No. 8 July 2013 Publication of Albanian Association of Banks
OVER REGULATION
Could it lead to overkill?
Bank Cards‌.
For whatever life has in store!!
The brochure on credit cards and their usage, is part of the Financial Education Campaign, undertaken by the Albanian Association of Banks and Bank of Albania. For more information visit: www.aab.al AAB MEMBERS
www.aab.al
No. 8 July 2013
Contents
Publication of Albanian Association of Banks
publication of the Albanian Association of Banks which mainly focus the Albanian banking industry. Bankieri provide readers with valuable information on the OVER REGULATION
Could it lead to overkill?
EDITOR’S DESK Red Tape in 3D! by Elvin MEKA
Investment of banks abroad - A costly endeavor by Besart KADIA
p.6 p.9 p.11
p.13
Publication of Albanian Association of Banks Editorial Team: Elvin Meka Editor-in-Chief Eftali Peçi Coordinator Junida Tafaj (Katroshi) Coordinator Anduena Manushi Editor Gert Hoxha Photographer
Execution of collaterals, an important feature of viable financial markets by Periklis DROUGKAS
p.14
Financial collateral, a novelty in the Albanian legislation and its implementation’s challenges by Holta ZAÇAJ
p.15
Printed by:
Risk culture as an aide to ensure effective risk management at banks by Artiola AGALLIU
p.18
Editorial Board:
Design & Layout: Ladybird Creations
Seyhan PENCABLIGIL AAB Chairman & Chief Executive Officer, Banka Kombëtare Tregtare
EXPERTS’ FORUM Public-Private Partnerships (PPP) and the Financial Reporting by Hysen ÇELA and Kledi KODRA
p.21
Theoretical considerations and supervision aspects of pension systems - Opportunities in Albania by Enkeleda SHEHI Physical Risk Classification Matrix – The Analysis Means for Risk Assessment by Roland TASHI
p.23 p.26
ECONOMIST CORNER
SOCIAL CAPITAL Banks' activity
A BANKER IN FIRST PERSON BALKAN NET Interbalkan news
p.29
AAB Albanian Association of Banks Activities
Alexander RESCH AAB Executive Committee Member & Chief Executive Officer, Intesa Sanpaolo Bank Albania Hubert de SAINT JEAN AAB Executive Committee Member & Chief Executive Officer, Societe Generale Albania Bozhidar TODOROV AAB Executive Committee Member & Chief Executive Officer, Fibank Albania
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Endrita XHAFERAJ Secretary General, Albanian Association of Banks
p.34
Hysen ÇELA Chairman of Albanian Institute of Authorized Chartered Auditors (IEKA)
p.37
FINANCIAL AUDITORIUM The use of payment instruments by individuals and bussinesses by Kliti CECA, Valentina SEMI, Alban PLLAHA
Ioannis KOUGIONAS AAB Vice Chairman & Chief Executive Officer, NBG Bank Albania
Periklis DROUGKAS AAB Executive Committee Member & Chief Executive Officer, Alpha Bank Albania
TECH TOPICS
E-COMMERCE – A tangible reality in Albania by Marsela KUSHTA
banks in particular.
Bankieri
BANKING SYSTEM
The agreement on European banks rescue rules by Adrian CIVICI
in general, and of commercial
No. 8, July 2013
INTERVIEW
2012 - A successful year for Fibank Albania Interview with Bozhidar TODOROV
financial industry's developments
p.5
FRONTLINE The Financial Regulation Conundrum by Viktorija PROSKUROVSKA Bank regulation - A complex future for banking activity by Avis ANDONI
BANKIERI is the official
p.39 p.42
Adrian CIVICI President & Head of Doctoral School European University of Tirana Spiro BRUMBULLI Rector - Tirana Business University Enkeleda SHEHI Chairwoman of Albanian Financial Supervision Authority
ALBANIAN ASSOCIATION OF BANKS Bulevardi: “Dëshmorët e Kombit”, TWIN TOWERS Tower I, Floor 6, A3, Tirana Tel: +355 4 2280 371; Fax: +355 4 2280 359 E-mail: bankieri@aab-al.org; www.aab.al www.aab.al • BANKIERI
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Editor’s DeSK
Red Tape in 3D!
Banking regulation is a must, but it should, however, be noted that “successful regulation is rare; market successes, on the other hand, are abundant”
by Dr. Elvin MEKA1 Editor-in-Chief
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egulation is a fact of life and there is no escape from it, especially when it comes to banking sector, which is not just well-regulated, instead it is hyper-regulated, by now. Usually, the regulation becomes the word-of-day, during or in the aftermath of any financial or economic crisis, and it is commonly judged as the most suitable vaccine against the collapse of the entire financial system and to contain the compounded risks of herd behavior, which follows thereafter. The spectacular crash of 2008 was a “par excellence” case for sparking a regulation appetite in a global scale, but specifically targeted on banking industry. By a broad viewpoint is seemed to be more than relevant and welcomed, as the financial sector and the banking industry turned to be the hotbed of the crisis. In turn, for more than three consecutive years, we have witnessed a steady regulatory undertaking, both in a global and European scale, aiming at regulating every square meter of banking activity. Typically, the run begun with Basel III requirements and discussions, followed by numerous European institutional and regulatory initiatives, which resulted in establishing three European Supervisory Authorities (ESAs): European Banking Authority (EBA), European Insurance and Occupational Pensions Authority (EIOPA) and European Securities and Markets Authority (ESMA), the European Banking Union, the adoption of European banking regulatory “architecture” CRD IV/CRR, and quite recently, the European bank rescue rules, which intends to force losses on creditors and therefore helping 1
Europe move towards proper banking union. The most admiring feature for these novelties is the time pace, speed of their drafting and adoption, creating a pure regulatory “clustering effect”, within European Union. Even Bank of Albania is moving steadily with respective regulatory changes and amendments, which aim at energizing the loan-making process to the economy, which is showing a continuous meager growth rate, along with approaching Basel II requirements, and in a near-future, even Basel III ones. So far, so good! But could hyper-regulation make markets and the banking system risk-free and thus produce relevant antibodies for an established prudent corporate governance and risk management? Were past regulations illdrafted and regulators short-sighted? Definitely, rules and regulations are not bad, but too much red taping could unavoidably give life to the famous Sir Winston Churchill’s saying: “If you have ten thousand regulations, you destroy all respect for the law!” Also, regulators decide and approve current rules, based on the present and they have limited abilities to predict the future consequences of their actions, because of the simple fact of life: the future cannot be predicted. Therefore, the banking industry is set into a 3D red taping environment. How successful these rules and regulations will be? Let’s close it with a statement by Professor Peter Lewin: “Successful regulation is rare. Market successes, on the other hand, are abundant!”
Head of Department of Finance, EUT-UET
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FRontline
The Financial Regulation Conundrum
Regulation is not bad indeed, banks need an adequate level of regulation to keep the industry safe and healthy. However, the way it has been piled up lately, without giving it sufficient reflection, is not really the right way to go about it. by Ms Viktorija Proskurovska Adviser, Economic Affairs European Banking Federation, EBF
B
anking regulation has been shaped, tightened and loosened throughout its history. Notable moments revolve around the Glass– Steagall Act of 1933 and the Bretton Woods System of 1944, the wave of innovation initiated by the US decision in 1971 to terminate convertibility of the US$ to gold, followed by de-regulation of banks that started on both sides of the Atlantic at the end of the 1990s. In the aftermath of the current financial and economic crises, the European banking sector is undergoing a regulatory ‘tsunami’. In fact, academics agree that big crises are often followed by (excessively) stringent regulation. In the run-up to the crisis, some banks have gone too far in excessive leveraging, resulting from shareholder-driven profit-seeking. As a consequence, banks, regardless of their business model, are now faced with tougher regulation on a vast array of issues: from capital and liquidity requirements, to limitations to financial leverage, to greater investor protection and increased transparency, to gov ernance and remuneration issues, to reduction of overthe-counter derivatives, to the way the sector is structured, and more.
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Taking a good look at the legislative proposals made by the European Commission over the past 3 years, one could think of it as a new set of EU acquis communautaire. Over 40 different legislative proposals have been made since 2008 by the Commission’s Directorate General for Internal Market alone. The current pace of new regulatory proposals and seeming lack of understanding of impact of these overlapping and sometimes even conflicting regulatory proposals create a very complex environment for banks to operate in. One example would be the way the Financial Transaction Tax is being put in place in the EU. There is a sense of regulation being enforced out of fear, rather than constructive shaping of a visionary framework for banking and financial industries. This makes the situation for banks equivocal. In an attempt to protect depositors from the potentially harmful effects of banking activity, regulators around the world are being advised to separate high-risk financial activities from deposits (Vickers, Volcker, Liikanen). Although led by sound reasoning, such structural changes to the European banks’ business models
may lead to unintended consequences. Capital endowment of banks is becoming a decisive factor in signalling their trustworthiness to the market. This approach taken by the markets should lessen the need to proceed with structural measures. This is not to say that regulation is bad. Indeed, banks need an adequate level of regulation to keep the industry safe and healthy. However, the way it has been piled up lately, without giving it sufficient reflection, is not really the right way to go about it. Clearly, politicians were unprepared for this kind of massive crisis, where every problem adds up to previous ones, creating a toxic kind of pie that EU politicians have to deal with. It has been five years since Lehman Brothers collapsed, and by doing so, shook up the entire global financial system. The EU financial framework was largely unprepared for this ‘surprise’: at the time, the resolution regime and the Banking Union were not there, the system of deposit insurance was not adequate to the kind of crisis that took place in 2008. Not least, fiscal policies were left to national policy-makers to do what they pleased. Banks have been forward-looking: they started antici-
pating the regulatory changes even before the key financial sector regulation entered into force, i.e. the fourth Capital Requirements Package (CRD IV / CRR)1. Banks have been increasing their capital cushions, provisioning for sufficient levels of liquidity, and deleveraging. Of course, the compound effect of CRD IV / CRR is significant, even if unknown, not to speak of the rest of the regulation currently in the pipeline. The banking landscape is changing not only in its regulatory dimension but in its supervisory and geographical/business model, too. In addition to the substantial and substantive re-regulation of the industry, an overarching structural change of the highest importance today is the creation of the euro area Banking Union. Soon, euro area banks are going to be supervised directly by an EU-level body, with national supervisors relinquishing oversight over the most significant banks in the euro area and cooperating in the oversight of smaller and local banks. The introduction of the Banking Union will inevitably change the way the banking business is undertaken in the way owing to the shift in the way rules are set (at least for the largest banks in the beginning), in the way banks are
The banking community is in agreement that the crisis did not occur because of low capital levels, but because of poor risk management. Risk management is the bedrock of any bank’s foundation, which is why the right balance must be struck between profitability and prudence.
supervised, and in the way banks reporting lines and content is defined. Being able to adjust to the new regulatory environment while maintaining attractive margins for investors will be key to the success of banking business in the foreseeable future. In the crisis, the banking sector has become more national (state aid, national deposit guarantees, banks’ government bond holdings had an effect, too). Moreover, the effect of some of the new EU legislation, as well as its mounting cost, has led cross-border banking groups to partially turn away from their overseas operations. Fewer transactions are being conducted cross-border, too. Achievements of the internal market for banks are willfully being disintegrated. The regulatory and supervisory changes mentioned above represent just the tip of the iceberg of the ongoing regulatory overhaul in the EU financial industry. The widely shared view in the EU financial industry is that while adjustments to the regulatory environment must indeed be made, over-regulation will lead to undesirable consequences, not only for the financial industry, but for the economy as a whole. Regulatory arbitrage is an inevitable side effect to the steady tightening of regulation. This ‘waterbed effect’ will hamper European banking, because it will cause a shift of risk to the shadow banking sector. Global systemic risk will persist, but in a less
supervised area. A few other unforeseen consequences risk arising. First, European banks’ universal banking model is under threat. This is not just about the way the banking model is built: it is also about how banks serve the economy, and how the economy uses financial services (i.e. no more one-stop-shop for SMEs!) Secondly, banks’ profit margins are being squeezed, which is a problem of double-edged sword: the margins are squeezed because of the enormous cost of the new regulatory requirements and reporting. The other side of the story is that with lower profitability, banks lose investors’ interest, so de facto the EU banking industry’s attractiveness is under threat. This may result in a substantial number of banks leaving the EU for other, more financial sector friendly jurisdictions. And at the same time, regulation should focus on the right set of targets. In addition to increasing the capital cushions of banks and making banks more transparent, a stronger and more determined focus on risk management within banks is crucial to financial stability – and thus to a more stable economic development in the future. This is a call on the banking sector to learn to adopt to the new normal, in order to succeed in this complex environment, and help the EU rebuild its economy.
1 CRD IV: Capital Requirements Directive IV - CRR: Capital Requirements Regulation
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FRontline
Bank regulation - A complex future for banking activity The way of capital structuring and the numerous defensive “cushions” narrow down and hamper the bank scope and its re-induction in economy.
by Ms Avis ANDONI, PhD Candidate Lecturer, EUT
he global nature of banking activity, leaves no other alternatives, T but orientation towards binding su-
pervisory framework. Living in today’s market without boundaries, with a transformation dynamism and capability, with a natural bias towards high risk for high profit, makes the updated and territorial enlargement of supervisory framework a must, in terms of serving as the main condition for ensuring international banking harmony. But let’s keep our focus on the EU and count numerous efforts towards unification: European Central Bank (ECB), European Banking Federation (EBF), the three European Supervisory Authorities (ESAs), European Banking and Financial Regulations, The European Banking Union, etc. Many questions and issues arise in the banking domain of the European territory. The question is: European Banking Authority (EBA), or European Central Bank (ECB)? Which one is the target? Baseline supervision or simply a joint regulation? Up to which point should the regulation penetrate? Frankly speaking, the aspira-
tion for a European banking union is very ambitious, but typically a déjà vu, because without banking union and common supervision, there is no possible solution to potential crises. In this spirit, the European banking regulatory “architecture” CRD IV/ CRR, which in harmony with the supervisory package of Basel III, modifies the rules on capital requirements at banks and investment companies level, was recently passed, following months of debates within the Council of European Union and the European Parliament. This set of rules shall become effective as of January 1st, 2014
The need to review capital requirements
Apart from negative consequences, the crisis produced “lessons” on system’s gaps or the insufficiency at the regulators level, and furthermore showed the vulnerability of the financial system, in a global scale. The first lesson highlights the need for strengthening the cooperation among monetary, fiscal and supervisory authorities, globally. Secondly, it “revealed” the financial institutions which could not absorb market “shocks” and therefore were not able to sustain themselves, as a consequence of capital level and its quality, its availability, liquidity management and quality of corporate governance. Thirdly, cross-border failures of international groups were an unsurmountable challenge for national authorities, alone.
From Basel II to Basel III
The last financial crisis highlighted a series of loopholes in Basel II Agreement, which was followed by a huge need for public support for
re-establishing trust and stability in the financial system. These loopholes included: a capital stock which could not absorb losses, weak management of liquidity and risk, at group level, as well as weak governance. Basel III proposal introduces changes to close such loopholes, i.e.: more quantity and quality of capital, aiming at absorbing potential losses, more balanced liquidity to achieve quality management of cash flow and liquidity, both in long and short term periods, to avoid market “drainage” from liquid assets, financial leverage restriction, in order not to compromise banks’ solvence capacity, capital requirements for derivatives, in order to contain bank’s exposure toward third parties, capital conservation buffers, which aim at an additional value of the high-quality capital reserve.
Could CRD IV and CRR “absorb” the Basel III Agreement, entirely?
The EU, or its Member States, are substantial contributors to BIS and BCBS1, that is, the Basel III Agreement itself, by ensuring that issues
Banks shall then face higher costs from the implementation of the directive, a fact that shows risk for smaller banks and on the other hand, these costs shall be transmitted to and absorbed by the endconsumer, in order not to affect the profitability.
1 BIS: Bank for International Settlements, PCPS: Basel Committee on Banking Supervision.
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and particular aspects of European banks were properly addressed. Both groups “fight” for the same objective, but Basel III cannot be literally ‘”copied” into the EU legislation, for two reasons: (1) this agreement is not a law, because it represents a set of standards approved globally by supervisors and central banks, (2) whereas capital requirements apply to international active banks, the EU addresses all banks and investment companies.
Novelties of CRD IV and CRR
CRR includes the “single rule book”, which represents a unique set of rules in the EU, thus harmonizing the scope rules and offering legal warranties to any market actor. Meanwhile, elements of Basel III, such as: capital and risk package, liquidity, leverage and package on exposure against SME loan-seekers are also found in the CRR. With regards to CRD IV, more changes can be spotted here: earnings, in order to avoid high risk undertaking, by setting a limit to bonuses, in relation to fixed salary (so that it does not exceed 100% of it); governance, where requirements for corporate governance are raised, in order to improve risk management and efficient supervision monitoring; increased transparency of banking activity and investment funds on profit, taxation and subsidies; diversity in the composition of managing board members, in order to avoid “groupthink” and stimulate diversification of risk undertaking and its efficient
The regulation and the directive shall have a direct influence on market capital structure, where the distribution of assets shall be significantly affected by the requirements for capital quantity and quality, by driving banks towards short term and well-covered debt. 10 • BANKIERI • www.aab.al
supervision; systemic risk buffers, which create an additional level of 3-5% of base capital, in order to ensure coverage from non-cyclical systemic risks; global systemic buffers for global systemically important financial institutions, which are required an additional liability of 1-3,5% of the base capital, in order to cover moral risk and abuse with the money of local taxpayers, in case of failure; other systemic buffers, which are addressed to other national financial institutions, with a coverage level up to 2% of base capital. To summarize, the objective is to draft a legal framework for a prudential supervision, which, in many aspects, has red taped many of financial/bank assets and products, naturally, to strengthen the stability and avoid crises. But would this regulatory framework so strict push banking into “temptation”? The way of capital structuring and the numerous defensive “cushions” narrow down and hamper the bank scope and its re-induction in economy. Also, the liquidity constraints shall force banks to turn down many investments in various business opportunities, because of potential influence on liquidity or leverage, regardless of the fact that they posses the relevant
capital. Other parts of the directive, such as the transparency and earnings, have a potential negative effect on banking sector competitiveness, by considering the fact that other financial sectors do not have the same constraints. Banks shall then face higher costs from the implementation of the directive, a fact that shows risk for smaller banks and on the other hand, these costs shall be transmitted to and absorbed by the endconsumer, in order not to affect the profitability. How shall the business model in banking strategy, governance, processes and systems react, under the three directive dimensions (capital, leverage, liquidity)? Practically, many questions arise in moments of change, but if we are to look at the Albanian financial/banking market, which is not yet at the level anticipated by these regulations, that is, less financial institutions and less products, then how would the discussion about their implementation be, before the constituent components get proper life? A natural question is hereby risen: we agree with the supervision for a healthier market, but would such regulations form or deform our market?
FRontline
Investment of banks abroad A costly endeavor Increased capital requirements for investments abroad will make more expensive the increase of these investments in international markets, while banks will face a new challenge, to replace these investments with sound lending projects in Albania. by Mr Besart KADIA, PhD Candidate
T
he Supervisory Council of the Bank of Albania, at its meeting on 27.03.2013, adopted a number of changes in the regulatory framework, aiming at improving the loan supply by the banking sector. According to Bank of Albania (BoA), a significant slowdown in lending growth by banking sector was evidenced during 2012, specifically, estimated at about 2 percent, and a further decline in the lending quality. During the last four years, bank lending underwent a moderate growth, at an average annual rate of about 10 percent, which could be considered relatively satisfactory, given the current economic situation, and when compared with lending developments in the region, which has experienced lower lending rates and sometimes even a decline. However, such level is manifold times lower than the growth rate of lending to the private sector, during 2004-2008, which increased on the average about 66 percent per year. Based on these data, BoA’s initiative to encourage banking system regaining its previous confidence in terms of having high growth rates for lending in the country is to be applauded. This package creates incentives for banks to channel funds within the country’s economy, by way of facilitating capital requirements for lending, whereas tightening requirements for investments abroad. Although a positive public perception on Boa’s measures is felt in the air, it appears that such tightening conditions for banks’ investments abroad will have a low impact in accomplishing BoA’s objectives in
this regard. Despite the fact that deposits in foreign currency, especially in euro, have increased lending has remained low, while investments in products of non-resident entities (mainly financial institutions) have increased. Commercial banks argue that they are bound to invest this liquidity abroad, due to lack of demand for loans in foreign currency, while the last movement shows that banks will face a new challenge, in order to replace these investments with sound lending projects in Albania. According to AAB, investing abroad is a non-profit activity (or even losses are incurred) for banks, and the increase of risk factor (to 100 percent) for such investments is ex-
In circumstances where the level of nonperforming loans is high and economic growth for 2012 is estimated at 1.5%, the reluctance of banks to lend in foreign currency seems arguable, as the result of low demand for loans from real economy in the country and not as a rescuing path for better investments abroad.
pected to have little-to-no effect on lending growth, affecting more the commercial banks’ requirement for capital additions, thus not improving lending in the country, at least in foreign currency. The measure to increase capital requirements for investments abroad aims to make such investments in international markets more expensive, thus reducing the capital adequacy ratio and giving a negative effect on banks. The growth of claims to nonresidents generally reflects the weakness of domestic demand for loans, therefore showing a slowdown of economic growth in the country. Specifically, as the level of non-performing loans is high and the economic growth rate for 2012 is estimated at 1.5%, banks’ reluctance to lend in foreign currency seems justified, given the weak loan demand from real economy in the country and not as a getaway for better investments abroad. On the other hand, AAB explains that banks in Albania are committed to provide the required level of loans to economy, as their primary and traditional activity, and this requires well-prepared funding projects by local businesses and a sound, sustainable and viable regulatory framework. At the end of its decision, BoA argues that its main objective is to maintain the stability of the banking sector and it is willing to identify the need for further action, should these measures will be unsuccessful. Therefore, it is seemed and believed that BoA and banks will soon reconsider this decision, in another set of conditions.
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INTERVIew
2012 – A successful year for Fibank Albania Every difficult moment brings along opportunities, together with challenges and difficulties and we believe we are able to exploit these opportunities with the support and experience of our mother institution. Mr Bozhidar TODOROV Chief Executive Officer, Fibank Albania
BANKIERI: How could you prescribe, in a couple of words, the year 2012 for Fibank Albania? The year 2012 was a very good year for us and has been a turning point for Fibank Albania. Our results were impressive and put us at the first place of the Albanian banking system for all components of growth rate for the past year. What makes our achievement even more meaningful is that in all performance indicators, and increase in nominal value of these indicators we are on the top 4-6 banks, like with Euro 30 million increases in total assets and almost Euro 33 million increases in deposits which is a clear sign of trust in our bank. Also we had 43% increase in loans, the highest in terms of % and 6th in nominal terms among all other banks, and to add something very important, we had this growth in lending while maintaining an NPL ratio of 8%, a very low figure for the moment. On the top of all this, during 2012 our Bank reached the breakeven and recorded a net profit of Eur 700 thousand; a very considerable profit if taken into consideration the ongoing economic situation. Our customer base has increased with the same speed as well and has more than tripled over the past three years, and we are now serving more than 40 thousand customers. What these figures are showing is the role that Fibank is playing among the most active banks in the system and in the Albanian economy despite its market share, and this is a major achievement for a growing bank. BANKIERI: What were the reasons behind this successful year?
In the last 4-5 years we have built a great team of professionals with the required expertise and our growth is following an increasing trend from some years now. In total assets, loans and deposits we have had an average increase of approximately 30% every of the last 3-4 years and 2012 followed this trend. Another very important reason is the experience of our mother bank, Fibank - Bulgaria, which is a regional bank operating in nearby countries. These countries have faced similar problems like the ones Albania is going through now, only few years ago, and having this kind of experience has proved to be a major
advantage which we have benefited from. Fibank - Bulgaria, which recently became the third biggest in Bulgaria and the largest locally own, is continuously rewarded for excellence in customer satisfaction and service, and is largely perceived as an innovative and flexible institution. We have successfully implemented our mother banks know-how, corporate culture and best banking practices which had a crucial impact on our positive results. Furthermore we have been focusing in each client and have offered products tailored to client needs. We have been focusing in SME-s and retail which we have identified to be our proper market segment, by benefiting in maximum from the fact of being a small size bank. We have exploited the potential of Albanian market in relatively new products such as credit cards and where we gained considerable market share. BANKIERI: Do you think 2013 will be as successful as 2012, considering also the challenges banking system and economy is going through nowadays? Obviously we are aiming to grow further and as mentioned above the bank is in a positive trend from several years now and has built brand recognition. Fibank Albania has shown to deal well with current economic situation and still is supporting businesses needs for financing by giving its contributing to the economic growth. We are very active in assisting local businesses in management issues in the role of a professional financial advisor. I would like to mention a personal favorite saying, that every difficult moment brings along opportunities together with challenges and difficulties. Our believe is that we are able to exploit these opportunities with the support and experience of our mother institution, and recently we have proved to have done so. We think that with an increased client base we will be able to continue a considerable growth in lending and also in other performance indicators, because we consider our clients to be Fibank messengers. Albania still offers a great potential for further growth and developments, but they will come only after improvement of legal framework, which Banks through the Albanian Association of Banks are bringing to the attention of the law and decision makers.
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Banking INTERVISTA System
Execution of collaterals, an important feature of viable financial markets The execution of collaterals would bring positive results and better banking performance in two directions, in reducing NPL in general and in generating new opportunities of crediting new buyers that need finance. by Mr Periklis DROUGKAS Chief Executive Officer Alpha Bank Albania
C
orporate and retail lending in Albania was usually secured with real estate properties. In this perspective, the raising of non-performing loans, due to the crisis, should have been followed by execution of collaterals that would have created, by default, opportunities to be evaluated and appreciated by the market. In other words, this would have been the “day of truth” for the collaterals, showing whether the bank had made a sound decision when considered and accepted the collateral in its lending activity. But, it seems that the “day of the truth” is difficult to be tested nowadays and this is so, for reasons not related to the market reaction, something that one would be prepared to face in this industry, rather than to unusual reasons. This has been confirmed more than once, also, by Bank of Albania, which addressed this issue recently in the Albania Financial Forum, when recognizing the impact of collateral execution in the slow adjustments of property prices to market conditions1. When it comes to execution of collateral, the paradox is that the tedious job here seems to be the legal procedures of enforcement and not the lack of market interested participants and agents. This was something that lenders and regulatory authorities in general didn’t consider and foreseen to be an issue of major concern, in a country aiming to be integrated in the European Community. In addition, the legal principles used in
an execution procedure are not subject of great novelties and therefore, do not represent, in most countries, substantial legal questions that need to be addressed with great legal engineering techniques. This has been the background that made the banking community to appreciate the response of the Albanian Government to amend the Civil Procedural Code, supported by Bank of Albania and World Bank. The new amendments try to address to a certain extent the issues created from the set back of the collateral execution. Some of the greater concerns were first, the possibility of the debtor allowed to raise numerous objections and appeals, thus converting the “execution” into a contradictory “lawsuit”. It has to be stressed that, this was not the idea when the loan contracts were introduced in the Albanian legislation as executive titles in 2001 and therefore they created the basis of a legal certainty required for banks and investors to operate. Second, the courts had great discretion in according rather
The practice of execution of collaterals, when and if properly applied, will impact the non-paying clients’ behaviors and will motivate them to better cooperate with banks in exhausting all the possibilities either for paying or restructuring.
1 Proceedings and Main Conclusions of Albania Financial Forum, 8 April , 2013.
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easily suspension measure which impaired execution until the final court verdict issued on the matter. This delayed extremely the execution, because of the lengthy court procedures, a feature of the Albanian Judicial System, that has been spotted by many international institutions and do not certainly make Albania proud of. Therefore, the new amendments, limiting the power of the courts to suspend execution, while balancing also the customer rights, represents a positive development that should be appreciated. However, there are still issues that need a better regulation in this respect, such as the incentive structure for Bailiff Officers, unrelated to success which fallout to be a distortion. There should be no room for misunderstanding in this matter; the execution of collaterals is not a per se goal of the banking industry, rather it’s an important feature of viable market and economy and I believe that considering the level of savings and deposits in Albania, the market have the needed resources to embrace the opportunities, created by the execution of collaterals. The practice of execution of collaterals, when and if properly applied, will impact the non-paying clients’ behaviors and will motivate them to better cooperate with banks in exhausting all the possibilities, either for paying or restructuring. In addition, the execution of collaterals would bring positive results and better banking performance in two directions: in reducing NPL in general and in generating new opportunities of crediting new buyers that need finance.
Banking INTERVISTA System
Financial collateral, a novelty in the Albanian legislation and its implementation’s challenges
A very important aspect of the new regulations is that the financial collateral is expected to create a new preference ranking over collateral, aiming to establish for the taker of collateral a secured creditor’s status against claims of third parties.
by Ms Holta ZAÇAJ, LL.M. Manager of Legal Services Section Alpha Bank Albania
T
he new legal regulations on financial collateral provided in the new law on Payment Systems1 represent a novelty in the Albanian legislation, inspired by the relevant directives of European2 and worldwide legislation and practice. These regulations aim to update and modernize the Albanian legislation, which has made use up to now to rigid principal related to collateral that were not in line with the current realities and development of financial practice worldwide. In this perspective, the acknowledgment of securities and cash (in accounts) as collaterals and their placement under a different and specific execution regime, is very important and adequate, due to the nature of these type of collaterals and the fact that they are under possession and administration of the financial institutions (banks) involved in the respective financing/ crediting activity. In this framework, the execution procedure for financial
collaterals is foreseen to be more efficient and less costly3, thus separating these collaterals from the general and typical execution procedures, foreseen by Civil Procedural Code4. However, it needs to be stressed that the execution results to be easy and efficient, in case of cash collateral, because the execution is completed directly within the bank, due to the fact that the latter has the cash in its
Regardless of the novelty and actuality provided by the new regulations, the financial collaterals are destined to find less use than we would like to, because of the restriction of their implementation, which is determined by the fact that only entities (legal persons) do qualify as subjects for entering in a financial collateral agreement.
possession, something that it cannot be stated for the securities. In a comparative perspective between the cash and securities collateral, the idea of the regulator in achieving an immediate and efficient execution is impaired for various reasons: (i) Securities cannot be hold (in possession) by the banks, because they do exist in a dematerialized (“book-entry”) form in Albania; (ii) The registration of securities’ ownership and the relevant transaction of the ownership title transfer seems to be unclear, due to lack of Central Depository for Securities, which for the sake of analogy would serve the same purpose as the Real Estate Registration Office. Currently, the companies’ shares are registered at the special register, kept by joint-stock companies themselves, and they are registered at National Registration Center (QKR) and at the Shares Registration Center (QRA), as well. It is important to note that, the transfer of shares’ ownership title is conditioned by the registration of new shares’ owner at the company’s share register5, whereas according to the law,
1 Law No. 133/2013 “On Payments system”. 2 Directive 2002/47/EC of European Parliament and EC date 6 /6/2002 on financial collateral amended with Directive 2009/44/EC European Parliament and of EC date 6/5/2009. 3 Article 1, 28,29 No. 133/2013 “On Payments system”. 4 Part Four, Chapter 2, Civil Procedure Code. 5 Article 117/2 and 119, Law No.9901, date 14.4.2008 “On entrepreneur and commercial companies”.
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the evidence of such ownership title transfer at QKR6 has only a declarative character and value. The same is valid also for shares’ registration at QRA7, whose regulatory legal framework results to be outdated and not in compliance with the principles of the Law on Entrepreneur and Companies, which do relate the shares ownership title transfer and the shares’ deriving rights such as: the voting right and to dividends, with the moment of entering into the contract. Therefore, the securities’ execution pledged as financial collateral is more complex and difficult than the execution of cash; (iii) Because of legal restrictions8, banks are unable to execute the securities and hold them, thus, the execution of such collateral is conditioned by finding an interested buyer, other than for cash, which banks do execute directly in their favor; (iv) The value of securities remains also an issue, which would affect execution, since securities in Albania are not listed and traded in the stock exchange. So, they do not reflect the market value, and therefore, even in ordinary transactions they are traded based on their face9 value. However, the execution based on face value according to initial capital, would create substantial grounds for the execution to be disputable in the court of law. Thus, based on the above-mentioned reasons, a further intervention is needed in
It seems that the banking and business community will be suffering not only the fact that they will have to return to Civil Code’s classical instruments for guaranteeing the financing activities, but they will have even less security charge means at their disposal.
the relevant laws to achieve the desired effect, regarding the execution of financial securities as collateral. Another very important aspect of the new regulations is that the financial collateral is expected to create a new preference ranking10 over collateral, aiming to establish for the taker of collateral a secured creditor’s status against claims of third parties, both in an ordinary course of business and in a bankruptcy scenario. However, this preference is impossible because of the preference ranking foreseen under Article 605 of the Civil Code. Thus, the advantage in relation to financial collateral encompasses only the efficiency in relation to procedural terms, and does not create despite this new law any new preference ranking, due to the hierarchy principle of legal norms. Finally, it is worth mentioning also that regardless of the novelty and actuality provided by the new regulations, the financial collaterals are destined to find less use than we would like to, because of the restriction of their implementation, which is determined by the fact that only entities (legal persons) do qualify as subjects for entering in a financial collateral agreement. Considering that securities in Albania are owned generally by individuals and that the group companies (linked ones) does
not represent a widespread reality, it makes the financial collateral with securities less applicable. Similarly, financial collateral with “cash” has found a broad applicability in practice. Generally shareholders have used personal deposits to secure loans of companies, in which they do have participations. However, new regulations on the “cash” collateral do not cover the above-mentioned practice due to the limitation of legal person as subject for the financial collateral agreement. The only cases that could benefit from the new regulations, are the related companies when one company guarantee the obligations of the related company and this doesn’t seem to be a representative practice in the Albanian market. In conclusion, considering also that new regulations on financial collateral were accompanied by amendments to the Law On Security Charges, which made the pledge of security charges inapplicable for securities owned by individuals and for other intangible properties, such as “receivables”11, it seems that the banking and business community will be suffering not only the fact that they will have to return to Civil Code’s classical instruments for guaranteeing the financing activities, but they will have even less security charge means at their disposal.
6 Article 74 (2) Law No.9901, date 14.4.2008 “On entrepreneur and commercial companies” and article 43/4, 44/b Law No. 9723, date 3.5.2007 “On National Registration Center” . 7 DCM NO. 112, date 19.2.1996 “On establishment of the Share Registration Center”. 8 Article 59, Law No. 9662, date 18.12.2006 “On banks in the Republic of Albania” 9 Article 105,107, Law No.9901, date 14.4.2008 “On entrepreneur and commercial companies” 10 Article 29, Law No. 133/2013 “On Payments System” 11 Article 1, Law No. 132/2013 on “ Some amendments of the law No. 8537, date 18.10.1999 “ On security charges”, as amended.
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Banking System
Risk culture as an aide to ensure effective risk management at banks
Enriching risk culture, along with other elements, such as: risk management policies, rules and procedures, systems, techniques, technology used, etc., can be considered as a promoter for banks’ effective management.
by Ms Artiola AGALLIU Deputy Head, Risk Management Department Alpha Bank Albania
I
t has been years now that risk management has become one of key requirements to ensure effective bank governance. On the other hand, capital requirements, based upon risks they face and weather, have added pressure on banks for a more effective management of their activity. Today, banks have built internal systems and have committed relevant staff, to identify, assess, measure and address all risks they face, by giving them the same importance. Now they are capable to measure and assess risks, either under normal banking and financial markets activity, or under abnormal conditions, even in extreme situations. They have moved from classical risk assessments, based on forecasted/expected amounts, to the more sophisticated methods, by including not only their directors’ opinions, especially those of bank’s board of directors, but also the shareholders’ ones, about risks. Despite these positive steps in the risk management process, risks and behavior towards them is not being understood by all parties involved in this process, starting from bank’s employees to even higher levels of
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hierarchy. The recent financial crisis has highlighted, alongside the need for an improved risk management function, the need for creating and enriching the risk culture.
Risk management function and its role in the bank Risk management function is one of the most important functions within a bank structure. During the last
Risks and their respective management process must get proper understanding from all bank employees, in any position they are, and the best way to achieve it is to encourage and promote a relevant risk culture at the bank, which must be based upon highly professional standards and ethical values of all bank staff and other parties involved in it.
years of the last century, the role of risk management in financial institutions in developed countries has been increased significantly, whereas in Albania, such development is a phenomenon of the last decade. Surely, this is due to the development of the banking system itself, which has not reached comparable levels to developed countries, yet. However, chances are that the gap could be filled within a short time. There have been continuously requirements to promote the development of such function, either form banks or the regulatory authority, not to mention that the latter has undertaken an institutional commitment, by adopting the last year’s regulation: “On basic principles of management of banks and branches of foreign banks and criteria for approval of their administrators. From the perspective of risk management, this regulation brought two major innovations: (1) it clearly defines bank’s risk tolerance, requiring form high-level management structures: management board and directorate “to recognize the full and clear profile of bank’s risk” and in parallel “to promote (stimulate) an appropriate management culture”; (2) it determines the need for establishing risk committee, as one of the most important committees, which shall report directly to the bank’s Management Board. Regulatory authority clearly defines, through this requirement, the role and importance of risk man-
agement function, as a basic function for bank management. On the other hand, during recent years, banks’ own requirements for developing the role of risk management have been risen earlier and are certainly increased. These are viewed with high priority, given that the risk management function has a key role in the success or failure of internal control, and jointly with the audit function, they represent the “guarantee” for bank’s shareholders. If risk management function was often confused with the reporting function or with that of the auditors, and not seen as a separate function, but was being integrated into the processes and procedures of the bank, today’s role and independence is guaranteed. The ever-increasing demands by bank executives on risk management unit, its inclusion in many existing or new decision-making processes, by considering it as a key point within bank, either from internal or external auditors and also by regulatory authority, banks’ increasingly investments on technology systems that serve risk management etc., bear witness to this development. The majority of banks in Albania have already a special risk management unit, as part of their own organizational structure, or at least appointed experts, who have been assigned to this function.
Risk culture, a guarantee for the effective risk management The term “risk culture” refers to the bank’s total value, resources, knowledge and understanding of risks faced (or shared) among a group of individuals, in particular bank employees or other groups within the bank. The interpretation or the practical understanding of such a concept requires a breakdown of factors and their respective analysis of reciprocal effects included in this definition, as well as other factors, that indirectly
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affect them. By breaking down the concept, it is noticed that the culture is born from personal ethics of interest-bearing individuals in the bank. Indeed, each of us has a personal risk approach, which in combination with personal ethics, shape individual behavior. The whole set of individuals’ behavior within a group (e.g., the group of employees, or other groups within the bank), form the group behavior. The term “behavior”, both at individual and group level, means repetitive behaviors and not simply “isolated” behavior, or which occur quite rarely. Also, the attitude and behavior of an individual or group in the bank, just like in any other work environment, is influenced by the prevailing group culture. Schematically, the correlation of these factors is given in the following chart, and their aggregation forms bank’s risk
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culture. Risk culture serves as an aide to effective risk management at the bank, thus affecting, in some cases, more than the risk management process. Practically, such culture has a positive effect on: • clear communication of bank’s risk strategy and its risk tolerance, • ensuring high standards of communication, transparency and information-sharing within the bank, • understanding and rapid vertical escalation of risks identified, from lower levels to higher levels of bank management. All these factors play a crucial role in a successful accomplishing of risk management process at the bank. Specifically, this process is not exclusively linked to the risk management unit, and not only with high-level management and decision-making structures in the bank. In addition, an effective risk management is accomplished only through inclusion of employees, individuals, or other bank groups. All bank employees and directors should feel that risk management is everyone’s responsibility. For this reason, enriching risk culture, along with other elements, such as: risk management policies, rules and procedures, systems, techniques, technology used, etc., can be considered as a promoter for banks’ effective management.
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EXPERTS’ Forum
Public-Private Partnerships (PPP) and the Financial Reporting Although Albania has not a clear guideline on public sector entities’ accounting and reporting, in relation to the property subject to concession agreements, a valuable help in this regard could be the use of the IASB Framework, the lease agreement standard and suggestions by IPSAS Board. by
I
n the frame of current trends, where governments are constantly retracted from direct involvement in performing administrative tasks, along with the aim to improve the quality of services to citizens, even in Albania we are witnessing a rapidly growing public - private partnership (PPP). Governments are increasingly faced with the challenge of building infrastructure and other public facilities, in response to growing population demands and also, with the need for proper repair of existing infrastructure and public facilities, which are being deteriorated, mainly due to delays for their maintenance. The distinguishing feature of today’s developments in our country is the increasing number of PPP agreements, effected or in the process of implementation, related to the construction of various infrastructure facilities for an efficient exploitation of mines, construction of HPPs, various public centers and facilities, various public services, etc. PPP agreements can take different forms, according to the level of private sector involvement and the means used to achieve them. A particular form of such partnership are concession agreements (CA), which differ from other forms of PPP agreements, due to the fact that the risk and benefits associated with the construction, possession and use of the asset (property), subject to the agreement, together with the respective control on it, are in a
Prof. Asoc. Dr. Hysen ÇELA Chairman of Managing Board, Institute of Authorized Chartered Auditors of Albania (IEKA)
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The accounting treatment and the respective financial reporting for concession agreements by private operators are covered by IFRIC 12 - Service Concession Arrangements, of IASB Interpretations Committee. If the financial reporting that property will be based on legal ownership only, it would not be possible to ensure a financial reporting which reflects properly the asset, based on the principle that: “economic substance prevails over legal form”. large scale divided between public and private sector units, which enter into agreements. Segregation of these aspects of asset/wealth, as well as the complexity of related transactions has often made the financial reporting by public and private entities, so uncertain. Such examples could be: the use and maintenance of a highway by a private company against a fee, production and distribution of national passports, excise
Mr Kledi KODRA, FCCA Head of Audit Department, PwC - Albania
stamps production, construction, operation and maintenance of large parking lots, construction and operation of power plants, etc. In many cases, if not most of them, the implementation of these agreements by the private sector requires the collaboration of the latter with banks, in order to ensure necessary financial resources (e.g. the case of HPP construction), where borrowing guarantee can be issued either by the public sector, or by different agencies or donors. In these circumstances, the financial reporting means reliable information to many parties involved. Although Albania has not a clear guideline on public sector entities’ accounting and reporting, in relation to the property subject to concession agreements, a valuable help in this regard could be the use of the International Accounting Standards Board (IASB) Framework, the lease agreement standard and suggestions by Board of International Public Sector Accounting Standards (IPSAS). The lack of specific regulations on this issue may cause divergences in the way property/asset and services are reported. Furthermore, there could be cases when the property is not reported as such, neither by the public sector nor by the private one. The focus here will be on the issue of accounting and financial reporting, from the perspective of public sector entities, only, (i.e. the providers), thus giving a limited consideration to
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operators of these agreements. This is so, because the accounting treatment and the respective financial reporting for concession agreements by private operators are covered by IFRIC 12 Service Concession Arrangements, of IASB Interpretations Committee. If the financial reporting that property will be based on legal ownership only, it would not be possible to ensure a financial reporting which reflects properly the asset, based on the principle that: “economic substance prevails over legal form”. Thus, it is deemed as indispensable, to analyze either relations between parties, or the asset or activity, subject to the agreement. Under IPSAS, assets are defined as: “resources controlled by an entity as a result of past events and from which future economic benefits or service potential are expected to flow to the entity.” The notion of control over resources is clearly presented in definition. In order for the provider of property, subject to the concession agreement, to report the property as an asset, according to the definition, it must not only have control over the property, but also earning future economic benefits or potential services. Control over the use of property is a key principle that is also addressed in
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the conclusions reached in IFRIC 12. According to this principle, the private operator does not have to report as an asset any of its own property, subject to the agreement which is covered by such interpretation. According to this interpretation, the private operator does not recognize the property as an asset, but recognizes an intangible asset or a financial asset that reflects the right given to it by the provider to use the property, or to earn the contracted cash flows. According to IPSAS Board, the nature of the criteria contained in the scope of IFRIC 12, is generally appropriate to determine whether the provider has underlying control on property, under these agreements, for financial reporting purposes. Bound together, these criteria show that: (a) The provider shall have a continuing right to request that the property be operated in a way that the objectives set for the service to the public are met, throughout the life the agreement is in force, and beyond; (b) The operator’s practical ability to sell or pledge the property is therefore limited. Despite the operator’s control over certain aspects of the services generated by the property, the general usage of that property is limited
to the provider’s objective, defined in the Agreement. Moreover, the concession provider controls key operating aspects of the property, such as: applied tariffs and fees for its use. Should similar criteria as those prescribed by IFRIC 12 are satisfied then is is generally accepted that the operator will operate the property on behalf of the provider, and that the latter has final control over the property. Based upon IPSAS 23 and IPSAS 6 instructions, it can be argued that, if the underlying control of concession provider over the property is similar to regulatory control, such control, alone, is not sufficient to match the concept of control given to the definition of an asset for the provider’s financial reporting purposes. For example, the government may transfer a land area of a public university, stating that the land will be used for building the campus, only. Under IPSAS 23, despite this definition, the public university (in this example “the user”) controls the land and will present it, in its financial statements, as an asset. Also, the university needs to recognize a liability, if the (land) destination will be considered as a condition, which means that, if the land is not used for the purpose for which it is given, then it will be returned to the legal owner. Financial reporting results in this example may seem in conflict with the guidelines discussed above, concerning the control over property under this agreement, where the party that imposes restrictions on the use of assets (provider) and not the user of the asset (operator) is considered, for financial reporting purposes, as having control over the property. The key difference between this example of land transfer for the university and the service concession arrangement is that the concession provider retains control of the remaining interest in the underlying property of the agreement until its end. In typical agreements as those mentioned above, the asset is not returned to the transferor, at the end of the agreement. Even where the destination is a requirement, the asset remains with the operator, upon the fulfillment of this condition, so in case of the university, at the time the land will be used to build the campus, the asset (land) remains to be reported in the financial statements of the University. (to be continued in the next edition)
EXPERTS’ Forum
Theoretical considerations and supervision aspects of pension systems Opportunities in Albania The contribution of third pillar is negligible, in relation to the size of the Albanian economy, so the reform of the second pillar will energize the pension system, by making a contribution in addressing long-term challenges that accompany it.
by Ms Enkeleda SHEHI Chairwoman Albanian Financial Supervision Authority, AMF - AFSA
P
ension funds represent some of the largest sources of capital in many countries, in some cases, by exceeding 100% of GDP. Such capital can have many positive effects on a country’s development, by providing liquidity to financial markets and also contributing to the development of institutional investors. Pension funds and institutional investors could exert an outright influence on corporate governance, which helps different countries in attracting and retaining capital. Likewise, through saving and social protection longterm reliable mechanisms, pension funds bring positive effects, by expanding planning horizons and reducing incentives for counterproductive behavior. According to Broeders, Kortleve, Pelsser and Wijckmans1, pension systems can be defined along three dimensions: (1) Pension benefits: (i) guaranteed payments (defined fixed benefit plans), versus non-guaranteed payments (defined fixed contribution plans), like the voluntary pension model in Albania.
(2) Method of financing: capitalized against PAYG. PAYG systems are sensitive to demographic and macroeconomic developments, whereas the capitalized systems against inflation and investment risk. (3) The level of risk-sharing: risksharing versus no-risk sharing plans. Stakeholders, who qualify as risk bearers are: sponsor, current participants and prospective participants. In general terms, there are two types of risk – sharing: within a generation (intragenerational) and between generations (intergenerational). OECD identifies three pillars, commonly known as pension system
The key objective of pension supervision is that the pension fund must be capable of accomplishing its commitments and expectations conveyed to its members, in line with benefits and risks, against which the fund is exposed to.
pillars, namely: the first pillar, which is mandatory and consists of the redistribution element, the second pillar, which is also mandatory and consists of saving elements and the third pillar, which is voluntary. Many European countries have the second column, but each country can have different plans. OECD identifies four plans within the second pillar: (1) Defined benefit plans - DB, where the pension income depends on the number of years of contributions and personal income. DB schemes are capitalized and risks between parties are shared among multiple stakeholders. (2) Defined contributions plans - DC, where contributions are deposited in individual accounts. Contribution and investment income collections form the future pension payments. DC schemes are capitalized, but there is no risk – sharing between stakeholders. (3) Point schemes - PS, where employees earn points, based on income they earn every year. Upon retirement, the amount of the pension point is multiplied by a certain point value, to determine the level of payment earned. These schemes are classified as PAYG scheme, without risk-sharing among stakeholders. With some exceptions, these schemes are conceived as capitalized, too. (4) National accounts - NDC, where
1 Dirk Broeders, NielsKortleve, AntoonPelsser and Jan Willem Wijckmans: The design of European supervision of pension funds, Network for Studies on Pensions, Aging and Retirement, February 2012.
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contributions are recorded in individual ‘theoretical’ or notional accounts (the account balance exists in the records of the institution that manages the account, only) and a certain rate of return is applied on the account. On retirement, the notional “theoretical� capital accumulated is converted into retirement payments. NDC schemes are classified as PAYG systems, where the risk is shared with the sponsor. The supervisory instruments, a regulatory entity should possess for proper supervision of this segment, are drafted depending on the model that will be selected. Pension regulators are faced with ever-increasing challenges, in a globalized economy and world. National competitiveness, market development, efficiency and security for members of pension funds, are today’s main challenges for supervisory authorities, let alone the fact that pensions are sensitive to political attention. Placed in such reality, the supervisory models are mainly oriented towards results, risk management, efficiency and transparency. Pension supervision is chiefly based on two main pillars, which are centered on transactions, or structural supervision. In the first case, the focus is on agency risks and procedural standards, while the second case, put emphasis on quantitative limits, financial entities from the perspective of systemic risk and portfolio. An increasingly emphasis is placed on risk management and results, rather than to structures and rules. The biggest challenge regulators face is adapt-
ing to these changes, structures and capacities to keep and attract suitable staff with financial and technical expertise, high flexibility in the adoption of structures, compliant with the dynamics of market development and full autonomy of these institutions.
What about Albania?
The modest level of development of third pillar in Albania, due to the fact that the scheme is voluntary, and the absence of the second pillar, produces a high opportunity cost for AFSA’s supervisory capacities. However, in recent years, AFSA has undertaken a number of positive steps towards reforming the third pillar of pension system. The Law No.10197, dated 10.12.2009, “For voluntary pension funds�, set the necessary standards for an effective administration and supervision of voluntary private pension funds, by creating a new
experience, according to European standards. The selected scheme is a defined contribution one, capitalized, in line with recent global trends. The most difficult ongoing challenge for AFSA will be to ensure financial independence and structural flexibility, with the main goal of attracting and retaining highly expertized staff and the dynamic adaptation of structures, in line with the development of supervised markets. Despite existing challenges in the design of a fair reform for the second pillar of pension system, such a reform would make a positive impact on the country’s general development and particularly, the capital market development, by producing new stock of capital to be invested in the financial system. The low level of assets under management in the third column, specifically at ALL 314 million and relatively insignificant participation of 7,289 members make the reform of the pension system a real must. As the graph shows, the contribution of third pillar in Albania is negligible, in relation to the size of economy. Thus, only a reform of the second pillar will energize the pension system in Albania and will contribute to address long-term challenges that accompany it. Therefore, the long-term transfer of a part of pension system to the private sector, will reduce significantly the political risk, by transferring the responsibility to individual management and responsibility. The stronger the role and importance of the second pillar of the pension system, the more significant the benefits of reform will be, thus increasing pressure on the prudential management and deficit reduction of the whole system.
Importance of pension funds relative to the size of the economy, in selected non-OECD countries. In percentage of GDP (ONGĂ’+ONGĂ’ #HINA #OLOMBIA 0ERU 7EIGHTEDĂ’AVERAGE "RAZIL #OSTAĂ’2ICA 3IMPLEĂ’AVERAGE "ULGARIA 4HAILAND &ORMERĂ’9UG Ă’2EP Ă’OFĂ’-ACEDONIA 2USSIANĂ’&EDERATION )NDONESIA 2OMANIA ,ATVIA )NDIA 5KRAINE 0AKISTAN !LBANIA
Source: Global Pensions Statistics, OECD 2011
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EXPERTS’ Forum
Physical Risk Classification Matrix – The Analysis Means for Risk Assessment The risk level analysis is a process which is not carried out during the planning stage of a building with banking functions, only; it should follow dynamically all developments, events and changes in the urban infrastructure, where the bank unit operates.
by Mr Roland TASHI Chairman, AAB Bank Security Committee
S
afety and security in the banking and financial system must be considered as a strategically important factor, as it affects, significantly, businesses involved in the system, thus being instrumental in their performance and progress. Risk management in a bank must be viewed in an integrated optics, which means analyzing many internal and external factors and particulars, that cause it and also exposing the institution against the risk. Despite the fact that a bank is perceived as a unitary institution, it is typically comprised of many business units and employees spread throughout all these units. The banking risk should be assessed as the analytical sum of all riskbearing factors, a sizeable number of which are difficult to predict, whereas the rest are almost unpredictable. The actual trend in banking industry is to be next to the customers, aiming at providing “friendly” service to them, by applying free entries and open windows, which in turn, increases the elements of risk. In this regard, the bank management has the difficult task to balance such trend, with the need to increase the protection level for workers operating in bank counters and within bank premises, in cases of abusive situations and criminal events. The in-
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creasing financial integration of population, and its rising approaching with banks, the diversity in bank layout facilities, and protection methods and techniques banks apply, sophisticated forms and methods employed by criminals during a bank robbery, constitute elements which require a special analysis of the factors that favor, enhance or reduce the risk, as well as condition the attempts to find ways in recognizing and assessing it.
Banks have proper tools and models for robbery risk assessment analysis, but one of the possible ways is constructing and completing the “Risk Classification Matrix”, which helps to envisage a clear picture of elements and factors that favor it, and also in determining its respective level.
How can one define the risk level of an object, in the selecting phase of turning it into bank premises, or where bank conducts its activity, so as to plan protective and defending measures against criminal abusive actions? Banks have proper tools and models for robbery risk assessment analysis, but one of the possible ways is constructing and completing the “Risk Classification Matrix”, which helps to envisage a clear picture of elements and factors that favor it, and also in determining its respective level. It is a complex table, which is filled with all those elements which the bank considers as risk “producers”, and which have a certain specific weight, expressed as a percentage. By calculating the level of each element in the table, a certain level of risk is assigned, expressed with the following risk figures: 1 (low), 2 (medium) and 3 (high). Some of the elements, suggested to be placed in the matrix, in order to determine the bank facility risk level through, are given below: - Crime level in the city, or the area the bank will operate. These data are reported by Prosecution Office, in its annual reports. An urban area with high propensity for crime level and social concerns, significantly affects the risk level. - Position of the object in the city, or its position in relation to geographical area around it. Facilities located in suburban areas, should be considered “high risk” facilities;
those located near police stations and patrolled routes have lower risk. - Protection of facility with security personnel. This is a requirement imposed by Bank of Albania; however, providing such internal and external service for the business unit and their proper combination, study and location assessment, where and how this service should be conducted, increases the security level. - Counters’ positioning, in relation to bank premises entry. Counters which are not in the sight line with the entrance, affect the increased risk level, during criminal incidents and robberies. - Facility’s entrance surveillance by desk/counter employees and service supervisor. Business units that are projected with “hidden” counters, with no direct sight line with entrance and client waiting area, should be assessed as “high risk”, because such layout helps a hiding and rapid robbery. - Counters layout and their operation mode. Open counters, without physical protection structures should be assessed as “high risk”, because
ees but also its customers inside the bank. Applying controlled entrances in the bank “helps” the balance of arguments in favor of business, who tend to be more communicating with customers, by requiring the use of open counters, without glass and other physical protection. Other elements that affect the risk assessment, can be added up in the risk classification matrix, such as: the nature of buildings and roads, or pass away systems around any banking facility, possibility of quick getaway after the robbery, the large concentration of individuals near the bank branch, because of public transport stations, shopping centers, the amount of money kept in desks, and their respective allowed limits, etc. It should be understood that the risk level analysis is a process which is not carried out during the planning stage of a building with banking functions, only; it should follow dynamically all developments, events and changes in the urban infrastructure, where the bank unit operates.
they are favorable to acts of robbery. Their construction must be accompanied by increased protective measures in the unit entrance. The last element deserves more attention, because of its influence over criminal incidents, resulting in bank robberies. In the period of 20002012 the banking system has recorded 35 criminal offenses, classified as bank robberies, out of which 28, or 80% of them, have resulted as completed. In all cases the bank units, subject to robbery, have been those with “open” counters design and with free entrances. In this regard, the elements of risk security matrix that address access/entrance to the unit and the counters layout and operation, should be treated very carefully, as they have a greater weight in determining the specific risk exposure and the respective risk level. It should be noticed that, the sophistication of counters’ physical security provides protection for staff located within them, whereas the application of controlled entrances to the bank, with various physical and electronic systems, protects not only employ-
RISK CLASSIFICATION MATRIX
Model of unit entrance
Urban zone plan, possibility for getaway
Amount of money in counters
TOTAL POINTS
18%
18%
6%
6%
100%
1
3
3
3
1
2.4
High Risk
Facility “B”, Berat
1
2
1
3
2
2
3
3
1
2.1
Medium Risk
Facility “C”, Saranda
3
1
1
1
1
2
3
2
1
1.8
Medium Risk
Low Risk: Medium Risk: High Risk:
1 ÷ 1.3 1.3 ÷ 2.3 2.3 ÷ 3
Reducing cash amounts at counters (reducing cash physical presence at counters)
Counters’ layout, modelling and operation
12%
3
Providing security services (internal and external service)
Facility’s entrance surveillance by desk/counter employees
12%
1
Applying safe counters (closed counteres, 1/2 glass)
Counters’ positioning, in relation to bank premises entry
8%
3
Changing entrance model, applying controlled entrances (cage rotary door systems)
Protection of facility with security personnel
10%
2
Facility Risk Assessment
Position of the object in the city/center/suburb/rural zone
10% Facility “A”, Tirana
Bank Facilities
Crime level in the city (annual data from Prosecution Office)
Recommendation to increase safety level
0.00 1.30 2.30 0.00
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economist corner
The agreement on European banks rescue rules This agreement is considered as the most important stage towards European banking union, paving the way for next stage of creating a European regulatory mechanism for banks (Single Resolution Mechanism – SRM).
by Prof. Dr. Adrian CIVICI President & Head of Doctoral School European University of Tirana, EUT - UET
I
n the context of measures and reforms towards implementing the European Banking Union, in 27 June 2013, the European finance ministers, under the motto of “trying everything to avoid the remergence of any type of banking crisis , resembling that of the cypriot one”, finally agreed and “in extremis” and important compromise and agreement, thus hammering out a set of rues and measures “to restore financial equilibrium or otherwise liquidate banks in difficulty or in a bankrupt situation”. The effects of the financial crisis and particularly the high cost paid by the EU in supporting its banks in difficulty (EUR 1,600 billion, or 13% of its annual GDP for 2008 - 2011), conditioned new rules to seek “the elimination of crisis’ costs, an increased accountability in banks’ operations, a strengthened resistance of the banking system against crisis, and particularly a reduction of negative impact and complications they caused to the growth of the Eurozone’s and EU sovereign debts”. In the framework of the foundations on which European banking union is supposed to be established, such as: the unified supervision of all EU banks; the establishment of a uniform system to
protect depositors and the economy from banking crisis; the creation of a European fund for emergencies or resolution of banking crises, the amendments of some important rules that guide the banking activity, etc., the new agreement on bank rescue rules was immediately deemed as
Such measures and also the unified system, do successfully implement the recapitalization, or the “correct liquidation” of banks in crisis, e.g. some activities could be transferred or sheltered within another specific bank, called “bridge bank”. Similarly, it is possible that, through the “bail-in” instrument, some parts of banks in crisis or the bankrupt bank liabilities, may be converted into equity capital or otherwise be amortized.
“quite important for the EU financial stability”, as a “cornerstone of EU efforts to break the vicious circle between banks’ debt and sovereigns.” According to the Eurogroup President, Mr. Jeroen Dijsselbloem, “if a bank is faced with problems, we have already a unique set of rules at hand, throughout Europe to decide who should pay the bill”. These new rules are expected to enter into force after approval by the European Parliament, starting from 2018. In this context, such measures and also the unified system, do successfully implement the recapitalization, or the “correct liquidation” of banks in crisis, e.g. some activities could be transferred or sheltered within another specific bank, called “bridge bank”, which manages them in perspective. Similarly, it is possible that, through the “bail-in” instrument, some parts of banks in crisis or the bankrupt bank liabilities, may be converted into equity capital or otherwise be amortized. The recent debate and contradictory positions were synthesized to the fact that “who should pay the costs of crises in various banks: public funds or banks?” The Eurogrup finance ministers agreed to avoid all or partial payments from public funds or from contributors/depositors, in cases where a bank should be restructured or liquidated, that payments must respect the following
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hierarchy: bank shareholders, largest junior creditors, senior bondholders and ultimately the unsecured depositors, over than EUR 100,000, so those owning deposits well above the amount guaranteed by the European legislation, in case of bank failure. According to French Finance Minister, Mr. Moscovici, “this is a drastic change, a shift from public funds to contributors/depositors’ money, from national budgets to the financial sector itself, which should be able to solve problems by themselves.” Meanwhile, the Italian Minister of Economy, Mr. Saccomani also notes that “it is an important compromise, which contributes to cracking the dangerous binomial: banking risk - sovereign debt risk.” Europe wants to move form the concept and practice of external support (bail out), to the “rescue from within - bail in”. Typically, it managed to establish a defense system which combines a new framework of unique rules with the necessary flexibility that keeps into account national features. As in the case of “European recipe” to weather Cypriot crisis, which practically caused many controversies and suspicions about speculative movements and transfers between banks
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in different countries or continents, deposits up to EUR 100,000 would, in any case, be guaranteed and rescued. During discussions on this important decision, EU countries were positioned in two opposing views: the first group, represented by France, Italy, Sweden and the UK, defended the position that “we cannot be so drastic on a common rigid rule, rather we must accept some flexibility on a caseby-case basis for various banks and EU countries.” France insisted especially on “the protection the individual depositors and SMEs deposits must enjoy “, by exempting them from facing bankruptcy or restructuring costs”. On the other hand, was Germany, Netherlands and Finland, who held the position that “the rules should be such rigorous and unique for all EU countries, in order to avoid any confusion, in about banking risk and any other speculative investment or deposit movement, from one country to another”, so as to discourage at maximum “the resort to public money”. According to German Chancellor, Angela Merkel “too big to fail blackmail cannot force member states endlessly to recapitalize banks with billions of euros of public money”. Nordic countries were “more de-
termined to take out the word “progress” in the ongoing process of European banking union, unless they see private investors’ commitment and involvement in the process.” Countries in favor of flexibility were bound to accept the rule to force bank shareholders and biggest creditors accept paying at least 8% of the bank liability, in case of restructuring or liquidation. Should this condition be satisfied, then the bank can hope any intervention from “national rescue fund”, or if necessary even “other European or national financial resources”, whose main purpose would be “bank’s direct recapitalization through ESM (European Stability Mechanism).” In all cases, it is concluded that such type of intervention cannot be greater than 5% of bank liabilities. Intervention modalities of ESM and Eurozone’s rescue fund have been a constant “disputing point”, between France and Germany. The key stalemate consisted in finding coherence between applying a direct mechanism for banks’ recapitalization through ESM and excluding ESM from the national flexibility game. As Germans excluded every rescue with public funds, the Frenchmen sought possible opportunities that, in special cases, ESM could be activated, in order to help troubled banks. In conclusion, it appears that the agreement makes room for a possible protection of deposits exceeding EUR 100,000, and SMEs full deposits. Should bank losses be greater than 8% of their liabilities, losses which are paid by shareholders and major investors in these banks, then it is possible (in exceptional cases) for ESM to enter in, thus not extending the obligation at covering losses of depositors, either those with deposits over EUR 100,000. But as per above mentioned, such intervention cannot be greater than 5% of banks’ liabilities, as closely related to the degree of flexibility, given to each member, in resolving banking crises in the context of the adoption of the Directive “Bank Recovery and Resolution Directive (BRRD)”. This agreement is considered as the most important stage towards European banking union, paving the way for next stage, that of creating a European regulatory mechanism for banks (Single Resolution Mechanism, SRM).
Social Capital
Alpha Bank - Albania “Together the future is more beautiful” On the occasion of “Alpha Bank’s Volunteer Day”, bank’s employees visited, on on 26 May 2013, the paediatric hospitals in Vlora, Durres, Kukes and Librazhd. The bank helped in restructuring hospital premises and also donated various equipments. Mr Periklis Drougkas, CEO of Alpha Bank Albania, said that it is important that everyone volunteer in such good cases and he hopes this activity will attract the much needed attention, so other important actors will contribute as well to further improve the hospital conditions in Albania. Tirana International Guitar Festival Alpha Bank Albania was one of the sponsors of the 1st Tirana International Guitar Festival & Competition, held on May 2013 at the premises of Tirana University of the Arts. In this event performed more than 60 artists and students from USA, Austria, Belgium, Germany, Switzerland, Albania, Thailand, Croatia, Montenegro and Kosovo.
BKT BKT supports the exhibition “Time and Places: Istanbul - Art Collection of the Central Bank of the Republic of Turkey” On 30 May 2013, at the premises of the National Gallery of Arts, was opened the exhibition “Time and Places: Istanbul - Art Collection of the Central Bank of the Republic of Turkey”, a joint exhibition of the Albanian National Gallery of Arts, the Central Bank of the Republic of Turkey, “Yunus Emre” Culture Institute and BKT. BKT supports the touristic season: “Summer 2013” in Orikum On 1 June 2013, the Orikum Municipality launched the official opening of the touristic season, “Summer 2013”. This activity was sponsored by BKT and some other sponsors and was supported by the Ministry of Agriculture, Food and Consumer Protection.
Credins Bank People in need- As annual tradition Credins Bank supported people in need by providing considerable food assistance for Red Cross in Shkodra. Community- Credins Bank supported the construction of a leisure park at the entrance of the city of Kavaja. Institutions - Credins Bank supports financially the activity of public institutions, as following: the Lezha Municipality, the Social Service and the “Shefqet Ndroqi” hospital. Sport – The bank supported the city of Vlora and “Flamurtari” basketball team. Also, it must be noted the financial support to National Championship of Boxing, the “Heart of Tirana” Cup, the men’s volleyball team “Studenti” and women’s volleyball team “Tirana”.
Credit Agricole Children’s Festival Art Credit Agricole Albania supported this year the Children’s Festival Art, organized on 25 May 2013. This year’s edition took place at the Palace of Culture in Kamza and was attended by children in need. During the activity, a competition was organized, with the theme: “My art, like a journey”. Children of 7 to 15 years old were divided into 4 groups under the supervision of 4 artists. The group of older ages was focused outside the Palace of Culture, aiming at making the environment a more beautiful place, through painting.
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Intesa Sanpaolo BANK - aLBANIA “Live Art” - Contemporary Art Painting Contest Intesa Sanpaolo Bank Albania organized the first Contemporary Art Painting Contest “Live Art”. Following the first round of evaluation, the international jury will select 25 finalists, whose paintings will be part of 5 exhibitions in the biggest cities of the country. The bank, through this contest, enhances the power of ART to create, transfer and preserve the values of the society, affirming as well its transformation power. Event on “Orphan’s Day” - Intesa Sanpaolo Bank Albania supported the organization of a special lunch for the 125 kids of the policemen who died on duty. The event was organized on the occasion of “Orphan’s Day”, 20 May 2013, by the NGO “Martyrs of State Police”, where 267 families are members there. “Albanians for each other” – Donation initiative for children in need - For the second consecutive year, the bank employees participated in the initiative organized by Albanian Qatar Foundation to help orphan children and families in need, by donating clothes, books, games and equipments. Many colleagues donated what they could and the bank donated 30 books to start the first steps for the financial education of these kids: “What Banks do? How to Spend Money? How to Save Money?” Voluntary Blood Donators Group of Intesa Sanpaolo Bank Albania – On 30 and 31 May in the two of biggest branches of the Bank: Head Office and “Rr.Barrikadave” Branch, more than 26 colleagues donated blood for kids with “Thalassemia” under the slogan: “Donate Blood to Save a Life! Best Gift for June 1st”. “Work & Study” Fair on 4-6 April, 2013 - Intesa Sanpaolo Bank Albania, presented the job opportunities for students and specialists in IT and Retail area, as well as the ongoing internship programs offered. The bank supports continuously qualified human resources offering them further professional development possibilities. World Environment Day – The two-week campaign, addressed to customers and employees to raise the awareness on the topic selected this year by UN, “Think-Eat-Save” was organized in full accordance with the images of the UN campaign. The selected expressions were translated into Albanian to attract easily the attention of Albanian consumer, through the web banner in the bank website and posters, posted in all its branches.
ProCredit Bank ProCredit Bank celebrates June 1st In occasion of June 1st, ProCredit Bank organized different activities with children and parents. These activities aimed at emphasising the importance of long-term savings, as part of Financial Education, which is one of the main pillars of ProCredit Bank approach. Through interactive games and “ProKid squirrel”, it was explained to the children the importance of savings at future plans implementation. “Open meetings” at ProCredit Bank On 31 May 2013, ProCredit Bank organized open meetings at the premises of its Head Office. During the meetings, every interested candidate has been informed about the “Young Bankers Program” which is the only opportunity to be employed at ProCredit Bank.
Raiffeisen Bank Raiffeisen Bank supports the cleaning of Spille Beach Raiffeisen Bank supported, for the fifth consecutive year, the initiative undertaken by the Free Thought Forum on cleaning of beaches. This year, on June 1st, the Raiffeisen Bank employees in Durres and Divjaka, along with the Volunteer Core cleaned the Spille Beaches in Kavaja.
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A BAnKEr in First PErson
TIRAnA BAnk
BRunIldA HAlIlI
Branch Manager of Tirana Bank, librazhd
International Boxing Memorial, Vllaznia 2013 Tirana Bank supported, for the second time, the organization of the “International Boxing Memorial, Vllaznia 2013”, in the city of Shkodra with the participation of 110 boxers from 11 different countries. This event is organized in memory of deceased sport personalities of all times. Job Fair at European University of Tirana and University of New York in Tirana On 16 and 23 May, a job fair was held at the European University of Tirana and University of New York in Tirana (UNYT) respectively. Tirana Bank as an active participant in job fairs organized by various universities advised the students and the best ones are recruited. The fourth year students and those completing their Master studies in these universities had the opportunity to submit their CVs and be interviewed by the human resources staff of Tirana Bank. Tirana Bank wishes good luck to all the students who participated in these events.
VEnETo BAnkA
Veneto Banka back again in Himara – In the course of supporting and cooperating with Himara Municipality, Veneto Banka was one of the sponsors of the opening of the touristic season. Thë bank, also, is the official sponsor of volleyball team “Himara Volley”. Veneto Banka promotes volleyball - Veneto Banka sponsored women’s volleyball playoff match between “Marin Barleti Volley” and “Tirana”, where “Tirana” team was crown as national champion. Veneto Banka at Job Fair – Veneto Banka participated on the third edition of Job Fair, organized from Ministry of Labour and Social Affair, at the Palace of Congresses. The expansion of the Veneto Banka network requires more human resources.
D
espite the workload, Brunilda is always trying to organize her day, in order to find time for her passion, folk dancing. Brunilda is the manager of the Librazhdi folk group and the daughter of the great choreographer Sadi Halili, which is also the name of the group. “Sadi Halili Ensemble” was established in 1969 and has participated in various national and international competing events and festivals, from which she has always been awarded with different prizes and festival cups. The ensemble consists of 70 dancers, ranging from 5 to 25 years old. From 11 to 13 May 2013, the ensemble attended, for the seventh consecutive year, the “Aulona Folk Fest” in the city of Vlora, a Balkan festival attended by ensembles from different countries, like: Bulgaria, Croatia, Kosovo, Montenegro, Macedonia and many others. This year, it was for the Librazhd ensemble group which represented Albania in this festival and it was awarded with the prize: “Best Performance”. Brunilda has been a folk dancer since the age of 6 and from 1997 onwards she has been the assistant choreographer of her father and the ensemble’s manager. She has represented Albania in festivals in many countries such as: Italy, Greece, Germany, France, Turkey, Austria, Bulgaria, Macedonia, Kosovo, Montenegro, Switzerland, Poland, etc.
www.aab.al • BANKIERI • 33
BAlKAnnEt
inTeRBalkan neWs
BoSnIA-HERZEgoVInA Sarajevo
The IMF will disburse 39 million euros to Bosnia-Herzegovina Balkans.com - 07.05.2013 The International Monetary Fund will disburse 39 million euros (US$51 million) to Bosnia-Herzegovina, as part of a stand-by loan program to help the country overhaul its economy and stabilize public finances. The IMF urged the government to keep spending tight this year to ensure fiscal consolidation. Banking sector in Bosnia and Herzegovina keeps its stability Balkans.com - 07.06.2013 Despite difficult conditions and all negative impacts, banking sector in Federation BIH kept its stability, in the first quarter of the year. Loans at the end of first quarter were 10.7 billion KM and their share in assets increased by 1.1 percentage points and amounted to 72.2%.Total capital grew 1.8%. It is evident that total profitability improved compared to last year, which is primarily a result of new methodology approach (implementation of MRS 37-39).
BulgARIA
Sofia The share of bad and restructured credits in the Bulgarian banking system has increased Balkans.com - 31.05.2013 In April, the share of bad and restructured credits in the Bulgarian banking system has increased once again following a particular period of decline. Their share from the total of loans issued to business and households (overdrafts excluded) surged by 0.7% to 23.2%. The rise is mainly due to the problematic debts of companies (in the non-financial sector) that gained 25.5%. Bulgaria will maintain the limitations on the funds of state-owned companies in commercial banks Focus - 13.06.2013 The Bulgarian government of PM Plamen Oresharski will maintain the limitations on the funds of state-owned companies in commercial banks introduced by the interim cabinet at least until the end of the 6-month transition period, during which the companies must enforce them. The new rules require that the net exposure of a company do not exceed 25% of its available capital. It turned out that the concentration of funds reaches 100% for some com-
34 • BANKIERI • www.aab.al
panies, while some of the most favorite banks of stateowned companies are Corporate Commercial Bank and Central Cooperative Bank. The condition of the banking system and the share of bad loans became a topic of discussion at the Bulgarian Parliament.
CRoATIA
Zagreb S&P: Slovenian, Bulgarian and Croatian Banks among the weakest in the Region Balkans.com - 05.04.2013 Central and Eastern European banks face a difficult year, with those in Hungary, Slovenia, Bulgaria and Croatia among the weakest, according to a sector report published by credit-rating agency Standard and Poor’s. “The region’s banks will likely continue to suffer from high levels of bad loans and credit losses, weak credit demands and compressed margins,” S&P wrote in its report Central and Eastern European Banking Outlook 2013: Another Tough Year in a Weak Economic Climate. Croatia would keep the national currency and is in no hurry to introduce euro NZ week - 10.05.2013 Croatia would keep the national currency and is in no hurry to introduce euro before preparation well, the country’s First Deputy Prime Minister Vesna Pusic said. It would be better to go slow and prepare well, said Pusic, who is also Minister of Foreign Affairs and European Af-
fairs. Croatia, who will become the 28th member of the European Union on July 1 this year, has suffered from recession for years with businesses reduction and unemployment reaching over 20 percent.
gREECE
Athens
aim of the Memorandum is to establish the nature and the level of cooperation and coordination between CBK and FIUK and as well explain their expectations and aims. Meanwhile the memorandum enables the facilitations of information exchange between the two institutions; increases the level of cooperation and coordination; improves the level of security and accelerates the process the information exchange between the parties, related to the prevention and fighting of money laundering and terrorism financing.
MACEdonIA Greece is recapitalizing its four big banks City A.M. - 22.05.2013 Greece’s bank rescue fund will aim to sell Hellenic Postbank and Proton by mid-July with big banks continuing to absorb small lenders as part of plans to revive the battered sector, the country’s foreign lenders said in an inspection review. Greece is recapitalizing its four big banks and winding down others deemed non-viable to improve the sector’s capacity to fund the economy out of a deep six-year recession. First ever EIB trade facility provided to Greece Balkans.com, Ekathimerini - 13.06.2013 The European Investment Bank (EIB) provides up to EUR 500 million for trade finance to support foreign trade oriented SMEs in Greece. The finance agreements were signed with three systemic Greek banks (National Bank of Greece S.A., Piraeus Bank S.A., and Eurobank Egasias S.A.) and three foreign banks (Corporate and Investment Banking, HSBC Greece, and Commerzbank AG).
koSoVo
Pristina Assignment of Special Country Code for Republic of Kosovo by SWIFT BQK– 07.05.2013 The Society for Worldwide Interbank Financial Telecommunication (SWIFT) has assigned a special country code to be used in identifying the financial institutions of the Republic of Kosovo. Meanwhile, on the basis of this particular country code, SWIFT initiated the process of creating an international identification code - BIC for the Central Bank of Kosovo (CBK) and its connection to the SWIFT system. SWIFT’s decision for using a particular country code for the Republic of Kosovo was taken in response to the respective CBK request, which was supported by the central banks of the G-10 as well as International Monetary Fund and World Bank. Signed the memorandum of understanding between Central Bank of Kosovo and Financial Intelligence Unit of Kosovo BQK-12.06.2013 Central Bank and Financial Intelligence Unit of Kosovo (FIUK signed the Memorandum of Understanding. The
Skopje
FYR Macedonia urges businesses to apply for loans with subsidized interest Balkans.com - 20.05.2013 FYR Macedonia’s Economy Minister Valon Saracini urged businesses to apply for loans with subsidized interest from MBPR. According to the latest information added, companies have used 61 million from the last credit line from the European Investment Bank of 100 million euros is credited with over 200 projects. “The realization of the amount of 100 million euros will be open 1,300 new jobs. This shows that the interest for credit lines of a simple reason, cheaper source of funding in this case is the interest rate of 5.5 percent, said the minister. Sarachini Minister urges companies to take advantages of the Shareholders for the borrowing procedure, the most lasting 45-60 days. KDB Bank plans to open branches in Romania, Serbia, Croatia, Greece, FYR Macedonia BBJ - 29.05.2013 The state-owned Korea Development Bank has renamed its unit in Hungary KDB Bank Europa and wants to use it as a base for expansion in the region, told news agency MTI. KDB Bank wants KDB Bank Europa to open branches in Slovakia, the Czech Republic, Austria, Romania, Moldova, Serbia, Croatia, Ukraine, Russia, FYR Macedonia and Greece by 2018.
MonTEnEgRo Podgorica
The banking sectors in the CEE region continue to outperform their Western European counterparts Balkans.com - 14.05.2013 In terms of growth and profit, the banking sectors in the CEE region continue to outperform their Western European counterparts. Total 2012 loan growth in CEE came in at 14.8% yoy in EUR-terms. Another year of expansion brings the cumulative 2010-2012 real loan
www.aab.al • BANKIERI • 35
growth in CEE to 21.8%; in the Eurozone real loan growth was negative over the same period of time. Banks in CEE continue to benefit from growth opportunities and margins that are significantly higher than in Western Europe. Montenegro hires banks to lead an international bond issue Reuters - 29.05.2013 The Republic of Montenegro, rated Ba3/BB-, has hired Citigroup, Deutsche Bank and Erste to lead an international bond issue, according to two sources. The sovereign is looking to bring the new bond to market in mid-June, one of the two sources said.
RoMAnIA Bucharest
growth as price pressures ease, a survey of economists showed. The Narodna Banka Srbije will cut the benchmark one-week repurchase rate by a quarter-point to 11.50 percent, according to 11 of 23 economists in a Bloomberg survey. Serbian monetary policy is set to follow the rest of Eastern Europe, where borrowing costs are falling to bolster flagging economic growth. Central Bank of Serbia adopts amendments and supplements in the legislation for banking supervision Central Bank of Serbia; Balkans.com - 20.05.2013 Central Bank of Serbia adopted amendments and supplements in the legislation for banking supervision related to Granting of a Preliminary Bank Founding Permit, Bank Operating License and Consents by the National Bank of Serbia, as well as the Provisions Relating to the Establishment of Criteria for Defining a First-Class Bank. Additionally, the Decision on Risk Management was amended to permit banks to assign receivables from legal entities and entrepreneurs (due and not yet due) to other banks.
TuRkEY Intesa Sanpaolo Bank Romania introduces U Turn tax refund service for corporate customers Business Review - 24.05.2013 Intesa Sanpaolo Bank Romania, has made a local agreement with U Turn Tax Refund (UTTR) in order to facilitate VAT refund. The reimbursement time can be reduced for only up to five working days. Types of expenses that can be reclaimed from over 40 countries worldwide, covering all European Union member states, Norway, Switzerland, Canada, Australia and Japan include: hotels & other forms of accommodation, restaurant meals, car rental and maintenance, taxis and public transport, petrol / diesel fuel, conference, trade fair and exhibitions, training courses and seminars. Bank interest rates are seeing a downward trend in Romania Balkans.com - 30.05.2013 Bank interest rates are seeing a downward trend in Romania, while crediting is almost blocked. According to bankers, the resumption of individual crediting can be done only after a few successive quarters of steady economic growth followed by the banks’ major involvement in crediting companies.
SERBIA Beograd
Serbia’s central bank will probably lower borrowing costs Bloomberg - 14.05.2013 Serbia’s central bank will probably lower borrowing costs for the first time since January 2012 to spur economic
36 • BANKIERI • www.aab.al
Istanbul
Turkey has begun to open the doors to giving new banking licenses Trend.az - 13.05.2013 Turkey has begun to open the doors to giving new banking licenses after the 2001 banking crisis, with no exception for interest-free Islamic banks. Turkish Deputy Prime Minister Ali Babacan said at the Turkish Participation Banks Union’s annual meeting that it appeared the format of two participation banks would be clearer in a few months. The state-run banks, Ziraat Bank and Halkbank, will establish these two participation banks. Online payments by bank cards grew by a third in 2012 Balkans.com - 05.06.2013 The recent “Europe Online Payment Methods Report 2013 – First Half 2013” report by Hamburg-based secondary market research company yStats.com provides information about the movement toward online and mobile purchase transactions. According to the report in Central Europe, awareness of mobile payment methods was relatively high in 2012. In Western Europe, the United Kingdom and France are on the path to adoption of alternative payment methods. Countries in Eastern Europe are also participating in the movement to online and mobile payments. In Turkey, online payments by bank cards grew by a third in 2012. Mobile payments were also on the rise in Turkey, reaching a high double digit number in millions of Euros.
Tech Topics
E-COMMERCE – A tangible reality in Albania E-Commerce is the latest service offered by Credins Bank, through which clients are provided with the opportunity to sell online and accept payments with VISA cards, issued locally or worldwide, and accessed through internet.
by Ms Marsela KUSHTA Chief of Operations Sector Cards Department, CREDINS BANK
C
redins Bank has made continuous efforts to be at the forefront of achievements of the Albanian banking system and industry, by achieving significant growth in all areas and indicators. Credins Bank has expanded its range of products and services in the area of electronic payments, thus increasing its presence in the Albanian banking market. Given the comfort, safety, speed and efficiency, new forms of electronic payments provide, as compared to cash, checks, etc., Credins Bank has been continuously introducing new technologies in this field. Thus, Credins Bank, in the frame of supporting business and responding to the growing demands by customers, decided to introduce a new service in banking market, e-Commerce, thus being among the first banks in Albania to take this initiative. Considering bank’s high indicators as card issuer and its expanding position in the market, VISA has granted Credins Bank the license for e-Commerce and POS Merchant Acquiring. These services are expected to improve all indicators, either as card issuer, or as a receiver of card transactions. Therefore, bank’s customers will benefit from advantages of one of the most contemporary alternatives in the
electronic payment system. Card transactions executed through e-Commerce contain sensitive information, as opposed to face-to-face transactions, thus carrying a higher risk, not only for the card holder, but also for the business. Bank customers, which in this case are merchants which offer their products and services online, but also those who buy online, by using their VISA cards, have the right to claim comfort, convenience, speed of service offered, without compromising data confidentiality and security. In order to provide customers with the necessary security in offering products and services online, VISA, as a highly trusted payment system in the whole world, has created an added to eCommerce, through VbV (Verified by VISA) technology, which provides a safe service and protection from unauthorized use of cardholders’ personal data. The application of VbV technology for Credins Bank customers (merchants seeking to sell online) is mandatory, so the bank does not accept offering e-Commerce service to clients who are not involved in the VbV technology, as a key condition for a safe and quality service, through which cardholder customers buy online, with the trust that the service security is merchant’s one of key priorities. Such technology enables the identification of cardholder who effects payment through merchant’s website, by providing full security for online purchases. Online transactions through VbV are authorized
after authenticating them via a password, only. The decision-making process for an e-Commerce service goes through a careful analysis process, which involves various specialists, by following strict procedures and specific requirements for this service. Also, the bank sets specific standards and carries out relevant controls to verify their proper implementation by the client (merchant who sells online). The page, through which products and services are sold online, must be user friendly and also reflect the transparency requirements under which the product or service is offered. Also, the page must contain detailed prescriptions for goods or services, a clear information about the
Currently, there are hundreds of websites that support online sale of a product or service specified and also hundreds (if not thousands) of others expected to enter in the online business. Figures and statistics show a double-digit growth every year. www.aab.al • BANKIERI • 37
return and refund policies for goods and services, deadlines and restrictions, the final price of the product or service offered (including transportation, taxes, etc.), merchant’s full and correct name, contact numbers for service and customer care, etc. Amazon is probably the best example how a site could offer such a quality and professional service as, by adapting to customers’ individual preferences. A key role in the success of the merchant which provides e-Commerce, plays the website design, but above all, its functionality and performance. It has been proved that any delay in opening the site or difficulties in its use, translates into an “abandonment” coefficient of the site by users, and surely, this hurts merchant’s business and image. In building the website, it should be noted that, the merchant is offering a virtual product or service, which is more difficult to be perceived by the client, rather than when buying it in a physical shop. This often requires a clear and complete visual appearance of product or service, its detailed prescription, its characteristics’ categorization, to increase customer confidence through online shopping. Selling online is a convenient solution, not only for large companies with prestigious brands, but also for smaller businesses, which send products/services to the most remote purchaser. Every registered and licensed business, seeking to sell its products or services online, constitutes a potential customer for e-Commerce. The merchant who owns a website, compliant with a set of required standards to provide such service, is qualified to accept online payments with VISA cards, which go to the merchant’s account at Credins Bank; should the merchant comply with the predetermined requirements (in accordance with VISA and Credins Bank’s policies and procedures), have a business relationship with the bank and apply for the service. A dedicated menu is therefore installed in the merchant’s website, where customers can effect payments, after choosing the desired product/ service. Its installation is realized in cooperation with the merchant, and those interested businesses which are customers of the bank, are provided with necessary technical assistance. The websites of business, which are Credins Bank’s clients and which
38 • BANKIERI • www.aab.al
have a business bank account, offer purchase opportunities for clients with VISA cards, issued worldwide. Any business could get information about the payments made on its account with Credins Bank, through a monthly transaction statement, or through e-banking. Currently, there are hundreds of websites that support online sale of a product or service specified and also hundreds (if not thousands) of others expected to enter in the online busi-
ness. Figures and statistics show a double-digit growth every year. The service is provided through internet, thus having the minimum requirements for initial investment and infrastructure, thus making “online trade” an attractive option for many businesses. This is why the number of businesses that sell online and the number of customers who buy online grows every day. Today, E-Commerce is a multibillion-dollar industry, with an ever-growing trend.
WHAT IS E-COMMERCE? E-Commerce means accepting payments in the electronic trade, which enable businesses the opportunity to offer products and services to their clients, through internet. Businesses sell products and services through their website, by accepting clients’ payments with cards. E-Commerce transactions are effected online, by way of using an access device from the cardholder client (computer or other terminal), in which the necessary data are entered in, to effect the transaction. The client initiates the transaction by uploading card data, used as a payment instrument, to bouy the product or service online, through merchant’s website. Through e-Commerce businesses may sell more, with increased security, faster, better, cheaper and without time and distance limits and boundaries.
Financial Auditorium
The usage of payment instruments by individuals and bussinesses A general overview of two studies of Bank of Albania1
Mr Kliti Ceca
Head of Economic Research Sector Research Department, Bank of Albania
O
Ms Valentina Semi,
Head of Policy and Payment System Oversight Sector. Department of Payment Systems Bank of Albania
ne of the objectives set by Bank of Albania is encouraging a normal functioning of payment systems. On the other hand, maintaining and promoting security, efficiency and stability of payment systems is a crucial precondition for an efficient implementation of monetary policy and maintaining financial stability. In this regard, Bank of Albania has been paying a special attention to payment instruments, as they are an integral part of payment systems. Furthermore, based on international literature, it is noted that the use of electronic payment instruments shows a negative correlation to the use of cash in economy, thus having a direct impact on the implementation of monetary policy and the financial stability. Because of relatively low volumes of payments through electronic instruments, Bank of Albania is paying special attention to the studying part of payment instruments, along with measures regarding the improvement of regulatory and legal frame1
Mr Alban Pllaha
Specialist, Unit of Methodological Research in Micro Data, Research Department, Bank of Albania
work as well as the infrastructural developments, with the aim to support considerably the decision-making process and reforms foreseen in the area of payment systems. During the period February – March 2012, two surveys were conducted, in the frame of assessing opinions of users of payments instruments, where different issues related to these instruments were estimated. The surveys were conducted by Bank of Albania, drafted and developed as scientific projects by Research Department, with the support of Payment Systems Department and Statistic Department of Bank of Albania and practically implemented by INSTAT. The first survey was conducted with individuals, who have a bank account. The sample of 200 individuals was selected in Tirana – Durrës area, as an area with the largest population density. The survey aimed at identifying individuals’ characteristics, which have a positive or negative impact on their use of payment
instruments. The second survey was conducted with businesses. The basic selecting condition was the fact of including 200 businesses, which offer payments through POS, and also including 200 businesses, that do not offer such payments. This made possible to make necessary assessments for each groups, and on the other hand, it enabled the comparative analysis between groups. This survey aimed to identify the main businesses features, which influence, positively or negatively, on the use of payment instruments. It must be emphasized that both studies were based on public surveys. They reflects evaluations given by individuals and businesses, about the questions they were asked in this regard.
Deepening financial literacy to enhance financial culture and turn it into a general culture, is a finding that supports Bank of Albania’s incentive for several years from now to further increase the financial literacy of the public.
The views expressed herein are solely those of the authors and do not necessarily reflect the views of the Bank of Albania.
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Complete information about the studies The surveys analyses are published by Bank of Albania in its scientific journal: “Scientific Papers” and they are currently available in print and electronic version on Bank of Albania webpage2.
Main findings of the surveys
Some of the main findings of the individuals’ survey are as follows: Deepening financial literacy to enhance financial culture and turning it into a general culture. Several issues of this survey show explicitly that the deepening of financial literacy is directly related to using bank accounts
and payment instruments. This finding supports Bank of Albania’s incentive for several years from now to further increase the financial literacy of the public. Monitoring financial literacy of the general public. Monitoring this financial literacy by using different methods, including surveys, would determine the concrete manner and issues in focus for the public education. Deeper monitoring of bank instrument fees and their distribution. The survey highlighted the respondents’ relatively lack of knowledge on fees involved in various payment instruments. So, the Bank of Albania’s initiative to undertake a unified publication of these database is deemed
as positive, has created the preconditions to better inform the general public on the issue, that, and has enabled individuals and businesses to make wise selection of banking services that would better suit their interest. This initiative would also facilitate fee monitoring, for research and administrative purposes. Deeper perception of issues on transparency about bank instrument provision and usage. As regards the transparency about cashless payment system, respondents stated the need for more transparency about these instruments. This may also be due to lack of information. However, it is deemed that transparency helps increasing public information, as well.
Some of the main findings of the survey with businesses The most acceptable payment instruments by businesses (except credit or debit cards, as initial condition on the realization of businesses selection), are as follows: “Credit Transfer” with 40.57 %.
The relatively high usage of this instrument, is in compliance with our expectations, because this type of instrument by its nature could be considered as widely used in business transactions, compared to individual transactions.
“Direct Debiting” with 25.71 %.
Regarding the relatively high usage of this instrument we estimate that, beyond the considerable percentage of the utilities companies included in the survey, a limited familiarization of businesses with this instrument could be noted, which is confirmed also by businesses’ responses related to the acceptance of the instrument for payments which are not possible to be made through this instrument. The usage, somewhat prolonged, of direct debiting, makes its accurate recognition somewhat doubtful, thus favoring the need for deepening the financial literacy
“Cheque” acceptance with 14.39 % “E-banking” with 13.21 %
- Businesses which accept payments through POS, estimate that the the elements with the highest impact on adopting these terminals to make payments, are: “security level” and “reliability”. Meanwhile, “the easy integration on business system” and the “easiness in use” are estimated as two other features that have contributed significantly on adopting these terminals. It seems that “Costs” have not so much impact on POS adoption, regarding this business category.
These data confirm the low percentage, such category of instruments has over total instruments, according to the data reported to Bank of Albania3.
- Businesses that do not accept payments via POS, evaluate that will adopt these way of payments, if more consumers would ask them. - The most evaluated feature of the payment instruments, by businesses, are: “Kontact with the market: The relevance of number of buyers who use these systems”, and “The confidence: How confident you feel with these systems”, which is also assessed as “very important”. - The least evaluated feature of the payment instruments, by busi-
nesses, are: “Relative advantage of the price: The amount of money you save by using these payment terminals”, and “Market presence: Have you listen about these payment instruments”, which is also assessed as “less important”. - High fees for POS usage. It is assessed that such claims could be raised by small businesses, for which POS costs, in the frame of low costs of cash usage, could be pervasive.
2 “Survey report on the use of payment instruments – Businesses, 2013, “Discussion Paper 01 (60) 2013”, K. Ceca, A Pllaha, V. Semi. Albanian: ttp://www.bankofalbania.org/web/Raporti_i_anketimit_mbi_perdorimin_e_instrumenteve_te_pageses_ndash_Bizneset_6581_1.php “Survey report on the use of payment instruments – Individuals, 2013, “Discussion Paper 02 (61) 2013”, K. Ceca, A Pllaha, V. Semi. Albanian: http://www.bankofalbania.org/web/Raporti_i_anketimit_mbi_perdorimin_e_instrumenteve_te_pageses_ndash_Individet_6582_1.php English: http://www.bankofalbania.org/web/Survey_report_on_the_use_of_payment_instruments_individuals_6582_2.php 3 Bank of Albania, Annual Report 2011, page 148.
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AAB
AAB Activities AAB - on financial education Bank Cards brochure AAB, in cooperation with Bank of Albania, prepared a brochure on credit cards and their usage, as part of the Financial Education Campaign, undertaken by AAB. The brochure includes information on bank cards, interest rates, transparency standards and advices on the appropriate use of cards through internet. The brochures are being distributed to the students, to the branches of banks, commercial centers etc.
Visits of students at banks premises In view of the collaboration between AAB and the European University of Tirana (UET), Ms Endrita Xhaferaj, AAB Secretary General and Ms Najada Xhaxha (Tirana Bank) Head of the AAB Payments Systems Committee, delivered two seminars for students, on banking and operational issues, as part of the curricula of graduating bachelor in Banking and Finance. Following up on those seminars, AAB organized tours in some of the banks’ branches in Tirana, as part of students’ practical learning, from 24 June until 01 July. Bank representatives explained to the students the daily activities of banks including branches and other departments. The banks which welcomed the students were: Alpha Bank, BKT, Credins Bank, FIBank, Intesa San Paolo Bank, NBG Bank Albania and United Bank of Albania.
AAB - Events 3rd Albanian National Card Forum, 17 May 2013 AAB and its Anti-Fraud Card Committee organized for the third consecutive year the 3rd Albanian National Card Forum entitled: “The dynamic future of business”. The forum was held in Sheraton Hotel, Tirana. It was attended by representatives from commercial banks in Albania and Kosovo, Bank of Albania, Visa and Master Card representatives, Albanian and Kosovo State Police, OPDAT, local and international companies, which provide technology services in electronic payments services such as: INFIGO, Mellon, Printec, Asseco, EasyPay, and MPay, etc.. This year’s forum emphasised the analysis of the market and the latest developments in cards and payments industry, both from the viewpoint of growth and development opportunities of card business, as well as the risks associated to it.
2nd National Forum on Bank Security, 31 May 2013 AAB and its Bank Security Committee organized the 2nd National Forum on Bank Security, held for the second consecutive year at Tirana International Hotel. It was attended by representatives from commercial banks in Albania and Kosovo, Bank of Albania, General Directorate of State Police, Physical Defence and Security Companies (SHRSF), and companies which offer services and products in the banking security sector.
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Roundtable on “The improvement of reporting from banks, in the context of Prevention of Money Laundering and Terrorism financing”, 24 May 2013 AAB in cooperation with the General Directory of the Prevention of Money Laundry (GDPML) organized a roundtable to discuss on banks’ reporting to the Authority, in accordance with the Law “On the prevention of money laundering and terrorism financing”. The meeting was attended by GDPML high officials, heads of Compliance Departments and specialists of prevention of money laundry at commercial banks, and Bank of Albania’s Supervision Department’ representatives. Participants in the meeting discussed on specific technical problems encountered in banks’ reporting and on the best ways to address them in the future.
Workshop on the Renewable Energy Program (BREP), 28 May 2013 IFC and AAB organized a workshop for local commercial banks as a part of a broader IFC’s Balkan Renewable Energy Program (BREP). The main objective was to introduce banks with the potential for investments into renewable energy projects in Albania, as well as the most characteristic risks associated with such projects. IFC introduced its advisory services in this field comprising manuals, training and assistance, as well as its investment services on the development of renewable energy sector. Representatives of high level management of banks attended the event.
AAB - Trainings Workshop on “Improving of electronic connection among the beneficiaries”, 05 April 2013
Training on “Information Security Management”,14-16 May 2013
AAB facilitated the participation of banks’ IT officers in the workshop organized by General Prosecution Office, as part of the twinning project on: “Support to anti-money laundering and financial crimes investigations structures”. The activity was moderated by experts of European Community and addressed the best practices in the cooperation between competent Albanian authorities and sharing of information amongst them and reporting on technical requirements for electronic connections.
AAB organized a three-day training course on Information Security Management. The objective were to inform the participants on basic security concepts, qualitative and quantitative risk management process, etc. The course was attended by 11 representatives from 8 banks.
Training on “Presentation skills in English”, 15 April, 2013 AAB organized a one-day course on how to present effectively and confidently in English, aiming at teaching to be able to speak with confidence in front of an audience. This interactive training course was moderated by Mr. Andy Zdan-Michajlowicz and was attended by 5 representatives of 2 member banks.
Training on Valuation of Immovable Properties, 22-23 May 2013 AAB in collaboration with Deloitte Albania organized a two-day course on the valuation of immovable properties including all the process and evaluation report. The course, attended by 15 persons from 6 banks.
Workshop on Basel III, 13 June 2013 AAB in collaboration with FSVC Program organised the workshop entitled “An overview of Basel III with regard to liquidity”. The workshop took place on 13 June 2013, at Hotel Tirana International. It was moderated from the Danish Central bank experts specialized in Basel III liquidity risk management and regulation.
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