FOREIGN EXCHANGE BUREAU DURRËS Licence No. 118, dated 05.09.2007. Address: Lagja 11, bulevardi kryesor, hotel Durrësi, Durrës Cambists: Kostandin Ekonomi, Entela Ekonomi Mobile: 068 20 46 103 Tel.: 05 229 626
85. “DODI” LTD., FOREIGN EXCHANGE BUREAU FIER Licence No. 119, dated 05.09.2007. Address: Lagja “Apollonia”, bulevardi “Jakov Xoxa”, Fier
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Cambists: Artur Dodi, Albert Cucuri, Astrit Celaj, Mobile: 068 21 32 098, 03 431 461
86. “G 24” LTD., FOREIGN EXCHANGE BUREAU GJIROKASTËR Licence No. 120, dated 05.09.2007. Address: Lagja “18 shtatori”, Gjirokastër Cambists: Artan Gjokaj Mobile: 069 20 80 805 Tel.: 08 468 760
87. “JM CHANGE” LTD., FOREIGN EXCHANGE BUREAU KORCË Licence No. 121, dated 05.09.2007. Address: Rruga “Ismail Qemali”, nr. 2, Korçë Cambists: Jorgaq Micani Mobile: 069 20 60 685
88. “RENJA” LTD., FOREIGN EXCHANGE BUREAU KORCË Licence No. 122, dated 05.09.2007. Address: Lagja 9, rruga ”Mis Edit Durhan” (pranë Ujësjellës kanalizimeve Korçë), Korçë Cambists: Përparim Rustemi, Alfred Kacidhja, Bardhyl Renja Mobile: 069 20 75 664, Tel.: 08 248 011
89. “EXCHANGE KIMI” LTD., FOREIGN EXCHANGE BUREAU TIRANË Licence No. 123, dated 14.09.2007. Address: Rruga ”Dëshmorët e 4 Shkurtit”, pallati. 3, dyqani nr.3, Tiranë Cambists: Shefqet Jata Mobile: 069 20 60 325
90. “JAUPAJ” LTD., FOREIGN EXCHANGE BUREAU FIER Licence No. 124, dated 26.09.2007. Address: Lagja “29 Nëntori”, rruga “Dervish Hekali”, pranë bar Rinia, AVN TV, Fier Cambists: Patriot Jaupaj, Miranda Jaupaj Tel.: 034 3 15 03 Cel: 069 24 73 555
91. “EXPRES CHANGE” LTD., FOREIGN EXCHANGE BUREAU VLORË Licence No. 125, dated 26.09.2007. Address: Lagja “28 Nëntori”, rruga “Mulla Xhaferri”, apt. 1111, Vlorë Cambists: Latif Breshan, Nexhmi Mustafaraj Cel: 068 22 08 961 Tel/Fax: 033 275 35
92. “MILI 2007” LTD., FOREIGN EXCHANGE BUREAU VLORË Licence No. 126, dated 26.09.2007. Address: Lagja “Osman Haxhiu”, rruga “Demokracia”, apt. 537, Vlorë Cambists: Ismail Shehu, Albert Malaj, Perparim Jaupaj Tel.: 033 30 381 Cel: 069 20 54 414
93. “EURO 2007” LTD., FOREIGN EXCHANGE BUREAU DURRËS Licence No. 127, dated 11.10.2007. Address: Lagja nr. 12, rruga “9 Maji”, Durrës Cambists: Raimond Çollaku, Yllka Lala, Arben Çuni, Ngushullim Hyzoti Mobile: 0692042778
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94. “XHO-2007” LTD., FOREIGN EXCHANGE BUREAUTIRANË Licence No. 128, dated 29.10.2007. Address: Rruga ”Kavajës”, pallati nr. 96, shk. 2, ap. 16/1, Tiranë. Cambists: Arben Xhoxhi Mobile: 0682136633, 0682040313
95. “PLANET- CHANGE” LTD., FOREIGN EXCHANGE BUREAU TIRANË Licence No. 129, dated 31.10.2007. Address: Bulevardi. ”Bajram Curri”, pallati. Aviacionit (ngjitur me kafe bar OSKAR) Tiranë Cambists: Llazar Nuzi Mobile: 0692034178
96. “MARDEA” LTD., FOREIGN EXCHANGE BUREAU ELBASAN Licence No. 130, dated 05.11.2007. Address: Komuna Mollas, Fshati Mollas (pranë tregut fshatar), Elbasan Cambists: Bexhet Basha Mobile: 0682651144
97. “GOGA” LTD., FOREIGN EXCHANGE BUREAU TIRANË Licence No. 131, dated 07.11.2007. Address: Bulevardi “Bajram Curri”, pallatet “1 Maji”, shk. 8, apt.# 8, Tiranë Cambists: Florian Goga Tel.: 51 539 Cel: 0682152944
98. “MIKA” LTD., FOREIGN EXCHANGE BUREAU TIRANË Licence No. 132, dated 12.11.2007. Address: Rr. ”Myslym Shyri”, nr.120, “Nikolla Lena”, Tiranë Cambists: Gjergji Ici, Maksi Ici Mobile: 0682587113
99. “M & GR” LTD., FOREIGN EXCHANGE BUREAU TIRANË Licence No. 133, dated 12.11.2007. Address: Bulevardi ”Zogu I”, pallati. 654, shk.3, ap.17, Tiranë Cambists: Maksim Likaj, Akile Dhimitri Mobile: 0682061465
100. “LULI –SH-1985” LTD., FOREIGN EXCHANGE BUREAU VLORË Licence No. 134, dated 19.11.2007. Address: Lagja “Hajro Çakërri”, rruga ”Sadik Zotaj”, pranë Sheshit “Pavarësia”, Vlorë Cambists: Fabjon Xhemali Mobile: 03 331 682
101. “ALB – COMMERCE” LTD., FOREIGN EXCHANGE BUREAU TIRANË Licence No. 135, dated 20.11.2007. Address: Rruga “Bardhyl”, pallati. 18, shk. 4, apt. nr. 2, Tiranë Cambists: Jetnor Isufaj Dashamir Bejaj Mobile: 069 24 72 502, 069 22 88 012
102. “ANDET 2005” LTD., FOREIGN EXCHANGE BUREAU VLORË Licence No. 136, dated 26.11.2007. Address: Lagja “Osman Haxhiu”, Rruga “Demokracia” (pranë Sahatit), Vlorë Cambists: Petrit Veliu, Lutfi Nuredini Tel/Faks: 03 333 659
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Mobile: 069 22 90 778
103. “GITA” LTD., FOREIGN EXCHANGE BUREAU TIRANË Licence No. 137, dated 26.11.2007. Address: Rruga “Kavajës”, pallati. 138, shk. 2, ap.10, (kryqëzimi “21 Dhjetori”), Tiranë Cambists: Myftar Kaziaj, Gëzim Kaziaj Mobile: 0682134076 Tel/Faks: 04 236 904
104. “MIÇO-PALUKA” LTD., FOREIGN EXCHANGE BUREAU TIRANË Licence No. 138, dated 26.11.2007. Address: Rruga “Dibrës”, pallati 507, Tiranë Cambists: Mikel Paluka Mobile: 0682355526
105. “NIKOLARO” LTD, FOREIGN EXCHANGE BUREAU ELBASAN Licence Nr. 139, dated 26.11.2007. Address: Rruga ”Jorgji Dilo”, lagja nr.1, pallati 13, Cërrik, Elbasan Cambists: Sokol Dudija Mobile: 0682156030 tel/fax: 05 813 687
106. “REDI-R” LTD, FOREIGN EXCHANGE BUREAU TIRANË Licence No. 140, dated 27.11.2007. Address: Rruga “Avdyl Frashëri”, pallati. 11/1, shk.3, ap.12, Tiranë Cambists: Ylli Ramaj Mobile: 0692020577
107. “ARBEL” LTD, FOREIGN EXCHANGE BUREAU LEZHË Licence No. 141, dated 17.12.2007. Address: Rruga “Luigj Gurakuqi”, Lezhë Cambists: Alma Marku, Andrea Marku Tel: 02 153 530 Mobile: 0682034981
108. “A & Q” LTD, FOREIGN EXCHANGE BUREAU FIER Licence No. 142, dated 24.12.2007. Address: Lagja “29 Nëntori”, rruga “Kastriot Muço”, pallati 8, Fier Cambists: Arjan Çepele, Qemal Zylalaj, Novruz Zylalaj Mobile: 0682151139
109. “MERIDIANA TRAVEL TOUR” LTD, FOREIGN EXCHANGE BUREAU TIRANË Licence No. 143, dated 24.12.2007. Address: Rruga “Dëshmorët e 4 Shkurtit”, nr. 7, Tiranë Cambists: Andi Alimehmeti, Edmond Konomi Tel: 256644 Mobile: 069 20 22 637
110. “ORGES-CHANGE” LTD, FOREIGN EXCHANGE BUREAU DURRËS Licence No. 144, dated 27.12.2007. Address: Lagja 12, rruga “9 Maji” (pas bustit të Azem Hajdarit), Durrës Cambists: Skënder Trebeshina, Sokol Janina Mobile: 0692135783, 0683565265
111. “B.LIKA” LTD, FOREIGN EXCHANGE BUREAU TIRANË Licence No. 145, dated 31.12.2007.
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Address: Rruga “4 Shkurti”, pallati nr.3, Tiranë Cambists: Bashkim Lika, Maklen Mici Mobile: 069213322
112. “LI & CO” LTD, FOREIGN EXCHANGE BUREAU TIRANË Licence No.146, dated 03.01.2008. Address: Bulevardi. “Bajram Curri”, pallatet Agimi, shkalla 8, apt. b, Tiranë Cambists: Ligor Treni, Ferzilet Treni Tel: 259 990 Mobile: 068 20 08 111
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ANNEX 7
LIST OF BANKING SUPERVISION REGULATIONS AND GUIDELINES IN FORCE AS OF JULY 2008
1- Regulation “On granting a licence to conduct banking business in the Republic of Albania” approved by the Supervisory Council Decision No.71, dated 11.09.2002, amended by the decision No. 03 of 26.01.2005 and decision No. 80 of 25.10.2006.
2- Regulation “On managing banks and branches of foreign banks” approved by the Supervisory Council Decision No. 120, dated 30.12.2003, amended with the decision No. 69 of 13.09.2006.
3- Regulation “On licensing the non-bank financial institutions”, approved by the Supervisory Council Decision No. 96, dated 26.11.2003, amended with the decision No. 88, of 16.11.2005.
4- Regulation “On credit risk management”, approved by the Supervisory Council Decision No.52, dated 14.07.2004, amended by the Supervisory Council Decision No. 101, dated 27.12.2006.
5- Regulation “On the size and fulfilment of minimum initial capital for the permitted activities of licensed banks and branches of foreign banks”, approved by the Supervisory Council Decision No. 51, dated 22.04.1999.
6- Guideline “On regulatory capital”, approved by the Supervisory Council Decision No. 57 of 05.05.1999, and amended by the Supervisory Council Decisions No.21 of 24.03.2004, No. 21 of 24.03.2004, No. 45 of 08.06.2005 and No. 70 of 12.09.2006.
7- Regulation “On reporting the capital adequacy ratio”, approved by the Supervisory Council Decision No. 58 dated 05.05.1999 and amended by the Supervisory Council Decisions No.86, dated 07.11.2001; No.72, dated 11.09.2002; No. 30, dated 16.04.2003; No. 82, dated 08.10.2003; No. 22, dated 24.03.2004; No. 46, dated 08.06.2005, and no. 7, dated 31.01.07 .
8- Regulation “On open foreign currency positions”, approved by the Supervisory Council Decision No. 59, dated 05.05.1999, amended by the Supervisory Council Decision No. 118, dated 01.12.1999.
9- Regulation “On foreign exchange operations” approved by the Supervisory Council Decision No. 64, dated 30.07.2003, amended by the Supervisory Council Decision No.101, dated 10.12.2003.
10- Guideline “On banks’ liquidity”, approved by the Supervisory Council Decision No.04, dated 19.01.2000, amended by the Supervisory Council Decision No. 08, dated 12.02.2003.
11- Regulation “On market risks”, approved by the Supervisory Council Decision No. 72, dated 02.06.1999, amended by the Supervisory Council Decision No. 98, dated 19.12.2001.
12- Regulation “On internal audit system in banks and branches of foreign banks”, approved by the Supervisory Council Decision No. 24, dated 26.03.2008.
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13- Regulation “On bank’s investments in the equity of commercial companies”, approved by the Supervisory Council Decision No.42, dated 06.06.2001.
14- Guideline “On interest rate risk management”, approved by the Supervisory Council Decision No.61, dated 05.07.2000.
15- Regulation “On prudential rates of non-bank financial institutions” approved by the Supervisory Council Decision No. 60, of 05.07.2000 and amended by the Supervisory Council Decisions No.31, of 27.04.2005.
16- Regulation “On authorized chartered auditors of the banks”, approved by the Supervisory Council Decision No. 06, dated 29.01.2003, amended by the Supervisory Council Decision No.102, dated 10.12.2003.
17- “The reporting system of savings and loan associations” approved by the Supervisory Council Decision No. 44, of 08.06.2005.
18- Guideline “On certificates of deposits”, approved by the Supervisory Council Decision No. 79, dated 03.10.2001.
19- Regulation “On money laundering prevention” approved by the Supervisory Council Decision No.10, dated 25.02.2004.
20- Regulation “On licensing the savings and loan associations” approved by the Supervisory Council Decision No.11, dated 27.02.2002 and amended by decision No. 09, dated 12.02.2003.
21- Guideline “On banks’ conservatorship and receivership”, approved by the Supervisory Council Decision No.45, dated 12.06.2002.
22- The Supervisory Council Decision No. 58, dated 24.07.2002, approved to add the “banking activity related to gold and precious metals” to the permitted banking activities. 23- Regulation “On supervising the savings-loans associations”, approved by the Supervisory Council Decision No.43, dated 08.06.2005 and amended by decision No. 68, dated 13.09.2006.
24- Regulation “On licensing, organization, operation and supervision of foreign exchange bureaus”, approved by the Supervisory Council Decision No. 31, dated 06.06.2007, amended by the decision No. 73, dated 27.11.2007.
25- Guideline “On reporting the foreign exchange operations”, approved by the Supervisory Council Decision. 69, dated 30.07.2003.
26- Regulation “On supervising electronic banking transactions” approved by the Supervisory Council Decision No.28, dated 30.03.2005.
27- “Reporting system of non-bank entities conducting financial activities”, approved by the Supervisory Council Decision No.32, dated 27.04.2005.
28- Regulation “On consolidated supervision of banks”, approved by the Supervisory Council Decision No. 68, dated 28.07.2005.
29- Regulation “On minimum technical and security conditions of work premises at the entities licensed by the Bank of Albania” approved by the Supervisory Council Decision No. 102, dated 28.12.2005.
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30- Regulation “On the use of communication and information technology in entities licensed by the Bank of Albania” approved by the Supervisory Council Decision No.32, of 03.05.2006.
31- Methodical Guideline “On foreign exchange risks” of 1999.
32- Regulation “On operational risk management at branches of foreign banks” approved by the Supervisory Council Decision No 57, dated 15.10.2007.
33- Unified reporting system on branches of foreign banks, approved by the Supervisory Council Decision No. 58, dated 15.10.2007.
34- Regulation “On risk management arising from large exposure of banks” approved by the Supervisory Council Decision No.31, dated 30.04.2008
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Endnotes
1 Decision No 78 of 12.12.2007 of the Supervisory Council of the Bank of Albania approved the merging of the Italian Albanian Bank Jnt.Stk., with the American Bank of Albania Jnt.Stk., and decision No. 22 of 12.03.2008 revoked the licence of the Italian Albanian Bank Jnt.tk. 2 Concerning Raiffeisen Bank as at end 2006, the number of branches of this bank was reduced in Librazhd, from 2 to 1. 3 Concerning Raiffeisen Bank as at end 2006, the number of branches of this bank dropped from 4 to 2 in Korça. 4 Concerning Raiffeisen Bank as at end 2006, the number of branches of this bank dropped from 2 to 1 in Tepelena. 5 Concerning Raiffeisen as at end 2006, the number of branches of this bank dropped from 2 to 1 in Çorovoda. 6 Concerning Raiffeisen Bank as at end 2006, the number of branches of this bank dropped from 2 to 1 in Pukë. 7 Concerning Raiffeisen Bank as at end 2006, the number of branches of this bank dropped from 2 to 1 in Përmet. 8 They are loans granted to households, who are assessed as high-risk borrowers. Therefore their interest rate is higher than that of the market. 9 The number updating for branches and agencies of the bank is made on the basis of information sent from the bank to the Bank of Albania on February 2007. So, of 83 branches and agencies reported at end 2006 according to annual information of the Raiffeisen Bank, given the accuracy sent on February 2007 the number of branches of this bank at end 2006 amounts to 93. The difference is 10 more branches. 10 Preliminary approval has been given for Prizren and Pristine branches. 11 The network of the Branch of First Investment Bank in Tirana has been transferred to First Investment Bank - Albania Jnt.Stk., based on the Agreement “On transferring the activities from the Branch of First Investment Bank to First Investment Bank – Albania Jnt.Stk., Tirana”. The licence of the Branch of First Investment Bank in Tirana has been revoked with decision of the Supervisory Council of the Bank of Albania, No. 28 of 09.04.2008. 12 Data on average number of population for 2003, 2004, 2005 and 2006 have been obtained from the Monthly Statistical Report – December 2007 of the Bank of Albania (table 01 – 03). 13 Data on the population number for January 2008 have been obtained from the main web site of the Institution of Statistics (dated 03.06.2008). 14 About 21% in euro, 7% in gbp and 72% in usd, though the interest rates for usd were volatile during 2007. 15 60.4 percent of foreign currency securities have a residual maturity of up to 1 year. 16 Ref. Chart 3: Peer groups’ share to the system by total assets. 17 G2, without the added bank, reports a growth of ALL 33 bn. 18 Referring to the fourth quarter of the year, compared with the third quarter 19 This item includes credit granted to enterprises for real estate investment purposes, and to households for real estate purchases. 20 At end 2006 “non-performing credit outstanding” on net basis is estimated at 1.36 percent. 21 The considerable amount of written-off values during 2007 and concretely by ALL 304.7 million, unlike their decrease during 2006 by ALL 293 million, results to unreal improvement of “non- performing loans/credit outstanding” radio for 2007. 22 Data on region countries refer to the third quarter of 2007 (*Report on Turkey refers to October ’07.** Report on Albania refers to 2007 year-end). Source: “South Eastern Europe & Mediterranean Emerging Market Economies Bulletin”, November’07 (BOG). 23 Security investments include Albanian government bonds and securities purchased in foreign markets. 24 Percentage weights of the paid in capital are computed by taking into consideration even the revaluation difference. 25 According to accounting manual, the share premiums represent the amount paid by shareholders in excess of the nominal value of the issued shares.
106 Bank of Albania Bank of Albania 107 2007 Supervision Annual Report Supervision Annual Report 2007
26 On November 2007 27 The Alpha Bank-Tirana branch and the National Bank of Greece - Tirana branch 28 The decreasing effect of two branches of foreign banks is not included in calculating the regulatory capital growth of G2. 29 The regulation started to be implemented during the first quarter of 2007. 30 In computing the growth of total assets and off-balance sheet items of G2 peer group, the decreasing effect of two branches of foreign banks is not included. 31 The indicator encompasses four categories of assets shown in the table at the risk weighted accounting value, respectively by 0%, 20%, 50% and 100%, as well as the total of off-balance sheet items weighted by respective risk coefficients. 32 Capital adequacy for both banks is computed evidently below the banking system adequacy over 2007 and at the end of 2006. 33 A more detailed analysis of the behaviour of this indicator discovers its good and comparable performance almost for all banks of the system, with the exception of three banks. 34 This phenomenon is always highlighted in the last quarter of the year, for recalculating the current tax against the one foreseen during the year, while there are also evidenced two or three banks that report the tax effect only at year end, by not distributing it uniformly during the fiscal year. Anyway, the last argument seems to have influenced very slightly over 2007. 35 Non-average return on assets indicator is volatile and is not generally used in analyses. It is used in this analysis for purposes of comparability to EU and Greece. 36 Source: Bank of Greece, Q3, 2007. 37 This methodology was used for the first time by the Bank of England in its financial stability reports and later on it was used by the Bank of Denmark and the Bank of Sweden. 38 Net interest income; net income from other resources 39 Risk-weighted assets for end of 2007 have been computed on a per annual basis, based on third quarter reports only for two banks, the Alpha Bank and the National Bank of Greece, which during the fourth quarter and onward have been subject to a new regulatory framework on branches of foreign banks and therefore, they are not liable to report the risk-weighted assets for the effect of CAR calculation. 40 Particularly when it speaks about fast and consecutive growth, under the conditions when the indicator has achieved a relatively accommodating level. 41 The growth of the second component may be somewhat explained by proportional supplies launched by some banks to absorb favourable interest deposits. 42 Expenses from other non-core activities, excluding provisioning expenses. 43 The Bank of Albania (2003), Monetary and Financial Statistics Methodology. 44 Including the total assets of non-bank financial institutions “Tirana Leasing” and “Besa”, which are not subject to supervision by the Bank of Albania, as well as the non-bank entity “Albanian Partner in Microcredit” (name changed into “Opportunity Albania”), which is licensed by the Bank of Albania, thus becoming subject to supervision by the BoA since 06.06.2007. 45 According to the Regulation “On supervising savings and loan associations and their unions” Article 11, which addresses to reporting issue, these institutions are bount to report to the Bank of Albania on the financial position and prudential rates at a six-month frequency. 46 All the indicators are on gross basis (provisions included). The indicators referring to non-bank financial institutions do not take into account the data of non-bank entities not under Bank of Albania supervision. 47 Data refer to end of 2007. 48 It refers to end of 2007. 49 Housing stock in Romania till end of ’90 has been higher than the overall demand for housing. 50 The data refer to end 2005. 51 The data refer to end 2007. 52 Source Monetary Policy Department, BoA 53 NCP, CB, ABA, NBG, Alpha 54 According to stipulation of the supervisory regulatory framework on housing (mortgage) loan portfolio, the weighting with a risk coefficient of 50% of this portfolio for the effect of calculating the capital adequacy, requires twice less monetary capital units than for other types of loans and for the same assets size, with the purpose to maintain the minimal rate of 12% of the capital
106 Bank of Albania Bank of Albania 107 2007 Supervision Annual Report Supervision Annual Report 2007
adequacy. 55 These rates represent respectively the average interest rate in Euro and in ALL. 56 The information coming from international markets depicts that though the Federal Reserve has cut the base interest rate at rapid paces, the LIBOR index that constitutes a fundamental index for quotation of overall loans has remained high, due to insecurity existing in the market because of sub-prime crisis. 57 Source MPD, BoA 58 Total deposits of the system account for about 85% of total assets, December 2007 59 Risk arising from a large mismatch between deposits and loans may be reduced from the deposit base enlargement. 60 Houses, in a major part of borrowings, have the collateral status. 61 The updating of the number of bank branches and agencies is made, based on the information the Bank sent to the Bank of Albania on February 2007. So, of 83 branches and agencies reported at end 2006 according to the annual information of the Raiffeisen Bank, following the accurace sent on February 2007 the number of branches of this bank at end 2006 amounts to 93. The difference is 10 more branches. 62 Preleminary approval has been given for Prizren and Prishtine branches.
108 Bank of Albania Bank of Albania PB