www.aab.al
BANKING SYSTEM
Legal and regulatory amendments for boosting credit to economy Some practical proposals
The government must identify strategic sectors of the economy for a longer period than the annual budget. Such identification may also lead to the implementation of a more relaxed regime of risk weights, used for assets.
Brunilda KOSTARE
Legal adviser ALBANIAN ASSOCIATION OF BANKS, AAB
I
n May 2019, the Bank of Albania organized a joint round table with senior management of commercial banks, discussing the prevailing state of credit to economy and issues related to it. Following the discussions at the roundtable, the parties agreed to develop a platform to identify practical actions that help reduce risk and create better conditions for credit growth. In November 2019, the Credit Revitalization Platform was developed, a joint action plan that engages the Bank of Albania and banking sector for regulatory improvements and practical initiatives, aimed at promoting lending. Following the approved platform, the Albanian Association of Banks (AAB) organized, in December 2019, a roundtable with representatives
from the banking sector, but not only, where representatives of Bank of Albania, World Bank, IFC were invited, along with EU Delegation in Tirana. Considering the discussions and proposals of participants, AAB finalized a document with all issues and interventions/actions needed to address them, as an action plan, aimed at increasing lending. This action plan and its ultimate goal got the full support from the Ministry of Finance & Economy. Upon invitation of the Minister of Finance & Economy, on March 6th, 2020, a meeting was held with the highest representatives from the ministry, Bank of Albania, Albania Investment Council and international institutions, such as: World Bank, European Union Delegation Office in Albania and IFC, in order to identify issues related to economic growth, obstacles, and steps that can be taken to improve business climate. At this meeting, AAB introduced the identified measures that require legal and regulatory intervention. To summarize, the proposed measures are as following: a) “The Cadaster Act” - increasing opportunities for collateral coverage The new Cadaster Act has brought improvements with regard to the registration of property and real rights over them. But there are problems that create legal uncertainties for banks (creditors), yet. The identified issues relate to transactions for buildings/premises under construction, with most of them occurring during construction,
when it is uncompleted and not yet registered. It is necessary to regulate properly the control of transfer of the mortgage, placed on a plot of land, even to the construction/building over this plot, at the moment when the completed building is registered, and during the construction phases, as there is no control in place over their registration in the register, or the lack of control over undertaking contracts that the developer/builder signs with third parties. As for the above, and not only, several legal changes are needed, as per following: • prescribing registration of undertaking contracts - providing banks with the opportunity to create and register real rights over the building under construction, in this particular mortgage register, whose ownership will be obtained in the future; • the obligation to notarize and register the undertaking contract notaries must have the obligation to notarize and register such contract; • registering the prospective mortgage contract since the construction stage (after the building permit has been registered) – actually, such registration is not performed, on the grounds that “the object/item does not exist, yet”; • regulating the control of the transfer of mortgages placed on a plot of land, even to the construction/ building over this plot of land, at the moment when the completed April 2020
Bankieri
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