PRESS RELEASE
Bank of Albania organises a meeting on promoting credit growth

Upon the initiative of the Bank of Albania and Ministry of Finance, on 8 April 2015 a meeting was organised on promoting credit growth. The meeting was attended by, Mr. Gent Sejko, Governor of the Bank of Albania, Mr. Shkëlqim Cani, Minister of Finance, Mr. Ervin Mete, Deputy Minister of Economic Development, Tourism, Trade and Enterprising, executives from commercial banks and microfinance institutions, and representatives of the Albanian Association of Banks.

This meeting, which has become a tradition, serves as a platform for participants to exchange ideas and present their perspectives in relation to various problems facing the banking and financial sectors.

The focus of the meeting was on the recovery of credit to the economy and situation of non-performing loans. The Bank of Albania emphasised its position that the overall economic and financial conditions, the banking system soundness, and the implemented monetary policy, as well as other factors have created a favourable environment for crediting the economy.

In his address, the Governor of the Bank of Albania urged the banking system to adopt a proactive approach, to better utilise the existing potential and boost intermediation. Mr. Sejko pointed out the need for compliance with the supervisory regulatory requirements with regard to credit risk assessment and management, including a balanced distribution of the credit portfolio. It is necessary, therefore, for the system to carefully revaluate the potential that exists in various sectors of the economy, and identify those sectors that offer better crediting opportunities.

In order to guarantee a steady recovery of credit to the economy, a thorough analysis of the non-performing loan portfolio is needed. This analysis should be performed at macro level, addressing case by case individual branches of the economy, various production and services-related activities, even systemically-important businesses, both for the sector in which they operate and the bank crediting them.

The Minister of Finance Mr. Shkëlqim Cani affirmed the readiness of the Government to support the banking system by simplifying further the legal and procedural barriers, which the banking industry considers as factors contributing negatively to the quality of the credit portfolio and its expansion. The Government has taken a series of important reforms to sustain economic growth, guarantee stability of macroeconomic equilibriums and create new spaces for private sector crediting by the banking system. These developments have improved the business climate, restoring the confidence of economic agents and contributing positively to credit demand.

Executives of branches of foreign banks operating in Albania stated that their plans for 2015 include clear objectives for credit growth. Some of the parent banks, however, maintain a prudent approach towards expanding their portfolio in the region. In addition to the identification of a still-sluggish demand, the banking industry raised the issue of inconsistency in the implementation of and the need to improve the legal framework pertaining to collateral execution and bankruptcy processes.

In conclusion, all the represented groups of interest agreed in principle on the need for a more detailed and thorough discussion of the issues that were raised in the meeting. For that purpose, in June 2015 the third Financial Forum will be organised. In addition to representatives from the Bank of Albania, the banking system, the Albanian government, and the IMF, representatives from foreign banking groups operating in Albania through their branches will be invited. Until then, banks are urged to intensify their efforts for identifying obstacles, in their view, and to draft relevant proposals for the Albanian authorities, for overcoming such obstacles.