Albanian Association of Banks

Publication of the Albanian Association of Banks
No. 18, January 2016
Bankieri
AAB 2016
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AAB MEMBERS
Content
Bankieri
Bankieri
No.18, January 2016
Publication of the Albanian Association of Banks
No. 18, January 2016
.
Botim i Shoqatës Shqiptare të Bankave
Editorial
Anti - Informality
From word of the day to rule of Thumb!
Elvin MEKA
Frontline
Banks facing informality
What is the role to play?
Gideon Van Den BROEK
Formalizing the economy
A very complex endeavor
Arben MALAJ
Interview
American Bank of Investments
A new synergy between the bank and non bank
Andi BALLTA
ANTI
INFORMALITY
Both sides of the story
.
Bankieri is the official
publication of the Albanian
Association of Banks which
mainly focuses on the Albanian
banking industry. Bankieri
provides readers with valuable
information on the financial
industry's developments in
general, and of commercial
banks in particular.
ALBANIAN ASSOCIATION OF BANKS
Street "Ibrahim Rugova"
SKY TOWER, 9/3, Tirana
Tel: +355 4 2280371/2
Fax: +355 4 2280 359
E-mail: [email protected];
www.aab.al
Banking System
Trade Finance:
Is there any demand in Albania?
Ardita SEKNAJ
Banks' profits…in the line of fire!
Ermal NAZIFI
Special
Financial education: An essential investment
Wim MIJS
Experts' Forum
The Albanian Eurobond:
A successful reissue
Suela TOTOKOÇI
Big Data and the Albanian banking system
Alban BURAZERI
Electronic payment systems in Albania
Increasing efficiency through projects and innovation
Irida HUTA, Dritan MOLLANJI
Economist Corner
Messages and effects of FED decision
to raise key interest rate
Adrian CIVICI
Social Capital
Banks' activities
Tech Topic
Security Operations Center
Challenges and Benefits
Anila HOXHA
Financial Auditorium
Loan restructuring
Testing the customer before making the decision on
loan restructuring
Elsa PECA
EDITORIAL TEAM:
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Elvin Meka
Editor-in-Chief
Eftali Peçi
Coordinator
Junida Tafaj (Katroshi)
Collaborator
Andis Rado
Photographer
Design & Layout: FCB Afirma
Printed by:
EDITORIAL BOARD:
Christian CANACARIS
AAB Chairman & CEO of
Raiffeisen Bank Albania
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Gazmend KADRIU
AAB Vice Chairman & CEO
of Union Bank
Periklis DROUGKAS
AAB Executive Committee
Member
& CEO of Alpha Bank
Albania
Seyhan PENCABLIGIL
AAB Executive Committee
Member
& CEO of Banka Kombëtare
Tregtare
Frédéric BLANC
AAB Executive Committee
Member
& CEO of Societe Generale
Albania
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Bozhidar TODOROV
AAB Executive Committee
Member
& CEO of FIBank Albania
Endrita XHAFERAJ
Secretary General,
Albanian Association of
Banks
Hysen ÇELA
Chairman of Albanian
Institute of Authorized
Chartered Auditors (IKEA)
Adrian CIVICI
President of European
University of Tirana
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AAB Activities
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AAB Trainings
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Spiro BRUMBULLI
Chief of Cabinet, Ministry
of Finance
Enkeleda SHEHI
Chairwoman of Albanian
Financial Supervision
Authority
www.aab.al
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Editorial
Anti - informality
From word of the day to rule of Thumb!
It should be clear to everyone that the formalization of
economy is a system of necessary, but painful and complex,
reforms, especially in the frame of Albanian economy and
society, but in any case it cannot be reduced and identified
as a simply taxmen’s campaign, which produces more tax
revenues and tax receipts.
by Prof. Asoc. Dr. Elvin MEKA1
Editor-in-Chef
D
uring the last quarter of 2015,
the term “anti – informality”
turned out to be not only the
word-of-the-day, but also the actionof-the-day, by being the epicenter of
all debates and discussions, be they
professional, social and political ones. Of
course, such endeavors and undertakings
are assessed, judged and prejudged
according to interests of various
stakeholders, and this is not an Albanian
practice, but a global one. Despite this,
the least common multiple of all this
government undertaking is the need for
a higher degree of formalization of our
national economy, whereas the approach
for its practical implementation remains
an open discussion.
It remains a fact of life that,
commercial banks in Albania have been
in the front line for supporting any
efforts and undertakings, pertaining to
formal economic activity and economic
and financial formality per se. It must
be noted that, banks in Albania had
to cope, since the Day One of their
activity, with an extreme pragmatism
and paradox: increasing and expanding
their loan portfolio, whilst maintaining
and preserving lending standards and
starting from scratch, towards an
emerging, latent capitalist economy and
entrepreneurs, without any inherited
financial, fiscal and business culture,
in the frame of a completely new form
of government, for which the former
had to pay levies and taxes. In this
mosaic of economic, political and social
development of the last 25 years, all
stakeholders have worked hard to turn
informality from a rule to an exception,
and here banks have been definitely the
key factor and mechanism in such a
transition, through their "soft power" of
documents’ regularity and by satisfying,
at best, the established lending standards.
Obviously, not all battles are won, both
by government and by banks, but it is
more than certain that the "war" is way
long, if not an everlasting one, because
it is based upon a simply right principle
and the challenge now is to switch from
the concept of formalizing the economy
as the word-of-the-day to that of the rule
of thumb, so having formal businesses
and economy, as part of the rule of
everyday life and activities.
In this context, no one more than
the banks has been long waited for
the anti - informality campaign by the
Albanian government, but in their role
as cool-minded decision-makers they
want to see calm, motivated, informed,
highly entrepreneurial clients, with
adequate and relevant financial and
fiscal knowledge. Banks will continue to
provide their valuable and unconditional
contribution, not only in this battle, but
in the whole “war” for formalization, in
their unique role of a partner at arms’
length with government and businesses.
However, it should be clear to everyone
that the formalization of economy is a
system of necessary, but painful and
complex, reforms, especially in the
frame of Albanian economy and society,
but in any case it cannot be reduced and
identified as a simply taxmen’s campaign,
which produces more tax revenues and
tax receipts. The latter is just one of
the battles of such everlasting war, but
frankly speaking not the only and the
most important one, when placed beside
battles against unemployment, poverty,
economic and consumption growth,
competitiveness of the economy and
nation’s welfare, as part of formalizing
national economy and its development
upon solid and sustainable foundations.
This is a long road and all have to accept
that Roma non fuit una die condita
(Rome wasn't built in a day)!
1
Vice Rector for Academic Process, UET.
www.aab.al
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Frontline
Banks facing
informality
What is the role to play?
by Mr Gideon Van Den BROEK
Chief Executive Officer
INTERNATIONAL COMMERCIAL BANK (ICB)
F
irst of all, I will present the opinion
of International Commercial
Bank as a financial institution
but can’t speak for the other financial
institutions active in Albania. As an
institution we welcome the efforts taken
by the Albanian government to reduce
informality in the Albanian economy.
Transparency in daily activities is critical
when dealing with financial institutions;
this goes not only for businesses but
also for individuals. Banks will have a
significant role to play in this transition
process, but are pieces of the puzzle.
Achieving the targets set in the campaign
against informality it will undoubtedly
require collaboration amongst all
stakeholders.
Addressing informality in the banking sector predominantly focuses on
crediting the businesses in Albania.
It is critical for any credit analysis to
have a detailed understanding of the
financial performance of a company,
and the mere fact that banks had to
adapt their current credit assessments
by analyzing both management and
declared accounts, doesn’t justify the
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We should be aware of certain pitfalls, that it is clearly
difficult to attain the target of achieving 100 % formality in
January 2018, unless business owners are not sufficiently
and properly equipped and guided with necessary tools to
attain a defined status of formality.
existence of an informal economy. In
fact, it reflects that businesses – and I’m
generalizing – are unwilling to evolve
from the early days of a free market
and to accept the mere fact that tax
payments, in line with the performance
of their businesses, is a citizen’s duty,
which ultimately contributes for a better
economic position of the whole nation.
It displays the “Albanian sport” of
minimizing taxes paid at any moment
in time, which probably leads back to
the simple fact that business owners are
skeptic towards the use of tax-funds by
government. Why pay if you’re unclear
on what you receive in return of the taxpayments. This is an essential element to
address in conjunction with the effort to
fight and reduce informality.
Migrating from an informal to
a formal economy is a road which
deserves to be taken seriously, as it will
require a clear roadmap, with specific
targets for all stakeholders involved. An
alignment between all stakeholders (Tax
Directorate, the Albanian Association of
Banks, Bank of Albania, the Albanian
FIU, other governmental bodies, bu-
siness owners, etc.) is a must, as this is
to be addressed as a multi-year program.
On July 2nd, 2015, the Ministry of
Economic Development, Tourism, Trade
and Entrepreneurship, set the target for
banks that, from January 2018 they
must solely rely on businesses’ Tax
Office declarations, when making their
credit assessments, only.
Banks are a vehicle to enforce the use
of declared statements, but this will only
Overall, the move to a greater
formality will have a positive
impact on the health of
the economy and the ease
of credit to businesses.
Currently, the assessment of
a business by applying both
management and declared
accounts is cumbersome and
doesn’t always provide the
full picture on the financial
stability of the company.
apply to those businesses with actual
financing needs. Under the auspices of
the Albanian Association of Banks, and
in collaboration with Bank of Albania,
we can set simple measures determining
under what level banks are allowed to
accept management account vis-a-vis
declared statements.
Currently the benchmark is set at
10 per cent of capital held by a bank,
meaning that any loan greater than 10
per cent of the capital will be granted
based upon fully declared financials,
only. We can build on this, and rather
than linking it to the capital levels of
any financial institution one could look
at the level of formality of the potential
customer. On the other hand, to reduce
informality by 2018 is a clear target but
one can’t just go from 0 per cent to 100
per cent formality overnight. It requires
diligent planning and stakeholders
should clearly communicate the annual
expectations to the businesses.
We need to coach business owners
to increase their formality at a predefined pace (it is up to the business
owner to move faster), by defining a
maximum percentage of acceptance
of management accounts, for example
starting by January 2016 banks will only
take into consideration management
accounts up to 50% of declared, January
2017, 25% and by January 2018, 0%!
This practical approach will need to
become the market practice (accepted
by all banks), to ensure an even playing
field. Furthermore, the adoption of these
measures by banks can be validated
by the Central Bank, in its role as a
regulator, during its regular audits of
commercial banks in Albania.
While this simple approach will
facilitate the acceptance of banks to
recognize declared accounts, it will
only impact customers with financing
needs. Hence, there is need to align
all stakeholders to ensure that such
measure must have a 100% reach of the
businesses. Business owners will require
support in dealing with this increase in
formality, they will need to be supplied
with tools and skills – especially the
small businesses (most likely those
recently registered but active in the
market for multiple years) will lack
the mere capacity to implement proper
book-keeping. Education is therefore
key to success, which must be combined
with simple off-the-shelf accounting
tools, in order to provide businesses
with proper tools in this regard. Banks
can play a coaching role on this matter,
when dealing with credit requests from
potential customers; yet one need to
think of other methods to educate the
business owners.
Overall, the move to a greater
formality will have a positive impact on
the health of the economy and the ease
of credit to businesses. Currently, the
assessment of a business by applying both
management and declared accounts is
cumbersome and doesn’t always provide
the full picture on the financial stability
of the company. The analysis process is
therefore fairly lengthy (depending on
the loan size) the move to formality will
simplify the crediting process and thus
reducing the turnaround time for banks
and customers.
A very positive spin-off effect of
Migrating from an informal to
a formal economy is a road
which deserves to be taken
seriously, as it will require a
clear roadmap, with specific
targets for all stakeholders
involved. An alignment and
coordination between all
stakeholders is a must,
as this is to be addressed
as a multi-year program
and conveyed as a unified
message and clear roadmap
with annual auditable targets.
the fight against informality will be
the improved registration of salaries.
Business owners will need to include
in their reporting the wages and social
security contributions, paid for their
staff. It is quintessential to stimulate
consumer spending, i.e. consumer
lending, it is the ability for the individual
to show proof of income. The current
situation of salaries being paid in cash,
or a hybrid of cash and bank transfer
(normally for the minimum income) not
only harms the protection of the salaried
employee (social security if any not in
line with the actual salary levels), but it
also hinders them when applying for a
consumer credit. Given that banks will
only recognize the income generated
and routed through bank accounts, as
the actual monthly earning power of
the individual, even if customer receives
additional income in cash, it is not
recognized and therefore reduces the
eligibility of obtaining any consumer
loan. It is a self-fulfilling prophecy, since
better declared wages through bank
accounts will facilitate consumer lending,
which at the end facilitates consumer
spending, the impacts positively the
economy and the businesses operating
within it.
In conclusion, the actions taken
against informality, although at their
early stages, are essential for the economic
development of the country. Yet, we
should be aware of certain pitfalls, that
it is clearly difficult to attain the target
of achieving 100 % formality in January
2018, unless business owners are not
sufficiently and properly equipped and
guided with necessary tools to attain a
defined status of formality. Coordination
amongst stakeholders, a unified message
and a clear roadmap with annual
auditable targets, will facilitate the
success. It will fuel not only the business
lending activities, but also will further
the growth of lending for individuals.
Banks will definitely play a significant
part in this process, but success will only
be achieved in collaboration with all
other stakeholders.
www.aab.al
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Frontline
Formalizing the economy
A very complex endeavor
A series of academic research have argued that, the reduction
of informality should be based upon a well-studied strategy, it
should be a mid-to-long-term one, should aim at focusing on
easing side, should be integral and include as many factors and
stakeholders of economic and social developments.
by Prof. Asoc. Dr. Arben MALAJ
President
INSTITUTE FOR PUBLIC POLICIES AND
WELLBEING, IPPM
T
here are many references and
classifications
about
what
is included in the informal
economy. The common ground is that
of paying a part portion or all fiscal
obligations. Generally, informal money
are found in a number of businesses,
mostly small and individual ones,
whereas the criminal money in an ever
smaller number of them. The former
pose a tiny threat for democracy, but the
latter are a real and a growing threat.
Money from the black economy become
even more dirty and threatening,
when invested in politics, with the
aim of state capturing. The high level
of informality in our economy puts
its respective reduction as one of the
top priority structural reform, for any
government. Positive effects are related
to better transmitting of monetary,
financial and structural policy, toward
a large part of the economy.
If we accept that informality in our
country is at 33-36%1 of the formal
one, this means that more than 1/3
of economic activity is out of reach
1
to take advantage of supportive and
encouraging economic policies. More
than 1/3 have limited access to credit
resources of their business; they do
not benefit from schemes for the
SMEs incentives schemes. If 1/3 of the
economy has such obstacles toward
development, then the overall economy
will grow below its potential, thus
Gradual reduction with a
facilitating logic towards the
informal economy is a win –
win approach for the banking
system. This is so, as the
formalization, on its first
steps, is recommended to be
handled through facilitating
financing schemes, which
requires cooperation
between banking system,
which provide loans with
commercial terms, and
government which facilitates
trading costs through risksharing schemes.
producing problems with the stability
of public finances and economy’s
productivity.
Currently, developing the country's
economy in new phase will be
conditioned significantly in its growth,
sustainability and quality of economic
growth. The increase of our economy’s
competitiveness is conditioned by
several significant structural reforms,
such as: (i) efficiency of public services,
energy, water, transport, lighting which should eliminate subsidies,
either directly or indirectly, because
they have severely limited state budget
resources to finance better education,
health, infrastructure, agriculture
and tourism; (ii) reduction of subsidy
level for unbalanced schemes of
health and social security, which are a
heavy burden for Albanian taxpayers.
Roughly USD 460 million of tax payers
money do not go to increase public
investments in sectors that determine
the quality of economic development
and for a gradual reduction of public
debt, instead they subsidize the deficit
of social security and health schemes;
(iii) the reforms in managing public
companies and agencies - their illmanagement causes huge losses to
our economy, not only financial ones,
but also with poor quality of services
and supplies they must guarantee; (iv)
IMF - An Empirical Study of their Impact on Taxpayer Compliance and Administrative Efficiency, May 2015, https://www.imf.org/external/pubs/ft/wp/2015/wp1573.pdf.
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the group of most difficult reforms,
but the most necessary ones, such as
those which the business environment.
The weak rule of law, lack property
freedom, endemic levels of corruption
and state capture – continue to put
reins on the potential for higher and
quality economic growth.
If we refer to some of major indexes
which scan various economies in the
world, they will help us to clarify the
main issues and spot real obstacles
and will understand repeated failures,
during our difficult transition. Some
of these indices include: (1) economic
freedom, (2) corruption perception, (3)
transition indicator, (4) doing business
and paying taxes, and especially (the)
global competitiveness index.
But what is the impact such actions
cause on the overall business climate
and furthermore, what is the impact and
consequences of such undertakings, in
terms of business applications for bank
loans? As cited above, the fight against
informality is indispensable and
worthwhile. So, the diagnosis phase of
the critical situation should be followed
by the next step, the therapy, the degree
of intervention, necessary means and
medical care, before, during and after
the intervention/action. The reform
would facilitate: (i) clarifying the vision
(i.e. a reform or an action); (ii) setting
practical and measurable objectives
and indicators; (iii) the type of chosen
intervention at three levels, legislative
- laws and regulations, relevant
institutions responsible for reform’s
implementation and improvement of
relevant authorities’ efficiency; (iv) the
pace of action, to achieve sustainable
results; (v) the ratio between sticks and
carrots – international studies show
that the reduction of informality will
ask for giving priority to facilitating
(carrot), rather than penalizing (stick);
(vi) would clarify the time frame for
achieving the objectives and practical
goals; would provide the monitoring
scheme and terms, as well as the time
frame for review, e.g. a 5 – 7-year
reform needs to be reviewed twice a
year and to be updated once a year
and finally, would clarify, within the
functioning government scheme, and
also within that of non-governmental
institutions, who does what and when.
Gradual reduction with a facilitating logic towards the informal
economy is a win – win approach
for the banking system. This is so, as
the formalization, on its first steps, is
recommended to be handled through
facilitating financing schemes, which
requires cooperation between banking
system, which provide loans with
commercial terms, and government
which facilitates trading costs through
risk-sharing schemes. Formalization
puts into economic circulation the
individual wealth, which is meant
to facilitate borrowing, by way of
stepping into a high degree of activity
and profits. In this regard, the Bank
of Albania, the Albanian Association
of Banks, together with other business
associations or potential donors could
finance a comprehensive study about
causes and size of informal economy, as
well as a national strategy of reducing
it. Experiences of such studies are
found everywhere.
Regarding the threat for banking
activity, loan demand and economic
growth such actions may pose, should
they be ill-studied and not accompanied
by other facilitating measures in
the economy, we must distinguish
between the immediate effect and the
sustainable effect. The most important
aspect here is the so-called "timing"
- the time chosen for launching a
reform, an action, or an endeavor.
In this context, the time chosen for
Business and banking
associations should promote
comprehensive studies, as
they should be stakeholders in
designing and implementing
successful structural reforms
in the economy; they need to
improve their management
and their professional
relationship with businesses.
the action against informality was
inappropriate. It was proper time to
start a reform that eases informality,
because the reduction of informality,
based on an ease of formalization,
could have created new sources of
growth, at a time when economic
growth is the most difficult objective
for any government, especially during
current times, when social challenges
are really tough. The action against
informality created pressure for closure
of informal activities; it has caused a
temporarily increased unemployment
and other social wounds, whereas the
formalization through easing would
have not created such situation.
Even in case of lending, it seems
that "timing" was not considered, since
the fight against informality gained
momentum in the period when, for
many reasons, our commercial banks
were under severe restrictions, in terms
of new lending. It is not a coincidence
that, in the global competitiveness
index of 2014-2015, the main obstacle
for business was the access to financing
sources.2
If we go through a retrospective
analysis of results produced by the action
against informality, some troubling
consequences are easily evidenced,
ranging from the serious violation
of the principles of proportionality
and the rule of law, which means
separation, balance and control of
powers. The Constitutional Court's
decision to freeze the Law On Tax
Procedures is an additional argument
in this public debate and a positive step
in clarifying the constitutional limits,
every government faces, in governing
its own country.
Repressive measures have fueled
uncertainty and, according to Bank
of Albania, they have depleted the
consumption resources, by displaying
even decreasing levels of anticipated
economic growth. Such measures
prompted mass migrations and
increased applications to emigrate.
The reduction of human resources
and social capital is the most serious
challenge, each country faces, as more
countries will face with not easygoing
demographic challenges, in the near
World Bank: Shadow Economies All over the World New Estimates for 162 Countries from 1999 to 2007, Policy Research Working Paper 5356,
https://openknowledge.worldbank.org/bitstream/handle/10986/3928/WPS5356.pdf?sequence=1
2
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future. Albania has still better chances
to use its demographic dividend,
before facing the European plague of
demographic deficit and increasing
structural unemployment.
Our criticism (www.ippm.al) for the
government action against informality,
and how the action could have been
better oriented and implemented, as
well as the potential benefits to all
stakeholders, including banks, relied
on studies by international financial
institutions, which had studied the
informal economy in 188 countries,
during the period of 1999-2009 and
an IMF study on issues with actions of
reducing the informality, by imposing
the absolute use of cash registers.3 Not
only these two studies, but also a series
of academic research have argued that,
the reduction of informality should be
based upon a well-studied strategy,
it should be a mid-to-long-term one,
should aim at focusing on easing side,
should be integral and include as many
3
factors and stakeholders of economic
and social developments.
Business and banking associations
should promote comprehensive studies,
as they should be stakeholders in
designing and implementing successful
structural reforms in the economy; they
need to improve their management
and their professional relationship
with businesses. Banks must not seek
and support the legal initiatives, even
up to the Civil Code, which affect
fundamental principles and vital rights
of every individual, in their contractual
relationship with banks and other
entities, be a public or private one.
If commercial bans’ problems are
intended to be solved by limiting or
disregarding these rights, then the
respective benefits will be limited and
temporary. Based on personal study
experience and the public mandates,
it has come the time for some bankers
to realize that there are no healthy
banks without a healthy economy.
The economy grows better through
structural reforms, which focus on
quality of institutions and the rule of law.
Financial intermediaries could handle
better the positive restructuring of our
country’s economy, by distributing and
redistributing savings/deposits and
profits toward more productive public
and private investments.
Finally, the government must
fulfill its obligations in reforms that
enhance and guarantee the freedom of
property, which reduce the obstacles
of corruption and state capture, by
eliminating additional costs of critical
shortages for business, such as: the
access to normal electricity and water
supply, physical, legal and commercial
infrastructure. The more relieved and
improved the business environment
is, the less time for red taping and the
more time to succeed. The less the cost
from barriers to business are, the more
sources of funding for growing and
modernizing the economy will benefit.
World Bank Doing Business 2016 Measuring Regulatory Quality and Efficiency http://www.doingbusiness.org/data/exploreeconomies/albania/~/media/giawb/
doing%20business/documents/profiles/country/ALB.pdf
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11
Interview
American Bank of
Investments (ABI)
A new synergy between
the bank and non bank
Mr Andi BALLTA
Chief Executive Officer
AMERICAN BANK OF INVESTMENTS (ABI)
BANKIERI: What does it mean, for the
Albanian banking market, a private
equity fund buying a commercial
bank?
The Albanian banking system has
a long and very positive experience
with banks acquired by private equity
funds. Undoubtedly, the American
Bank of Albania was the first success
story of investment funds and the bank
which laid the foundation of modern
banking in Albania. Furthermore,
that bank brought the American spirit
of doing business (such as trust and
confidence in the banking system,
as well as respect for the client), at a
time when walking out of economic
crisis and restoring trust in financial
institutions, following the failure of
pyramid schemes in 1997, was more
than indispensable for the Albanian
market. Another success story is
Banka Kombëtare Tregtare, BKT,
which has become now the largest
bank in Albania. It is no coincidence
that BKT has one of the lowest levels of
non-performing loans. An investment
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Our first objective is to prepare the bank to operate
according to the new shareholders’ strategy, which relies
on the existing branch network in all major cities of the
country, the advanced information technology systems,
qualified and long-experienced bank’s staff and the unique
relationship with 'Tranzit Finance".
fund has a very close shareholder –
employee – customer relationship.
Employees feel more motivated to
serve customers, as they are treated
very differently, so there is greater
trust and greater responsibility put
with employees, by shareholders.
"NCH Capital" expansion in
Albania brings a very positive diversification of banking market investors
and expands the existing positive
experience with investment funds. As
a large fund, with a long regional and
global experience, and with a time-long
knowledge of the Albanian market,
"NCH Capital" intends to use the
American Bank of Investments, ABI,
as a platform for other investments in
the Albanian economy. Our country
and region is gradually stepping out
of a protracted economic crisis, caused
by the aftermath of global financial
crisis of 2008. The time we are going
through has a cyclical similarity with
early 2000s, although the reasons
causing the crises of 1997 and 2008
are di-fferent. We do expect an positive
economic growth in the coming years
and it is worth mentioning that, even
EBRD predicts a 3.8% GDP growth in
2016.
BANKIERI: What kind of innovations
ABI aims to bring in the Albanian
banking market?
ABI aims to be fast and flexible
in the banking market, by providing
traditional banking services and also
some other new services, which will
be communicated to the public, during
2016. Our first objective is to prepare
the bank to operate according to the
new the shareholders’ strategy. This
strategy relies on the existing branch
network in all major cities of the
country, the advanced information
technology systems, qualified and
long-experienced bank’s staff and
the unique relationship with 'Tranzit
Finance". ABI is definitely the most
liquid bank in the market and creates
the highest banking confidence for
depositors and greatest opportunities
for borrowers.
BANKIERI: What will be ABI’s
distinguished feature in this market?
We aim to be more willing and
quicker at meeting customers’ needs,
which are not so interesting for big
banks, as well as providing some
additional services that are not
currently provided in the Albanian
banking market. We will bring
back confidence, optimism, rhythm,
customer care and respect, which
are highly correlated with being
"American".
BANKIERI: Why Albania is an
attractive market for NCH private
equity fund?
Albania has been the center of
NCH for Western Balkans and Greece,
since 2008, as Albania is a country
with the most interesting investment
opportunities in the region. It remains
a very significant and impressive
fact that the Albanian economy has
progressed, despite small demographics
and historical economic isolation.
Albanians are the most optimistic
nation and the least pretending one.
This is a very important competitive
advantage, which is often overlooked.
Many of the most advanced labor
markets’ features (e.g. New York),
are currently noticed in Albania. The
regional and global exposure of senior
and mid-level professionals brings
a permanent improvement of the
performance quality, which keeps on
growing faster than the claims’ level.
As I mentioned earlier, the
economic growth in 2016 will be
approximately 4%. During 2015 we
experienced a satisfactory economic
growth in Albania. The successful
Eurobond re-offering in 2015 indicates
a high confidence of foreign markets
on the Albanian economy. The antiinformality reforms and focusing on
important sectors of the economy will
produce a lasting positive impact on
the banking system and the economy,
as a whole. Albania continues to be an
interesting and developing market, with
clear objectives towards joining the
European Union.
The Governor of Bank of Albania, Mr Gent Sejko, officially
concedes the license to the American Bank of Investments
During the ceremony, held on 4 December 2015, at the premises of National
Art Gallery, Mr Gent Sejko, the Governor of Bank of Albania, conceded the
banking license to Mr Lorenzo Roncari, Head of Board of Directors and to
Mr Ballta, Chief Executive Officer of the American Bank of Investments,
after the approval of Credit Agricole Bank’s purchase from the American
Bank of Investments, in October 2015. The ceremony was attended by
special guests, like: Mr Edi Rama, Prime Minister of Albania, Mr Donald Lu,
Ambassador of the United States of America in Albania, Mr Gregory Katz,
senior representative of American investors from NCH Capital Inc, Mr Rezzo
Schlauch and Mr Mark Crawford and other members of the Board.
During his speech, Mr Edi Rama, Prime Minister of Albania stated: “This
investment will be a strong driver of crediting and turns the newly licensed
bank into an attractive example for investors, which will further encourage
others to follow suit”.
Meanwhile, Mr Ballta, Chief Executive Officer of American Bank of
Investments, underlined that ABI aims at becoming a significant factor in
the Albanian banking market, with competitive and innovative products and
services for customers.
www.aab.al
Bankieri
13
Banking System
Trade Finance:
Is there any demand in Albania?
“Without trade finance, there will be no expansion of trade;
without trade, there is no need for trade finance.”
Vincent O’Brien1
Ms Ardita SEKNAJ
Secretary General
INTERNATIONAL CHAMBER OF
COMMERCE – ICC ALBANIA
B
oth international trade and the
financial sector are important
engines of growth in today’s
economies. Trade is probably one of
the oldest human activities, but its basic
function remains unchanged, throughout
history. Financial sector is critical to the
functioning of the economy as a whole,
and banks are central to the financial
system.
Albania is part of a globalized world
and uncertainty is present at every aspect
of the economic and daily developments.
The growing importance of these
two sectors in Albanian economy is
highlighted by their respective share in
output, over the last decades. According
to INSAT and Ministry of Finance’s data,
the ratio of international trade of goods
& services to GDP has risen from about
38 % in 2003 to about 58 %, in 2014. The
ratio of financial transactions (including
banks & insurance and real estate)
to GDP has maintained a sustainable
portion through the last five years, at
approximately 7%. The International
1
Center for Trade of the World Trade
Organization (WTO) recognizes that
Albania, despite achieving some of
the strongest growth in South Eastern
Europe, its trade is still hampered by
limited financial access, underdeveloped
transport and energy infrastructure, and
cumbersome regulatory and business
environments. So, stemming from what
above mentioned, it is important to note
that the well-functioning of the financial
system supports the international
trade by minimizing and covering its
Trade finance is a complex
process, including from 6 to 12
parties in a typical transaction,
with different responsibilities,
interests and risks, and trying
to get all those elements
generally in one or two pages of
letter, is a very difficult thing.
main risks, such as: exchange rate risk,
transportation risk, and political risk.
Financial institutions, acting as
intermediaries, play a crucial role in
facilitating international trade, by
developing instruments to provide the
so-called trade finance. Trade finance
is recognized as the provision of any
form of financing that enables a trading
activity at taking place. Trade finance
includes such activities, like: lending,
issuing letters of credit, factoring, export
credit and insurance. Trade finance is
provided by commercial banks, official
export credit agencies, multilateral
development banks, insurance firms,
suppliers, and purchasers in various
forms. Direct forms include: loans
to finance trade – related purchases,
prepayments by buyers, and delayed
payment by sellers. Indirect support
comes through financial intermediaries’
instruments, in the form of insurance,
guarantees, and lending with accounts
receivable as collateral. Most of these
contracts require some form of collateral.
Trade finance is a process that
includes not just the buyer, the seller and
the banks, but also insurance companies,
freight forwarders, shipping companies,
consolidators, inspection companies and
government units, involved with each
shipment. Thus, financial institutions
while assessing the process of a trade
finance transaction have to consider
multiple factors and parties. The
instruments offered for financing trade
vary between financial institutions,
depending on the perception of the
type and size of the risk involved in the
transaction; the distribution of risk and
risk reduction efforts between exporters,
Member of the ICC Executive Committee & Chair of ICC Banking Commission Market Intelligence Task Force.
14
Bankieri
www.aab.al
importers and their banks; and the costs
of risk reduction.
Banks provide financing through
their credit lines for working capital,
or other short – term lines, by issuing
bank guarantees, letter of credits, and
discounting documents, or other related
structured trade finance instruments.
Insurance companies, as well, provide
insurance against certain risks involved
in the trading process. Insurance
instruments involve freight and export
credit insurance, but also forward
contracts (to insure against exchange
rate changes). Certain other provisions
can insure against non-compliance by the
seller and risks arising from government
policy changes. Without these financial
instruments, international trade would
be much more risky and impeded.
As mentioned above, trade finance is
a complex process, including from 6 to
12 parties in a typical transaction, with
different responsibilities, interests and
risks, and trying to get all those elements
generally in one or two pages of letter,
is a very difficult thing. The factors
which have helped all stakeholders
talk on common terms and standards
are the governing rules of the said
documents. The International Chamber
of Commerce has been playing a very
important role, for more than 80 years,
in facilitating international trade and
finance by producing international
uniform rules and guides to help all
related parties perform better. Uniform
rules for demand guarantees, uniform
rules and practices for documentary
credits, uniform rules for documentary
collection and to the latest forfaiting
rules or payment obligation rules have
all served to improve the international
trade transactions.
In the Albanian context, trade
finance is generally considered as
a complimentary business line to
corporate, or SME banking. Financial
institutions, whether banks or insurance
companies, do not have developed
strategies or priority lines with special
focus on supporting trade, specifically.
Nevertheless, it must be stated that,
during the last decade most banks
operating in Albania have dedicated
structures and staff within their
organization, dealing with trade finance
transactions. The reasons behind this
might be of different aspects; it might
be a cultural background of making
business, or due to the fact that the
risk perceived by banks to small scale
lending is high, because of administering
costs, allocation of collaterals and other
reasons, might be business and economic
environment in the country, trade
policies, human resources and many
other reasons.
When started drafting this article,
one of the objectives was to provide
some trade finance data of financial
institutions operating in Albania and
make a more relevant analysis on the
current developments in this field. But,
the lack of national data on trade finance
Acording to INSTAT, SMEs
make up more than 90% of
total businesses, so that it can
be clearly stated that trade
finance, or loans tied directly to
international trade transactions,
would make a relevant
contribution to development and
access to trade finance, which
is of particular importance
for small and medium – sized
enterprises (SMEs) in our
country.
remains big constrains that impede an
in-depth review of the market. In fact,
the lack of data is not solely an issue
of Albania, but has been a concern
in global level, as well. Historically,
the global trade finance market was
considered liquid and well-functioning
and did not attract much attention from
policymakers, accordingly. However,
the sector has experienced periods of
stress, most notably after the Lehman
Brother’s bankruptcy and also in late
2011, when funding strains at European
banks raised concerns about possible
disruptions. Many international and
industry organizations observing the
trends in international trade, economic
developments and financial sectors
started to conduct surveys in this field,
to better understand the different
relationships between relevant factors.
Albania is a small developing
economy with international trade
making a large portion on the domestic
production, as reflected in a high ratio of
trade-to-GDP, noted above. According
to INSTAT, SMEs make up more than
90% of total businesses, so that it can
be clearly stated that trade finance,
or loans tied directly to international
trade transactions, would make a
relevant contribution to development
and access to trade finance, which is
of particular importance for small and
medium – sized enterprises (SMEs) in
our country. Quantitative information
would promote the empirical evidence
as a good support for the trade-related
strategy development. It is strongly
suggested that, industry associations
enhance multilateral collaboration with
other international organizations, in
conducting specific studies on trade
finance and providing policy makers
and players with a richer background
on country’s trade finance potential and
further developments.
The 2015 ICC Global Survey on
Trade Finance and Register, show
an increasing demand for trade risk
coverage products, meaning increased
business and fee income for trade
finance banks. Trade finance is mainly
a business for SMEs, but the underlying
key message is that there is an increased
perception of commercial, bank, and
country risks in global trade markets.
Such kind of report adapted to a
national level, would become a useful
tool allowing policymakers, regulators
and financial institutions to identify
gaps in the availability of trade finance
for local banks and their clients. It is
crucial to state that the collaboration to
be provided by the information sources,
such as businesses, financial institutions
and related governmental institutions,
is an imperative to accomplish such
objectives.
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15
16
Bankieri
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Banking System
Banks' profits…in the
line of fire!1
Should the dominant position be proven, then the
Competition Authority must prove the abuse with such
position, in the form of unfair prices, which have led to a
higher profit margin. This is so, because the high profit
margin alone is simply not enough to prove an anticompetitive behavior!
by Attn. Ermal NAZIFI, LLM, PhD2
Legal consultant
AGENCY FOR DEVELOPMENT OF
INTEGRATED SERVICES, ALBANIA (ADISA)
T
he Competition Authority is
conducting a general market
inquiry for opening a general
inquiry procedure in the banking
sector. Such inquiry is expected to be
completed within the first quarter of
2016. Such investigation is driven by
motivation that the banking market
displays relatively high profit margins.
Specifically, the Decision no.373,
dated 09.16.2015, "For the opening
of general inquiry procedure in the
banking sector", it is cited, inter alia,
that: "During recent years the banking
market displays the characteristics of
a market with relatively high profit
margins, under the conditions of a
stagnating credit process; low interest
rates on deposits (up to 0.55% on an
annual basis below the inflation rate);
relatively high spread between loans
and deposits’ rates; growing trend of
government papers’ yields, mainly
long-term (bonds) ones, in the frame
of an accommodative monetary policy
and when key interest rate on deposits
experiences and downward trend;
commissions on domestic payments
have been increasing, etc. "
What does a general inquiry
represent?
General inquiries, in contrast to
preliminary and in - depth ones, carried out by the Competition Authority, do not primarily intend at
detecting violations of competition
and punishment of "culprits" (the international terminology does not use the
term "investigation", but instead the
term "inquiry", in terms of collecting
information).
The main purpose of these inquiries
is to improve the market functioning for
consumers and competitors themselves,
by identifying competition issues in
the market. Such general inquiries
reveal and analyze these problems,
by studying, in particular, the market
structure, the nature of competition
and, if any, any grounds of restrictions
on competition. Such an investigation
may produce some results, such as:
a) identifying issues that need to
be addressed, in order to improve
competition in respective market, or
b) noticing that the market may
display signs of restriction or distortion
Proving the individual
dominant position appears to
be extremely difficult, given
the changes experienced
in the market shares of
major banks, with strong
competition between
them, or other factors that
determine such position. On
the other hand, proving a
collective dominant position
is highly problematic, both
in theory and in practice.
Such a position cannot be
taken for granted by the
Competition Authority, as it
requires proving the lack of
competition and a uniform
behavior of companies.
DISCLAIMER! This article provides information about the Law No.9121, dated 28.7.2003, “On Protection of Competition” (updated), with the aim of ensuring a
better understanding, but it does not, in any case, represent an exhaustive interpretation of the law and it does not replaces the professional and legal consultancy.
Ex-adviser of Competition Commission at COMPETITION AUTHORITY. The views and opinions expressed in
this article are those of the author and do not necessarily reflect the official policy or position of any institution.
1
2
www.aab.al
Bankieri
17
of competition, in the form of anticompetitive practices, leading to the
opening of a preliminary and in- depth
inquiry.
Eventually, if
anti-competitive
behavior is therefore evidenced, the
responsible subjects may be subject of
heavy fines, up to 10% of their annual
turnover of previous year.
Do "relatively high profit margins"
of Albanian banks constitute any violation of competition?
The Competition Law prescribes
two main violations of competition:
abuse of dominant position and prohibited agreements. According to this
law, all agreements which have as
their object or effect the prevention,
restriction or distortion of competition,
are therefore prohibited.
Given that the banking market is
characterized by a fierce competition
among banks to get clients from
each other, crowded with very
serious operators, which understand
the consequences of infringing the
competition law, I think that the
likelihood of prohibited agreements
are small, or nonexistent. With regard
to abuse of dominant position, the law
prohibits any abuse by one or more
enterprises. The reasoning behind the
decision of opening a general inquiry
by the Competition Authority implies
that the Authority’s main doubt pricing
is the unfair price fixing for banking
"products", given the relatively high
profit margin.
It should be noted that, in this regard,
it is primordial proving that certain
market operators have a dominant
position, which may be individual,
but also a collective one. Proving the
individual dominant position appears to
be extremely difficult, given the changes
experienced in the market shares of
major banks, with strong competition
between them, or other factors that
determine such position. On the other
hand, proving a collective dominant
position is highly problematic, both in
theory and in practice. Such a position
cannot be taken for granted by the
3
Competition Authority, as it requires
proving the lack of competition and a
uniform behavior of companies.
Should the dominant position
be proven, then the Competition
Authority must prove the abuse with
such position, in the form of unfair
prices, which have led to a higher
profit margin. This is so, because the
high profit margin alone is simply not
enough to prove an anti-competitive
behavior! Practically, in case of the
banking market, high profit margins
may have come for a variety of reasons,
Each bank must have its
own effective mechanisms of
corporate management, to
ensure compliance of their
activities with the competition
law, as they practically do
with fiscal or regulatory legal
framework for commercial
banks. Also, consulting with
experts of the competition
right is critical in such cases,
as it helps a great deal in
avoiding violations of the
competition right.
linked to this specific market, such
as: the reduction of non-performing
loans, the sale of real estates, pledged
as collateral, etc. Moreover, the profit
growth may have been generated as a
result of the need to improve financial
indicators of previous years, where
non-performing loans reached very
high levels, and therefore, the bank loan
loss provisions contributed significantly
to a reduction of their profits. Also, the
cut of key interest rate by the Bank of
Albania has contributed in this regard.
Proving whether established prices
by an operator are unfair remains also
not an easy task and undertaking for any
competition authority, particularly in
the banking market. The jurisprudence
of the European Court of Justice points
out that the high margin between
the cost and profit is not enough to
determine the price as being unfair.
Only in cases when this profit has been
produced due to lack of competition,
then we may talk about unfair prices.
What must operators do in these
cases?
These
general
inquiries
are
beneficial even for market operators
themselves (in this case, commercial
banks), because they depict a clear
panorama of level of competitiveness in
the market. In this way, operators need
to be cooperative with the Competition
Authority, by providing any information
it may be requiring. Undoubtedly,
the Competition Authority cannot
require unnecessary information for
the inquiry, or require any information,
document, and data, the operator has
in possession (the so-called "fishing
expeditions"). This may even turn into
an abuse of power by the authority.
However, the Competition Authority
may request data, which constitutes
a trade secret or other confidential
data. The operator must clearly define
which part of information is a trade
secret, or of confidential nature. The
Competition Authority may require
meetings to discuss about necessary
data and information, but this stage of
inquiry has nothing to do with proper
inspections, where inspectors may enter
the premises of the operator, to obtain
data and documents, information
stored in an electronic way, etc.
However, operators should be
duly diligent, in order to prevent anticompetitive behavior, conducted by
their staff. Each bank must have its
own effective mechanisms of corporate
management, to ensure compliance of
their activities with the competition
law, as they practically do with fiscal
or regulatory legal framework for
commercial banks. Also, consulting
with experts of the competition right
is critical in such cases, as it helps a
great deal in avoiding violations of the
competition right.
Particularly establishing, either directly or indirectly, unfair prices of purchase or sale or other unfair trading conditions.
18
Bankieri
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Special
Financial
education:
An essential
investment
with Mr Wim MIJS
T
he banking sector across Europe
will celebrate European Money
Week for a second time in March.
Mr Wim Mijs, Chief Executive of the European Banking Federation, invites Albania to actively join the initiative and encourages it to develop its own financial
education program.
BANKIERI: Why does the banking sector need to invest persistently in financial
education?
We can all see that society is changing; with the rise of mobile phones
and branded clothing we see that
young people are increasingly becoming
indebted and at a younger age than
previously. That is why we need financial
education programs in schools. These
are essential. Academic research clearly
shows that, if children learn the basic
values of money and interest, then they
are less likely to become over-indebted
at a later age. It is a role for society,
not only for governments, but also for
the private sector, including banks, and
schools to join forces and do financial
education. Furthermore, at a later age,
as people get older, retirement provisions
become more of an issue. People will
do their own planning and their own
financial planning,
investments and
saving. So, they need to be able to
make informed decisions, and they
Chief Executive
EUROPEAN BANKING FEDERATION
need to know what they are talking
about. Again, also at that age, financial
education is essential. So, it is essential
for all of us to continue to invest and I
am very happy to see that Albania and
the Albanian Banking Association now
have a program investing in financial
education.
The success of EBF in
financial education is not
because of what we do as
a federation, but comes
from the national financial
education initiatives of our
members, each one active in
their own national context.
The EBF is merely a platform
for exchanging experiences
and to let us all learn from
each other.
BANKIERI: What are the most effective
mechanisms and techniques used for
financial education?
There is no one-size-fits-all approach.
Many countries have proven to be quite
effective with many different approaches.
But if you look at the targeted audience
– younger people through schools and
older people through other mechanisms
– you see that it pays off to work through
schools. You see that the teacher is the
key, together with the parents. The first
step in financial education always goes
through the parents, and schools need
to be supported. This can be done by
creatively developing, together with
them, financial education programs that
can be used in mathematics, or calculus,
or economics lessons. Additionally, it
can also be done by organizing a visit
by a banker into a classroom, who may
explain the basics of interest and savings.
So there are many different approaches
possible. Many roads lead to Rome. There
are also many well-known established
practices, throughout the community
of the European Banking Federation. In
our groups we share best practices and
we look forward to sharing them also
with our associates, including Albania.
We cannot decide what works best in
your country, but together we can find
something that will work also for you.
BANKIERI: What are the main difficulties in the process of financial ed-
www.aab.al
Bankieri
19
ucation, especially in developing
countries?
The first main difficulty is actually
that it is sometimes seen as, either a
competitive tool between banks, or as
a reason to lower consumer protection
standards. Both are not true. In
financial education everyone has a role,
government, as well as the private sector.
There is no competition here; we all
have the social responsibility to make
it work. Funding and money is another
challenge. Of course, the best way to
make it work in a country is to start a
platform that includes the Central Bank,
the Ministry of Finance, the main banks,
the Banking Association, maybe also the
Ministry of Education. You need a broad
platform of public and private parties
that come together to develop these
tools, and these tools need to be funded.
What you need is a dedicated budget
for financial education. One thing,
that is very clear, is that the education
system usually is strapped for cash. We
need to help them develop programs for
financial education. Another obstacle
that sometimes appears is the mistrust
between the public and private sector, as
we have seen in some of the countries
in the European Union. Again, the only
way to overcome this is by starting the
work. Start working small, develop a
nucleus, and then you will see that every
year, your program will grow bigger and
will become more interesting for more
and more people.
BANKIERI: How can academia help
and support financial education?
Most of what we do is based on
academic research. It is the only way
that will actually deliver measurements
that will be the basis for a program
that really works well. Very wellknown is the Italian-American professor
Annamaria Lussardi, who has done a
lot of studies on financial literacy at the
Global Financial Literacy Excellence
Center in Washington1. These studies
have been instrumental in helping us
develop a program that works. But it
is not only one. Ms. Flore-Anne Messy
at the Organization of Economic
Cooperation and Development, the
OECD2, has collected data on financial
literacy and education for many years,
1
2
3
not only in Europe, but throughout
the world. On the basis of this data
you see the trends, not only in financial
literacy; it also shows where you can
be effective and you also can see what
works well. Measurements are essential
not only to develop the projects, but also
to demonstrate what works and what
not, and to serve as an incentive for
developing future programs.
BANKIERI: How can Albania learn
from Europe in terms of financial
education?
To be honest, it is not about learning;
it is about passion. It is about starting
somewhere. Albania has shown us that
it is interested and that it has a good
program. We are there to help. What
can help is learning from the best
practices and experiences, within the
EBF community. You know best what
works in your country. You can select
and talk to the other countries in our
network to see what you can use. I invite
Albania to actively join our working
group on financial education, so that
you can be as close as possible to the
exchange of best practices. It always
starts with seeing the importance and
with the social responsibility of all
us. What I hope to achieve with our
European Money Week, starting on
Monday the 14th of March, is that we
can provide inspiration. Inspiration not
only for starting something during that
week, but for beginning a program that
keeps going throughout the year, and
that then is repeated again year after
year. The success of EBF in financial
The only way to overcome
the obstacles in the process
of financial education is
by starting the work. Start
working small, develop a
nucleus, and then you will
see that every year, your
program will grow bigger and
will become more interesting
for more and more people.
education is not because of what we
do as a federation, but comes from the
national financial education initiatives
of our members, each one active in their
own national context. The EBF is merely
a platform for exchanging experiences
and to let us all learn from each other.
This platform is also open to our
associate members, like Albania.
BANKIERI: Does EBF have an outreach
program for its associate members?
What we learned from the first
European Money Week in 2015 was
that there was a great collective power
of bringing together all the activities of
our members, working and exchanging
best practices. Our first European
Money Week gave tremendous energy to
all involved across Europe and reached
far. For 2016 of course we are more
ambitious, so in our association meeting
in Brussels in December we discussed
what we call the “outreach program”
for our associate members, where you
are fully able to feel and share the energy
and this collective power, not only of the
members of EBF, but also of the other
associate members. We hope that this
will not only help you but also that
European Money Week this way will
reach out far into your country, and to
your governments, and to your people.
BANKIERI: What can Albania do
during European Money Week?
There is one European Money Week.
Let me reiterate again that you are very
much invited to take part. If we can help
with materials, with anything else, let
us know. We hope that you can make a
start. As I said, you don’t have to start
big. It usually starts with a nucleus.
Maybe you can do lessons on financial
education at just a handful of schools,
or a presentation at your Ministry of
Finance, or Ministry of Education.
Otherwise, you may organize a seminar
at your own association. The small
nucleus is where the inspiration starts.
That is what will bring it further. It is
a great honor and pleasure to invite
Albania to actively participate in
European Money Week 20163!
Global Financial Literacy Excellence Centre, Washington DC: http://gflec.org/.
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Experts' Forum
The Albanian
Eurobond
A successful reissue
The government issued successfully the new Eurobond
with an increased nominal value and a much lower cost,
compared to the old one. This auction was considered
as successful, also due to the fact that the order book
reached EUR 750 million, from which some EUR 450
million were accepted, with a coupon rate of 5.75%, while
the Initial Price Thoughts (IPT) was 6%.
by Ms Suela TOTOKOÇI
Head of Finance and Capital Market
Division
INTESA SANPAOLO BANK ALBANIA
T
he Albanian Government has
successfully closed the process of
reissuing the new Eurobond, in
November 2015, by raising new funds,
which were big enough to cover the
matured Eurobond, along with obtaining
fresh ones. Considering the weight of
the Albanian Eurobond, at approx.
3% of GDP in 2014, its recent reissue
was expected to impact significantly
government debt portfolio and its
respective debt management strategy.
As a result, the Ministry of Finance was
engaged, since the beginning of 2015, in
contacting and discussing with different
international financial intermediaries,
from which later would be chosen two
Lead Managers: Deutsche Bank and JP
Morgan Chase, which would lead the
process of issuance of the new Eurobond.
In his way, the government intended
to benefit in general from favorable
terms in international financial markets,
during the first half of 2015, and
more specifically from low interest
rates offered in EUR and USD and to
potentially reduce the pressure from
investors, by issuing the new Eurobond
prior to its maturity date.
Apart from issuing the Eurobond
in the European financial market, the
option to access the American financial
markets was also on the table, due to
their higher risk appetite, since latest
developments in the Eurozone made
European investors more conservative
and risk averse. On the other side, the
pressure on the government relieved
significantly, when it received a new loan
of EUR 250 million, with 10-year-tomaturity and an interest margin of 1.3%
over benchmark rate, from Deutsche
Bank, with a guarantee (PBG) of EUR
200 million from World Bank. This
long – term loan, with very favorable
terms, helped the government assess
present market conditions and served as
a benchmark for the reissue Eurobond,
even that both risk and tenor were
different for these two instruments.
In June 2015, despite its commitment
and the fact that the roadshow start
was imminent, changes in European
financial markets, due to the crisis
The pressure on the
government relieved
significantly, when it
received a new loan of
EUR 250 million, with
10-year-to-maturity and
an interest margin of 1.3%
over benchmark rate, from
Deutsche Bank, with a
guarantee (PBG) of EUR 200
million from World Bank.
This long – term loan, with
very favorable terms, helped
the government assess
present market conditions
and served as a benchmark
for the reissue Eurobond,
even that both risk and tenor
were different for these two
instruments.
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unfolding in Greece, forced the Albanian
government to postpone the issue of the
new Eurobond. Nevertheless, this didn’t
cause any problem for the government,
since the maturity of the existing
Eurobond was in November and it didn’t
have urgent needs for liquidity, thanks to
the new loan with Deutsche Bank and
the successful domestic borrowing.
The approaching of the maturity date
resumed the attention of investors on the
issue of the new Eurobond, while market
players were aware that government had
sufficient liquidity to repay the existing
Eurobond with no need to reissue it.
As a result, the government was in a
very comfortable position to issue the
Eurobond, at very favorable market
terms. This is what typically happened
on 5 November 2015, one day after full
repayment of the existing Eurobond,
according to its terms.
The government issued successfully
the new Eurobond with an increased
nominal value and a much lower cost,
compared to the old one. This auction
was considered as successful, also due
to the fact that the order book reached
EUR 750 million, from which some
EUR 450 million were accepted, with a
coupon rate of 5.75%, while the Initial
Price Thoughts (IPT) was 6%.
To assess whether the coupon rate
of 5.75% was the best the market
could offer for such a security, we need
to make a comparison of issue spread
592.4bp, over the benchmark for the
new Albanian Eurobond with the
benchmark spread of a Montenegrin
government Eurobond maturing in
2019 of 471.02bp. If we consider the
better ranking of Montenegro (B+) and
shorter remaining maturity (4 years), we
think the Albanian Eurobond got a fair
market price, despite the fact that it was
issued during high volatility in European
markets for countries such as Albania.
This was further confirmed when
Macedonian government issued a 5-year
Eurobond on 1 December 2015, with a
coupon rate of 4.875%, and a nominal
amount of EUR 270 million. Considering
a better ranking by S&P for Macedonia
(BB-), compared to Albania (B) and
the smaller issue value, we believe the
Albanian government has obtained very
good terms the international market
could offer to lower-rated countries,
such as Albania.
Another factor impacting these
favorable terms is the fact that Albania
has been assessed from rating agencies
with Stable Outlook (Moody’s) and
Thanks to the latest changes
in the Bank of Albania’s
Regulation: "On the Risk
Management from Large
Exposures of Banks", where
the percentage of the asset
risk weighting for the Albanian
government securities, issued
in foreign currency, decreased
from 100% to 50%, Albanian
banks could double their
original portfolio in foreign
currency. Furthermore, such
instrument was considered
very lucrative for Albanian
banks, as it paid a coupon of
5.75% for EUR, at a time when
money market rates were into
negative territory and bond
yields at their historic low.
Positive Outlook (S&P), partially also
thanks to the reforms undertaken during
the last couple of years and bilateral
agreements with IMF and World Bank.
Albanian banks had in their
portfolios the Eurobond maturing in
November 2015 and were interested in
rolling it over. Since it paid a coupon of
5.75% for EUR at a time when money
market rates were into negative territory
and bond yields at their historic low, this
instrument was considered very lucrative
for Albanian banks. Furthermore,
thanks to the latest changes in the Bank
of Albania’s Regulation: "On the Risk
Management from Large Exposures of
Banks", where the percentage of the
asset risk weighting for the Albanian
government securities, issued in foreign
currency, decreased from 100% to 50%,
Albanian banks could double their
original portfolio in foreign currency.
Albanian banks are heavily exposed
to Albanian government securities in
local currency. This exposure is not
subject to limits from Bank of Albania
regulations, being weighted with zero
risk factor. Meanwhile, as stated above,
the Albanian government securities in
foreign currency have a risk weighting
factor of 50%, thus being riskier than
securities in LEK. Despite all this,
for as long as this exposure is closely
monitored, it is not believed that it will
pose any high risk for Albanian banks.
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Experts' Forum
Big Data and the
Albanian banking
system
A challenge faced by banks in Albania, when dealing with
big data, is the inappropriate organizational structure.
There is a lack of concerted efforts to aggregate analytics
bank-wide and bring the knowledge-based decision
making to the next level.
by Mr Alban BURAZERI
Operations and IT Business Unit
Manager
ALPHA BANK ALBANIA
T
he term “big data” is relatively
new and like any other new term
we may find various definitions.
In open sources big data is defined as
data sets so large or complex, structured
or unstructured, that traditional data
processing applications are deemed as
inadequate to process them. While the
term “big data” is relatively new, the act
of gathering and storing large amounts of
information for eventual analysis is ages
old. The concept gained momentum in
the early 2000s, when leading industry
analysts articulated the now-mainstream
definition of big data as the three Vs:
Volume - Organizations collect data
from a variety of sources, including
business transactions, social media and
information from sensor or machine-tomachine data.
Velocity - Data streams in at an
unprecedented speed and must be dealt
with in a timely manner.
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Variety - Data comes in all types of
formats, from structured, numeric data in
traditional databases to unstructured text
documents, email, video, audio, stock
ticker data and financial transactions.
Nowadays, is common to consider
two additional dimensions when it comes
to big data:
Variability - In addition to the
increasing velocities and varieties of data,
data flows can be highly inconsistent with
periodic peaks.
Complexity - Today's data come from
multiple sources, which make it difficult
to link, match, cleanse and transform
data across systems.
The sources for big data generally fall
into one of three categories:
Streaming data - This category
includes data that reaches IT systems
from a web of connected devices. We can
analyze this data as it arrives and make
decisions on what data to keep, what
not to keep and what requires further
analysis.
Social media data - The data on social
interactions is an increasingly attractive
set of information, particularly for
marketing, sales and support functions.
It's often in unstructured or semi
structured forms, so it poses a unique
challenge when it comes to consumption
and analysis.
Publicly available sources - Massive
amounts of data are available through
open data sources, like the European
Union Open Data Portal.
After identifying all the potential
sources for data, we have to consider the
decisions needed to make, once beginning
harnessing information. These include:
How to store and manage it Whereas storage would have been a
problem several years ago, there are now
low-cost options for storing data if that’s
the best strategy for our business.
How much of it to analyze - Some
organizations don't exclude any data
from their analyses, which is possible with
today’s high-performance technologies,
such as: grid computing, or in-memory
analytics. Another approach is to
determine upfront which data is relevant
before analyzing it.
How to use any insights we uncover
- The more knowledge we have, the more
confident we will be in making business
decisions. It is smart to have a strategy
in place, once we have an abundance of
information at hand.
The final step in making big data
work for the business is to research the
technologies that help us make the most
of big data and big data analytics. We
should consider:
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virtualization, large grid environments,
high connectivity and high throughputs,
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resource allocation arrangements.
The minority of the banks have
hands-on experience with live
big data implementations,
while the majority of banks
are still focusing on pilots and
experiments.
Big data affects organizations across
practically every industry including
here: banking, education, government,
healthcare, manufacturing, retail, etc.
How banking can benefit from this
onslaught of information? With large
amounts of information streaming in
from countless sources, banks are faced
with finding new and innovative ways to
manage big data. While it is important
to understand customers and boost
their satisfaction, it is equally important
to minimize risk and fraud, while
maintaining regulatory compliance. The
importance of big data doesn’t revolve
around how much data you have, but
what we do with it. We can take data
from any source and analyze it to find
answers that enable: 1) cost reductions,
2) time reductions, 3) new product
development and optimized offerings,
and 4) smart decision making.
When we combine big data with highpowered analytics, we can accomplish
business-related tasks such as:
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issues and incidents in near-real time.
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point of sale based on the customer’s
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before it affects our organization.
Worldwide studies show that
financial institutions believe that big data
analytics offers a significant competitive
advantage and additionally, they believe
that successful big data initiatives will
determine the winners of the future.
However, knowledge of the impact of
big data has not translated to on-theground investments. Still, the minority of
the banks have hands-on experience with
live big data implementations, while the
majority of banks are still focusing on
pilots and experiments. Why are banks
unable to exploit big data? Researches
show that “organizational silos” are the
biggest barrier to success in big data.
Dearth of analytics talent, high cost of
data management, and a lack of strategic
focus on big data are also major stumbling
blocks. Finally, privacy concerns – which
are high on many bank executives’
agendas – are also a significant issue.
How can banks realize greater value
from big data? There are two broad areas:
1. Customer analytics including
here pricing, marketing analytics, sales
analytics, and channel analytics.
2. Risk management consisting of
financial reporting and fraud analytics.
Customer data analytics is a relatively
low priority area for banks. Most banks
have not focused significant energy on
using analytics to enhance customer
experience. Surveys indicate that risk
management has been a high-priority
focus area for most banks, mainly to
comply with regulatory requirements,
while customer analytics has largely been
neglected. How can banks realize greater
value from customer data? Banks can
maximize the value of their customer data
by leveraging big data analytics across
the three key areas of customer retention,
market share growth and increasing
share of wallet: (1) Acquire customers
by improving credit risk estimation and
maximizing lead generation potential,
(2) Retain customers by limiting
customer attrition and improve customer
satisfaction, (3) Grow share of wallet by
driving efficiency of marketing programs
and increasing sales through predictive
analysis.
Big data initiatives are typically time
and resource-intensive. To pave the way
for a smooth implementation, banks
should follow a three-step approach that
begins with an assessment of existing
analytics capabilities and is followed by
the launch of pilot projects, which are
subsequently expanded into full-scale
organization-wide programs.
Alpha Bank Albania, is making use
of big data in two main areas: customer
relationship management (CRM) and
fraud detection. The CRM project has
been successfully piloted and now is
being deployed full scale. The fraud
detection project, which may be seen
also as forensic analytics in general, is in
a more advanced stage and currently is
being enhanced and fine-tuned.
What makes it more challenging
in Albania when it comes to big data is
the lack of public available sources. On
top of that we have to add the lack of a
periodic, formal, and organized exchange
of information between the participants
of the banking industry. Hopefully, such
gap will be bridged in the near future,
otherwise the efforts of the individual
banks will remain isolated, their relevant
know-how won’t be shared, the adequacy
levels of the applied customization and
personalization on imported (from their
Groups or off-the-shelf) solutions will
be low, and somebody might end up of
investing heavily, by employing precious
financial and human resources, to simply
reinvent the wheel.
Another challenge the banks in
Albania are facing is the inappropriate
organizational structure to deal with
big data. Data analytics as a function is
commonly seen as part of MIS, part of
risk management, and part of business.
There is a lack of concerted efforts to
aggregate analytics bank-wide and bring
the knowledge-based decision making to
the next level.
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Experts' Forum
T
he Albanian market of electronic
payments and products (cards,
ATM, etc.) commenced during
2002-2003 by a few banks, through
proprietary cards, used within a small
ATM network. The development of this
market experienced an explosive growth
during the past decade, especially during
the years 2005 - 2006. State institutions,
including Bank of Albania, have
always appreciated the contribution of
technology and innovation in financial
services, as a support to achieve their
strategic objectives, such as: financial
inclusion of the public and cash
reduction in the economy. Basically, such
objectives serve not only at ensuring
proper transmission of monetary policy,
but also at maintaining the financial
stability. International experience has
shown that the use of innovations in
banking and financial system contributes
to the reduction of social costs in the
economy, approximately by 1 - 2% of
GDP. This figure, in case of Albania, may
be even higher, because the use of cash in
the economy remains at relatively high
levels.
Compared with other countries in
the region, the growth of cards usage
displays a satisfactory trend, considering
the active population in Albania, which
is reported to be around 1.1 million,
with an internal market which accounts
for 900,000 cards, issued by the
banking system, thus having a specific
ratio of 82% of cards issued per active
population. Given this, it can be said
that there are a number of segments and
opportunities, which may spur a positive
momentum to such business. There are
still some areas to improve and narrow
the gap between the Albanian market
and developed countries’ markets,
including those in the region. Moreover,
the reduction of cash in the economy
through specific projects managed and
coordinated by government or local
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Ms Irida HUTA
Mr Dritan MOLLANJI
Business Development Manager
PAYLINK
Chief Technology Officer
PAYLINK
Electronic payment
systems in Albania
Increasing efficiency through
projects and innovation
Local operators of electronic payment schemes aim at
focus at supporting banking and financial system, in
terms of providing modern, innovative, low cost and high
efficiency services.
authorities, remains a challenge for the
banking system and the government, as
well.
PayLink and projects for electronic
payments
PayLink, which is operational in the
Albanian electronic payment system for
some years, aims to provide solutions
and payment facilities in Albania, given
that a substantial part of them are
executed outside the banking system.
The payment solutions provided by
this company in Albania play an
important role in approaching the
regional countries’ standards, which
have an advanced level in this regard,
by channeling these projects through
banking/financial system and targeting
a potential group of customers, of more
than 600,000 cardholders. Specifically,
PayLink undertook the initiative to
propose and deliver the technical
The growth of the number of cards - The market
solution and support for two projects,
as part of the government program,
to serve and to meet their obligations
towards citizens, such as: the pensions’
project, in the framework of pension
reform, and the transport project for
Tirana Municipality.
Pensions’ Project
Pension card is a product offered to
the Albanian market for a certain
segment of customers: qualified retirees/
pensioners, according to the guidelines
of the Social Security Institute (SSI).
The primary purpose is to create
opportunities for pensions’ reform to
fit into required frames, by channeling
this process through the banking system,
educating the local market, as well as
formalizing the process. This project
will offer the possibility of withdrawing
pension amounts, through a bank card
with a financial function. This process
will be governed by SSI, in cooperation
with commercial banks, as the main
stakeholders in the process, by enabling
technical and operational solutions,
through PayLink. This project provides
a number of benefits for all stakeholders,
such as:
Pensioners: Providing pension delivery
in optimal conditions, with no waiting
rows, assuring easy access to pension
fund, at any time (24/7/365) and a wide
use of it for different purposes, such as:
payment for urban transport, invoices,
price discounts, or various benefits from
merchants nationwide.
SSI: Providing citizens with a dedicated
and contemporary service, reducing
the operational costs and increasing
service efficiency, by having the ability
and comfort of an immediate or online
reconciliation, controlling the actions
and high security authentication
of transactions, through advanced
technology systems.
Banks: They will have the opportunity
of increasing profitability through
the introduction of a new product
and market segment, as well as more
opportunities for cross - selling, use of
low-cost operations and products, with
a potential of 500,000 customers.
Urban Transport Project for Tirana
Municipality
Current transport process is entirely
manual and ill-controlled. What PayLink
intends to provide consist in a longterm and low cost automated technical
solution, efficiency in services provided
and profitability, either for issuers
(banks), or their holders. The solution is
intended to enable the use of transport
cards in current banking infrastructure,
such as: POS and ATMs, by offering
citizens the facility of card use in the
transport system.
It should be noted that, in a large part
of European countries and beyond,
these products are combined with
other services, provided by respective
municipalities, which allow access
to extensive use of cards payments’,
wherever banks have placed equipment
for card payments. They are named as
city card, especially those which include
the "Contactless" functionality, used
in case of low value and immediate
payments.
In conclusion, it is worth mentioning that
Albania, as well as other countries in the
region and beyond, has a great potential
in terms of developing and channeling
the market through electronic payments
in all areas, ensuring mutual benefits
for all participants and stakeholders,
associated with these schemes. It is
believed that now is the right time
that automation and formalization of
processes related to consumer services,
be fully implemented in Albania.
PayLink remains at disposal of the
banking/financial system to support any
initiatives or proposals in this regard.
PayLink in Albania
The Albanian Paylink Processing Center
is established as a joint-stock company
in September 2012 and is licensed by the
Bank of Albania on 4 October 2013 as
the National Operator of Card payments,
starting operations in 2014. This new
entity in the Albanian market aims to
initiate, develop and maintain electronic
payments in the provided platform,
creating a complete and genuine
system in providing such products and
services in the domestic market. This is
achieved based on the support provided
by advanced technology and systems,
powered by qualified personnel.
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Economist Corner
Messages and effects of FED
decision to raise key interest
rate
Monetary policy experts and central bankers think that
we are not dealing with a simple decision that may be
limited within US, instead it is a decision expected to
produce international effects, causing turbulences in
many countries
by Prof. Dr. Adrian CIVICI
President
EUROPEAN UNIVERSITY OF TIRANA, UET
T
he recent unanimous decision,
dated 18 December 2015, by
FED’s FOMC Committee to
increase the key interest rate for the
US dollar with 25 points, thus moving
from 0 – 0,25% range to 0,25 –
0,50% confirmed, in a symbolic way,
that the global financial crisis, which
broke out in 2008, may be considered
as over. Unlike many predictions of
doubts, such increase of key interest
rate after a 10-year period, the first
increase since 2006, did not provoke
any panic on stock exchanges and
other financial markets. In 2008 it was
described as the "FED experiment: an
accommodative monetary policy with
a minimum dollar cost, close to zero".
Many other central banks around
the world followed suit. The entire
world, almost unanimously, thought
that it was the right response to the
global financial crisis. This cycle was
interrupted on 18 December, by FED
decision on the change in the stance of
monetary policy, towards interest rate
hike.
Analysts and experts of financial
markets assess that key messages and
"lectures" drawn from such a decision
can be synthesized as follows:
First, the communication manners
by central banks represent a very
efficient instrument, to channel
expectations and decision of different
investors. Following the surprising
abandonment of NBS (Swiss National
Bank) in January 2015 of its longstanding Swiss franc cap against the
euro, fixed in 2011 in at EUR 1 = SFR
1.20, in order "to break away from
solidarity with Euro, on building fears
of a continuous euro devaluation,
which could adversely affect the
SFR sustainability and its respective
exchange rate with US dollar";
following FED’s lost opportunity
to raise dollar interest rate since
September 2015, and its preference to
preserve the status quo, based upon
the reasoning that: " the US economy
is yet at appropriate levels of economic
growth and employment"; especially
after the uncertainties of financial
markets caused by recent ECB stance,
in the frame of its policy of "monetary
easing”; decisions by major central
banks came in the spotlight, in terms
of impacting the direction pursued
Seen in a broader perspective,
in relation to recent decisions
by central banks in Japan,
Europe, UK, Russia, China, etc.,
it is admitted that all are being
convinced about the fact that the
era of “cheap money” is ending,
where emerging economies are
threatened by instability, as a
result of the risk of investment
and investors departure towards
the US dollar and US.
by financial markets, exchange rates
and stock exchanges. The lack of
panic and tensions in these markets,
after the FED decision, shows how
important the faith of investors and
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29
their monetary and financial strategies
is, on the message and attitudes of
central banks.
Second, the clear and convincing
content and explanation of FED
decision’s
communiqué
to
the
public appeared as an important
guaranteeing element, in confirming
the fact that the process of interest
rate normalization will be gradual
and progressive. Basically, it evidenced
the consensus with the wish and
expectations of money and financial
markets that other increases of key
interest rate will follow, till the end
of 2016, until it reached the 1%
level. The practical implementation
of such scenario is translated within
banking and financial environment
as an opportunity that "lending
conditions will continue to remain
accommodative", which would create
the possibility to avoid the burst of
speculative bubbles, which may have
been formed in several segments of
financial markets, since the launch of
the quantitative easing program, back
in December 2008. With this move
FED wants to avoid price fluctuations
of corporate bonds in the energy and
mining sectors, which are especially
sensitive to such movements.
Thirdly, the new path of key interest
rate for US dollar is expected to cause,
during the following months, a series
of adjustments in monetary policies
of many countries, particularly those
pertaining to the group of emerging
economies, such as: China, Russia,
Brazil, India, Turkey, Mexico, etc.
Many central banks of these countries
have stated that, "in response to the
recent FED decision, they are ready to
pay in the same coin", thus starting a
spiral of increasing key interest rates
of their currencies, in order to prevent
capital outflows and devaluation
of their own national currencies,
although some of them are faced with
the dilemma whether to follow the
path of FED, or otherwise accept the
devaluation of their currencies, for the
sake of stimulating economic activity
and exports. Although FED decision
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cannot be equated with the effect of a
new monetary paradigm for the world
economy, yet it proves that global
economy and finance are entering a
new post-crisis economic cycle.
Questions which dominate the
banking environment after this
“expected” FED decision are: why
now... what are its main goals and
objectives...what are the expected
A general conclusion, which
seems to form a consensus,
is that "such move must be
conceived as a serious signal
that the global financial crisis
of 2008 seems to be over, the
serious risks which threatened
international financial and
money markets have been
significantly reduced, and the
fact that FED did not take this
decision in October, when
it seemed to be more than
reasonable and expected by
all, shows that the concerns
regarding the Chinese economy
and currency are overcome.
effects on other economies and
currencies, be they large, developed,
small, or poor countries...what would
be the expected reactions from other
major central banks, etc.? The first
general reaction in international
banking and financial communities
was like: "... finally they decided, after
a long time of implying that they will
take that decision, following 10 years
of decreasing or constant key interest
rates". In explaining its decision,
FOMC stressed that, "the key interest
rate hike reflects FED's belief in the
continuing process of strengthening
the economy. The economic recovery
has made significant progress,
although it has not reached the
satisfactory levels yet...as it requires
substantial improvements in the labor
market, while inflation continues to
perform under our 2 percent longrun objective. Given the stable current
economy current and a positive trend
for the future, the Committee decided
to raise the target range for the federal
funds, taking into account that the
stance of monetary policy remains
accommodative after this increase ".
FED notes that "the significance of
this first increase of interest rate, after
10 years, should not be overestimated",
while many experts associate this FED
attitude with the question: "does this
move send a message for the future
of the American monetary policy, the
future of dollar in the international
arena of currency wars and in
determining global financial flows"?
Analysis and responses are more than
moderate.
A general conclusion, which seems
to form a consensus, is that "such
move must be conceived as a serious
signal that the global financial crisis
of 2008 seems to be over, the serious
risks which threatened international
financial and money markets have
been significantly reduced, and the fact
that FED did not take this decision in
October, when it seemed to be more
than reasonable and expected by all,
shows that the concerns regarding
the Chinese economy and currency
are overcome. Markets seemed to
have been prepared for this move and
showed a positive and calm reaction
toward it. Since the key rate of UD
dollar has a direct impact on interest
rates of commercial banks’ loans, the
first effects are expected to appear
on businesses and companies, which
in predicting an increase in the cost
of loans in the coming months, are
expecting to increase and multiply
their investments. While Mrs. Janet
Yellen, FED Chairwoman, predicts
that the key interest rate is expected
to reach 1.4% in 2016, 2.5% in 2017
and 3.5% in 2018, the main effect of
such hike is expected to be an increase
in the employment rate in the US, since
FED objectives on economic growth
and employment, are as important as
the price stability.
Does this decision mark "the
end of a relaxing accommodative
monetary policy by FED, undertaken
in the context of a necessity to
support and stimulate the American
economy and credit, following the
outbreak of the crisis and recession
of 2008 – 2009"? Monetary policy
experts and central bankers think
that we are not dealing with a simple
decision that may be limited within
US, instead it is a decision expected to
produce international effects, causing
turbulences in many countries. It
appears that FED did not consider this
fact when, in the interest of improving
the US economic and financial health,
it decided to increase the key interest
rate and announced a new upward
trend for the next 3 years.
Seen in a broader perspective, in
relation to recent decisions by central
banks in Japan, Europe, UK, Russia,
China, etc., it is admitted that all
are being convinced about the fact
that the era of “cheap money” is
ending, where emerging economies
are threatened by instability, as a
result of the risk of investment and
investors departure towards the US
dollar and US. Even a series of poor
and developing countries, including
Albania, which are highly dependent
on FDIs and international funding,
fear a similar scenario and with the
beginning of 2016 they risk being
quickly oriented towards US dollar,
by increasing significantly the future
investment costs, as well as debt costs.
With near-zero key interest rates,
the US monetary policy of the past 10
years, encouraged many investment
funds, driven by a greater profit
margin, to invest in countries, like:
Turkey, Brazil, South Africa, Mexico,
Nigeria, Morocco, Egypt, Ghana,
Indonesia, India, Russia, Argentina,
South Korea, Chile, Central and
Eastern Europe, ex-Soviet republics,
etc. Now that course of US monetary
policy has changed, all these countries
risk being regarded as unattractive
and face a massive capital outflow, by
jeopardizing their economic growth
and socio - economic development,
especially their poverty reduction
policies. The World Bank has recently
rung the alarm bell on this danger by
"advising these countries to tighten
the belt and be prepared to cope with
financial and social turbulences".
The economies of many countries are
already highly dependent on interest
rates of loans in US dollar and prices
of commodities, which also quoted in
US dollars. Should such scenario of
capital exodus from these countries
be fulfilled, the consequences would
have been scary: costly and reduced
lending, difficulties in managing the
balance of payments, permanent fiscal
constraints, lower credit ratings from
rating agencies, etc.
Another expected effect of FED
decision is the risk which emerges from
the strengthening of the US dollar in
international financial markets and
trade. Typically, the strengthening of
US dollar affects the competitive power
of US exports, but in furtherance, this
appreciation impacts all businesses
and corporations, around the world,
which have entered into long-term
contracts in US dollar, when the dollar
was weaker, and therefore, they will be
obliged to settle their obligations by
buying US dollars, more expensively.
The same applies to countries that
have borrowed in US dollars, which
should repay in more expensive US
dollars, besides the fact that the
strengthening US Dollar will further
aggravate the debt burden on their
macroeconomic balances. Individuals
and businesses, which have borrowed
in US dollars, but with activities and
incomes in local currencies, or in other
international currencies, will be also
affected in this regard. Loan repayment
in US dollars for such category means
an immediate price increase for their
loans. In contrast, businesses that have
contracted their sales and payments
in dollars for the next 3-4 years will
have leverage on a strengthening US
dollar, as well as European enterprises
that export to US, or in US dollar trade
areas.
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Social Capital
Alpha Bank Albania wins the 2015
“Philanthropy” award
On December 4th, 2015, the bank received the 2015 National Philanthropy
Award for its remarkable performance
in the CSR approach and activities. Mr
Gent Sejko, Governor of Bank of Albania,
handed over the National Philanthropy
Award to Mr. Periklis Drougkas, Chief
Executive Officer of Alpha Bank Albania,
with the motivation: “For the continuous
support in healthcare sector, education,
environment, art and culture, especially
for the support and initiatives for the fight
against breast cancer, purchase of the
X-ray equipment for early diagnose donated to the Hospital “Mbretëresha Geraldinë” in Tirana and reconstruction of
“Zërat e Jetës” kindergarten, in Kamëz”.
supporting children with Down Syndrome. Alpha Bank Albania greeted all
the colleagues, bank customers and its
collaborators with a greeting card, painted by Irma Nika.
“Zërat e Jetës” kindergarten
On 31 December, offered them some
presents to the children of “Zërat e Jetës”
kindergarten in Kamza, which the bank
adopted in September, joing the initiativ:
“Adopt a kindergarten”.
Independence Day, by promoting Albanian art and culture abroad.
FASTIP Graduation Ceremony
BKT continues to support the FASTIP
program, in cooperation with “Aleksandër Moisiu” University, Durrës. The
fifth generation of FASTIP students, graduated this year, were employed at BKT.
“Mustafa Qemal Ataturk” School
BKT, in view of its mission to support
education and to improve conditions in
school premises, contributed financially
to the reconstruction of “Mustafa Qemal
Ataturk” School.
Holidays together are more beautiful
At the year- end, the Bank has joined
the initiative by Tirana Municipality to
transform ''Mother Teresa” Square in
a Christmas market, providing the city,
especially children, a festive atmosphere
throughout December. On this occasion,
Alpha Bank supported the construction
of the ice skating pitch, which was one
of the innovations of this event.
Security Forum
Alpha Bank Albania, supported the first
Security Forum, with the topic: "A general approach on safety". The forum aimed
at highlighting the need for a comprehensive and coherent approach towards
issues related to risk management, by
focusing on two levels of security: physical security, associated with objects, commodities, property and individuals, and
information security, associated with corporate data, networks, communication
and information infrastructure.
Down Syndrome Foundation - Albania
The Bank attended the Presidential Ball,
organized under the auspicies of H.E.
Bujar Nishani, President of the Republic,
and the First Lady, Mrs. Odeta Nishani.
Th eincome from the ball was given for
Love Soup
The staff of the Bank contributed with
numerous packages of food, which were
handed over at the "Love Soup" kitchen,
which has been operating for 10 years,
under the auspices of the Albanian Orthodox Church. This center provides
daily food service to more than 150
people in need.
Albanian Embassy in Turkey
The Albanian Embassy in Turkey annually
celebrates the Independence Day. BKT financially supported the ceremony, organized on
this occasion.
“Ismail Qemali” University, Vlorë
BKT supported the University, by financing different cultural and academic activities.
The Best Bank In Albania for 2015 by
The Banker
Banka Kombëtare Tregtare has been selected as "The Bank of the Year in Albania for 2015”, by "The Banker" magazine, a publication of Financial Times.
One of the most prestigious financial
magazines, “The Banker” annually nominates the best banks in the world. This is
the third year that BKT receives all three
major awards (The Banker, Euromoney
and EMEA Finance) in the banking industry.
General Consulate in Istanbul
BKT supported the General Consulate in Istanbul for the event organized on Albania’s
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Social Capital
During the fourth quarter of 2015, the International Commercial Bank undertook
several initiatives:
ICB, in cooperation with the Albanian
Red Cross, held the second session of blood
donation for 2015 at the premises of the
bank, respectively on 20 November, 2015.
Help those who are not like you! - October
17 - World Day against Extreme Poverty
Intesa Sanpaolo Bank Albania, in collaboration with the Albanian Red Cross and
on the occasion of the International Day
for the Eradication of Poverty, organized a
fundraising campaign, in order to increase
the awareness and concrete contribution
towards helping 200 families and people in
need, with the motto: "Help them that are
not like you".
Blood cannot be created in the laboratory
it could be donated, only!
For the fifth consecutive year the employees of Intesa Sanpaolo Bank participated
in the voluntary blood donation initiative,
on 25-26 November 2015, in cooperation
with the Albanian Association of Voluntary
Blood Donors.
The bank selected SOS Village for sponsoring the Season’s Greetongs cards. Also,
bank’s bemployees contributed voluntarily
to purchase of a basket of food for a family
of SOS Village for holidays.
The Albanian Network for Social Responsibility (Albanian CSR Network), in
cooperation with the Ministry of Economic Development, Tourism, Trade and Entrepreneurship, and UNDP Albania, organized
for the second consecutive year the Award
for Best Companies, in the field of Social
Responsibility. International Commercial
Bank was chosed by the jury as the winner
in third category, and was awarded with the
"Best initiative” prize.
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Blood donation for children with thalassemia
As every year, the bank organized at the
premises of its head office a voluntary blood
donation activity, with the support of the
mobile unit of Albanian Red Cross. ProCredit Bank’s staff ensured a massive participated in such donation, as they wanted to help
children with thalassemia, as well as all the
people in need.
"Donate a book! Donate knowledge! Donate love!"
Intesa Sanpaolo Bank Albania organized
during November - December 2015 an
internal charity initiative. Employees do-
nated books for two institutions: "Zyber
Hallulli" Children House in Tirana (70
titles) and Shelter for Women & Girls, supporting STOP THE VIOLENCE initiative!
(30 titles)
Donate with heart, give the opportunity to
4 disabled people to celebrate!
Bank employees donated cash, as per their
wish and capacity, through direct transfers
to bank accounts of four disabled persons,
according to a list of names received from
the Independent Association for Children
Care with Mental and Physical Disabilities,
in Tirana, with the desire to donate a bit joy
during holidays.
The triangle of success for young entrepreneurs: Civil Society - Business – Education
The bank supported one of the projects
of Junior Achievement, through voluntary
34
engagement of its staff in 3 cities: Tirana,
Durrës, Elbasan, for students of secondary
schools at 11 and 12 form, by delivering the
subjects: "Business Ethics", "Skills for Success" and "How to become Entrepreneurs
at Student Societies".
Raiffeisen Bank and Tirana Municipality inaugurated the project of reconstruction "Dritan
Hoxha" Street. A part of the project was bicycle lanes, which were financed by Raiffeisen
Bank. At the ceremony held on this occasion,
Mr. Christian Canacaris, CEO of Raiffeisen
Bank and Mr. Erjon Veliaj, Mayor of Tirana,
chose to ride bicycles along the new lanes, with
a group of young people.
Social Capital
International Operatic Festival “Maria Kraja”,
30th – 31st October 2015
The Bank supported the International Operatic Festival “Maria Kraja” that was held from
the 30 – 31 October 2015, organized for the
15th consecutive year, as its general sponsor.
The festival was open to singers from all over
the world, who were all under the age of 32.
This year, 15 participants were selected from
170 applications, which were interviewed from
various juries in Milan, Vienna, Brussels and
Tirana.
Museum of "Themistokli Gërmenji" High
School
The Bank supported the establishment of
the school museum at the premises of "Themistokli Gërmenji" High School, in Korca,
to mark the 50th anniversary of the school,
which serves as a historical bridge, bringing
together different generations of students and
teachers of this institution.
Wine Festival in Pogradec
Under a joyful atmosphere of the end-year, on
18 - 19 December was organized the “Wine
Festival 2015”, in the city of Pogradec, where
local wine manufacturers introduced and presented their products. Even this year, Tirana
Bank support and assist such activity, which
aims to promote the tradition and support local entrepreneurs.
Societe Generale Albania supports young entrepreneurs
Societe Generale Albania collaborated with
Startup Weekend Tirana in hosting the “Startup Weekend Tirana 5.0”, Smart City edition
from 20 – 22 November 2015. This event was
hosted at the Tirana Business Park premises.
New ideas came to life by young entrepreneurs.
Societe Generale Albania not only participated
as a sponsor to this event, but had a seat at the
jury, with Mr Ardian Hasa, Operational Division Manager.
Tirana Bank continues its tradition of blood
donation
Tirana Bank, in cooperation with Blood
Transfusion Centre, on 28 October organized for the seventh consecutive year, the
voluntary blood donation.
Supporting YWCA to increase the awareness on breast cancer
Even this year, Tirana Bank joined this initiative, by supporting television campaigns,
as well as distributing leaflets and posters
to increase the awareness and importance
of early examinations.
The year-end Concert “Ndërmendje” 2015
Tirana Bank continued to support “Ndërmendje” concert of classical music, in the city
of Shkodra, bringing each year-end classical
masterpieces of well-known foreign and domestic composers.
Tirana Bank in cooperation with Tirana Municipality supports children of Zall Herr
Even this year, the amount of money allocated
for gifts’ purchase and distribution to Tirana
Bank customers and partners was donated to
support people in need. This year-end, in cooperation with Tirana Municipality, the gift
of year-end went to 105 families in need in
Zall Herr.
Union Bank, in collaboration with the Public
Center for Residential Development Berat,
supported the End - Year Feast organization.
Thanks to the bank contribute in 28 December
2015 at the premises of the Public Center, was
organized the End - Year Feast for the persons
with disabilities.
The branch manager Ms Leonora Shosha, on
behalf of the bank, conceded to the Center Director the cheque.
Supporting the State Police
Veneto Bank continues to support the
State Police structures, by becoming a very
active partner of the Ministry of Interiors.
After its investment in some border police
stations, this time, Veneto Bank supported the Police Academy and Basic Police
Academy, by rehabilitating the main entrance of the school, which is expected to
be attended by more than 300 students.
Supporting Vocational Education
For the second consecutive year, Veneto
Bank supported the students of culinary
school, who attend their studies at the
well-known "Neranxi" Institute. In addition to financial support for professional
institutes, Veneto Bank also provides various favorable financing opportunities, to
help students attend and complete their
studies in such schools, as well as to startup businesses, after graduation from professional institutes.
Veneto Bank supports dentists
the Congress of Albania and Regional
Dentists, an international event, was held
in Tirana and was attended by thousands
of dentists from Albania, Montenegro,
Macedonia, Kosovo, etc. On this occa-
sion, a Dental Fair was organized, where
Veneto Bank, following the cooperation
as an Official Partner of Dental Leader
Corsi, supported financially the introduction of this institution, by promoting the
development of professional education
and training in Odontotiatry.
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Tech Topic
Security Operations Center
Challenges and Benefits
Given today’s ever changing threat landscape - the only
way to maintain efficiency of security is to leverage
a security operations center to transition towards
intelligence-driven security.
by Ms Anila HOXHA, CISSP, CISA
Head of Security and Safety Operations
& IT
RAIFFEISEN BANK ALBANIA
S
ecurity operations center (SOC) is
not a new notion or trend, often
referred to as a monitoring center,
the concept though has seen an increase
in attention in the past five years. It
comes as a natural step in organizations
with mature security functions, where all
security components (physical security,
information security, and incident
response and business continuity) are
fully interrelated and integrated to each
other. In the local market however this
is to some extend an underdeveloped
concept. We’ll be visiting briefly the need
for SOC, the challenges when designing
and setting up as well as the rewards and
benefits of it.
We are faced with numerous challenges in security today, such as:
- Security operating in Silos mode,
most areas security is seen and split
between information security and
physical security. In most cases these two
functions operate organizationally into
different areas or units, lacking synergies
in between.
- Numerous point solutions, operating in a standalone mode, such as:
antivirus system, firewalls, intrusion
prevention/detection, access control
systems, alarm systems (controlling
physical access, fire detection, intruder),
CCTV systems, etc.
Companies in general and in
particular Banks invest into numerous
security solutions, in mature organizations this is driven by the best
practices concept of “layered protection”, or “defense in depth”. Certainly this is necessary in order to build
effective protection, however once
setup we’re left with all these systems
working in a standalone mode, lacking
the generic visibility that gives insight
into the entire security echo-system and
how it operates or inter-operates let’s say
starting from the physical access to the
building or location up to the accessing
the most critical application systems
holding and processing company critical
data (crown jewels). At the same time
we’re faced with an ever changing
threat landscape. There’s an increase in
attacks and sophistication, and same
time increased compliance controls
and regulatory requirements. Security
Operations Center finally provides clear
and central visibility of the entire security
defenses deployed in all layers, tying
together all the bits and pieces giving the
central missing overview. It is designed
to centrally control security operations
providing situational awareness and
real time monitoring increasing thus the
response time, at the same time serving
as nucleus of all security operations
Security operations centers
are heavily process oriented.
The above can’t really function
without a set of well-defined
processes, in terms of
continuous monitoring and
workflows.
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covering all security aspects.
Challenges in building a security
operations center
Building a SOC has, however, its own
challenges. Before starting building a
SOC, there has to be a clear definition
of scope and requirements, what will
the SOC cover in terms of systems/
infrastructure end points in scope
of monitoring and controlling (all
IT infrastructure: network, systems,
applications, databases etc., non IT
infrastructure, such as: physical security
systems, CCTV, power, utilities etc.).
Once scope has been defined, a clear
commitment and support from management is a critical success factor, not
only because of the considerable budget
and investment required but also because
it brings a change into the company
culture. Once these have been obtained,
may a security team start designing and
building a SOC. A phased approach
is recommended, due to the major
changes it poses as well as the amount
of investment/budget required. Security
operations center is based on three
main pillars: (1) People, (2) Processes, (3)
Technology.
People
The staff operating the SOC, they are
a very important part of the puzzle.
They need to have good mix of
analytical skills combined with very
good communication skills. Some of the
qualities needed for the people operating
the SOC include: (i) extremely curious,
(ii) can deal with low-level details while
keeping big picture view of situation, (iii)
can communicate to various groups that
have very different requirements, (iv)
respond well to frustrating situations.
Continuous training, a combination
of formal and on the job, has to be
planned beforehand for the staff
operating the SOC.
Technology
Technology is a crucial part of the
security operations center. It basically
cannot stand without a system that is
able to collect and correlate real time
vast amounts of data from different
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numerous data sources (IT systems
such as firewall, IPS, network devices,
application systems, access control
systems, alarm system, etc.). SIEM
– enterprise wide data collection,
correlation and real time analysis is the
core technology of a successful SOC.
An effective security monitoring system
incorporates data gathered from the
continuous monitoring of endpoints
possibly including physical security
systems, it:
-provides a baseline, what is normal
in the internal environment
-helps detect quickly abnormal/
suspicious activity
-provides data to drill down to a
particular case
-integrates other threat intelligence
information (data on the external threat
landscape and environment) and use it to
spot patterns at the internal end points.
Processes
Security operations centers are heavily
process oriented. The above can’t really
function without a set of well-defined
processes, in terms of continuous
monitoring and workflows. In case
something is detected there has to be a
document reaction/response process and
proper workflows (including escalation
procedures). Basically response process
Security Operations Center
finally provides clear and central
visibility of the entire security
defenses deployed in all layers,
tying together all the bits
and pieces giving the central
missing overview.
is fully integrated into the company
incident response procedures. Let’s say
for instance unusual activity is spotted
over weekend on a remote location
(or branch) – there has to be a clear
set of steps for the monitoring staff to
understand what verifications are needed
and in what order (access control logs,
system logs, vault access if possible, list
of authorized staff to enter the location
and operating times etc) whom to call
for further verifications/ checks and
whom to escalate it to and when. Is it
an incident, does it require invocation of
incident team, crisis team, etc., all these
steps need to be defined as part of the
SOC processes.
Security operations center – the benefits
Security operations center provides that
missing visibility on the entire security
echo-system providing central and realtime monitoring of all the deployed
security defenses. Typically, it:
- Helps achieve speed of response
time. Real-time access to information
allows for faster reaction to an external
attack (whether technical, such as:
malware, or physical one, such as:
intrusion or robbery). Quicker detection
of insiders’ theft and breaches lowers
the overall negative impact of the event
– via continuous monitoring and defined
baselines/normal behaviors.
- It provides an intelligence based
security. Focusing efforts, resources
and further investments as the need
goes, depending on the overall security
posture.
- Delivering security measurable
metrics. Defining meaningful metrics in
security is already a challenge, however
having aggregated information at hand
makes it possible to design and deliver
meaningful metrics – such as what is the
trend Bank operations are complete in
the branches network (time people log
out of systems and the security systems
are fully armed – by correlating data
from logical access with physical security
systems activation).
Conclusions
SOC is indeed imperative to security.
Given today’s ever changing threat
landscape – the only way to maintain
efficiency of security is to leverage a
security operations center to transition
towards intelligence-driven security.
This will give the required flexibility and
agility to effectively respond to todays
and future threats.
Financial Auditorium
Loan restructuring
Testing the customer before
making the decision on loan
restructuring
Loan restructuring could be considered a valuable
mechanism for reducing nonperforming loans, if it is used
efficiently, by emphasizing the use of the "trial" method,
before finalizing the process.
by Ms Elsa PECA
Head of Risk Department
INTERNATIONAL COMMERCIAL BANK (CB)
L
oan restructuring is defined as any
modification to the original plan of
payment, signed by the customer
when of borrowing from the bank, as
a result of actual or future increase of
possibility that such loan could produce
problems in the timely repayment of
obligation. Loan restructuring is a
process which provides bank customers
in financial difficulties, with the
opportunity to reduce the payment of
actual installment through the extension
of loan’s remaining maturity. At the
same time, the bank can, throughout
the restructuring process, improve the
collateral’s previous position, as well as
revise the interest rate and other loan
terms or conditions.
Loan restructuring process could be
initiated by the customer, or by the bank.
In order to initiate the restructuring
process, two preconditions must be
fulfilled simultaneously:
1. The customer must still generate
income, which means that her/his own
business is active, in the case of a business loan, or receives salary income or
income from other sources, in case of
retail (individual) loan. Specifically, the
business or the individual must generate
incomes, which obviously are less than
incomes collected at the moment of
loan disbursement, as long as s/he is in
financial difficulty,
2. The customer must have shown willingness to pay, that means s/he
is ready to repay the loan and that the
delays in repayments are caused as a
result of financial incapacity to repay the
debt and not from the lack of willingness
to pay. This condition is very important,
because otherwise, the restructuring
will result in an inefficient process and
the bank will end up being at the same
situation with the customer, as it was
before restructuring.
The bank must be prudent when
deciding on loan restructuring, because
it is accompanied with additional costs
for the bank. Typically, the bank must
provision the restructured loan at
10% of the restructuring amount and
maintain this level of provision for at
least 6 months after restructuring, should
the costumer pays 6 full installments, on
regular basis. On the other side, the bill
for customer, along with administrative
expenses for the new agreement with
the bank, which includes legalization
(notarization) of the new contract and
putting up the collateral as mortgage
(if applicable), may include payments
Loan monitoring after
restructuring is an important
element in this process, and is
carried out by Non-Performing
Loans Department, or any
other department, established
for such activity, along with the
performance of restructured
loans and further actions to
be taken, in case of customer
insolvency, which are discussed
at least quarterly, in the
meetings of bank’s respective
committees.
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for potential enforcement, if legal
procedures will re/start, should the
client does not comply with the new
restructuring agreement.
The costumer must be informed
about these costs in advance, prior
to the decision-making about loan
restructuring. The restructuring process
should be seen as a long-term solution
for the bank, so that the bank does not
face the same situation within a few
months period.
A really efficient method is the method
known as “3-month trial period”, used
to customers before restructuring, under
which they pay a new installment similar
to that calculated for restructuring . In
this context, a written agreement with
the customer and a manual payment plan
is drawn up, which defines the payment
date and the amount of installment for
the next three months. Only in cases
when the customer pays on a regular
basis for three months in a row and
when the financial analysis justifies the
new installment, the formalization of
restructuring process takes place. At this
point, a new contract with the customer
is signed, reflecting the new terms and
conditions of the new loan. In some
cases, in addition to the above reasons,
the restructuring can be seen as a way
to strengthen the position of collateral,
either getting a more quality collateral, or
a second collateral, when it is perceived
that the current collateral is impaired, or
it does not cover the amount of loan, due
to its recent devaluation.
As it is explained above, the bank
will continue to classify the customer at
the same loan category as it was before
1
restructuring, for a period of at least six
months. If the customer pays regularly
and it is verified that her/his financial
situation is improved, the bank may
reclassify the customer and upgrade his
classification at a higher category. Loan
monitoring after restructuring is an
important element in this process, and
is carried out by Non-Performing Loans
Department, or any other department,
established for such activity, along with
the performance of restructured loans
and further actions to be taken, in case of
customer insolvency, which are discussed
at least quarterly, in the meetings of
bank’s respective committees.
International Commercial Bank has
restructured about 41 loans, granted
mainly during the period of 20132015. Some 30 loans, out of 41, have
performed successfully, in accordance
with terms and conditions of the
agreement, whereas 11 of them have
continued to show delays in repayments,
after restructuring. So, in 11 cases the
restructuring process resulted inefficient,
only. It is worth noting that, before
restructuring the majority of loans has
been classified as "lost loans", overdue
for more than 365 days. Furthermore,
the subsequent enforcement procedure
for these loans proved to be ineffective.
The majority of this group of loans
is granted in foreign currency, mainly
in Euro-s and in amounts ranging
from EUR 30.000 to 50.000. During
the restructuring process the loan is
converted into domestic currency, taking
into account the currency in which the
customer’s incomes are denominated, in
order to avoid or reduce the exchange
rate risk. It should also be noted that,
the original loan maturity was mainly
up to 5 years, while the period after
restructuring is extended up to 10
years, enabling customers to pay a
lower installment, depending on its
current financial situation. The interest
rate of loan is also revised, based on
current market rates, which affects
positively the reduction of installment
for customer. Also, with regard to
economic activity, most of restructured
loans belonged to customers engaged
in construction activity and during the
restructuring process, it was noticed
that these customers had changed their
business activity, due to the liquidity
bottlenecks the construction sector has
faced over the last year. Furthermore,
some customers which underwent the
restructuring process were classified as
customers receiving business income,
at the time of original loan agreement,
whereas at the restructuring moment
they belonged to the group of customers
receiving wage income.
As per above, more than 70
percent of the restructured loans in
International Commercial Bank have a
positive performance after restructuring,
comparing to the banking system ratio,
which is 9 percent, only. At the same time,
due to the restructuring mechanism, the
non-performing loans ratio is reduced
more than 5 percent.
In summary, loan restructuring could
be considered a valuable mechanism for
reducing nonperforming loans, if it is
used efficiently, by emphasizing the use
of the "trial" method, before finalizing
the process.
This is the method actually used by the International Commercial Bank, ICB.
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AAB ACTIVITIES
AAB organizes the Fourth
National Forum on Bank Security
AAB, with the support of its Committees
for Information and Bank Security,
organized on 26 November 2015, for
the fourth consecutive year, the national
forum on bank security issues, entitled
“Safe banks, protected customers”, held
at the premises of Tirana International
Hotel. Participants at the Forum included
the representatives of commercial banks
in Albania and Kosovo, the Bank of
Albania, the General Directorate of State
Police, the National Security Computer Agency (ALCIRT); the National Authority for Electronic Certification (NAEC); and
companies which provide services or products to the relevant sectors.
Even this year, the forum served as a platform to exchange ideas, experiences and the latest national and international developments
and dynamics both on banking physical and information security.
In conclusion of the Forum, all the participants once again emphasized the importance of the cooperation between the related
parties, in order to protect banking consumers.
Year End Dinner
AAB organized on 16 December 2015 the annual year-end dinner, which
was attended by the Chief Excecutive Officers and other representatives
of the member banks of the Association and other special guests such
as: the Governor, the First Deputy
Governor, the Head of Supervision
Department, the Chief of Cabinet of
the Governor of the Bank of Albania,
the Head of the Albanian Deposit
Insurance Agency, and members of
“Bankieri” Editorial Board.
The AAB Chairman, Mr Christian
Canacaris, and the Governor of the
Bank of Albania, Mr Gent Sejko,
welcomed the guests during their
short speeches.
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AAB TRAININGS
Training courses, organized by AAB during the period October - December 2015, in
collaboration with national and international partners as follows:
Trainings organized with ATTF Luxembourg
Back Office Operations, 21-23 October: The first in-house cooperation
of AAB with ATTF Luxembourg. The training delivered by Mr Paul
Klenbart, a senior ATTF expert, was attended by 17 representatives
of member banks.
Basel II and beyond, 2 – 4 November: The training was delivered by
Mr Stefano Bragoli, European Investment Fund, ATTF Official Senior
Expert, and was attended by 19 representatives of banks in Albania.
HR Management, 9 – 11 December: The training was led by Mr Gilles
Ossona de Mendez, ATTF Expert Coach, Consultant and Trainer, and
attended by 17 representatives of member banks. This training was
financed from the Ministry of Finance of Luxembourg.
Trainings organized with Lincoln Centers of Albania
Business Communications: The Art of Conversation, 5 – 6 November:
The training aimed to introduce to participants skills for more effective
communication. It was delivered by Mr Josh Miekley and attended by 8
representatives of member banks.
Great Negotiators: Achieving mutually satisfying outcomes through winwin negotiations, 12 – 13 November: The program focused on widely
agreed-upon foundational concepts of negotiations. It was led by Mr David
Turner and attended by 9 representatives of member banks.
Other partners
Fraud detection and prevention, 1 – 2 October: The training organized by
AAB in collaboration with AIIA aimed the practical approaches in the local
environment, through interactive sessions and group exercises. The training
was attended by 20 banks representatives.
VISA Business School - Fraud Prevention, 13 – 15 October: For the first
time in Tirana was organized a training by Visa Business School, which
was attended by 24 representatives of banks of Albania and Kosovo. This
workshop focused on key functional areas including operations, fraud risk
management, MIS and data, merchant cardholder monitoring and loss
controls.
Strategic Leadership and Effective Governance, 23 – 24 November: The
training was organized in cooperation with WIFI Albania and was attended
by 13 high managers of 5 member banks.
Using Scoring While Managing Risk, 24 – 25 November: The training was
organized in cooperation with SBPS Technologies Company. It was led by
Mr Ayhan Akay, a risk management consultant, and was attended by 9
representatives of banks in Albania and Kosovo.
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