Austrian Airlines to resume money transportation

Tirana Times
By Tirana Times April 23, 2019 16:09

Austrian Airlines to resume money transportation

Story Highlights

  • The Austrian Airlines is expected to resume the money transportation from Albanian banks to Austria today after the security conditions are checked and positively evaluated. Market actors claim it might not affect the currency exchange market.

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TIRANA, Apr. 24- Following the robbery of 6.5 million euros by an organized group on April 10 at the Tirana International Airport (TIA) from an Austrian Airlines plane which was ready to transport bank money in Vienna, the Austrian Airlines reported that it was going to suspend any further money transportation from Albanian banks to Austria, as the only international airport in Albania was deemed unsafe with an easily breaching security.

However, after two weeks of suspension the Austrian Airlines was reviewing the opportunity to restart the money transporting from TIA to Vienna. Austrian Airlines spokesperson Tanja Gruber said yesterday that the security conditions are being scrutinized, and if all goes well, then the cash money transferring will resume. As of yesterday an exact date wasn’t provided, however the transport is expected to continue today. The security procedures will be checked and guarded today by an unusual police and military forces, so any potential incident will be avoided. However, future prospects on security are still uncertain.

Abroad money transferring is a normal bank procedure which places a part of the free money from depositors (euro, dollars, pounds, etc.) into financial institutions abroad as an alternative form of investment. The transfers are physically carried out and this is a relationship that banks settle with private security companies. Besides sending euros and dollars surplus (when there is no possibility of lending or engaging in other investments in Albania for that currency), banks also collect cash of a market currency. Usually in Albania they collect the Pound or the Swiss Francs. Banks also transport money to make large payments to customers where transfer money is sent to correspondent banks. But in anticipation of how the money transport will be carried out, banks were not inclined to swap in the euro, and if this crash is not resolved quickly, this might be a problem for the businesses that conduct large transactions. For individuals who exchange small amounts there will be no problems however.

The event which occurred in Rinas, is expected to affect insurance rates as well. Raiffeisen International which is the correspondent with which Austrian banks operate in Albania, is reported to have recently introduced a contract amendment to banks, informing them that it will review the terms of travel insurance. Avni Ponari who is CEO to Sigal, the country’s largest insurance company, told business and economy magazine Monitor that “cash transit security is a product that is covered by the national and international insurance market.” Yet, he added that this situation will increase the insurance premium and on the other hand it is not easier to find reinsurers.

 

Currency market

The suspension of money transportation had some negative impacts in the first few days giving an immediate effect in the currency exchange. In the first three days Euro lost 1.31 points reaching its lowest value against lek since January this year, being exchange at 123.58 lek per 1 euro. The value of the US dollar was also depreciated, but the highest drop was to the English pound by 2.16 lek, and the Swiss franc by 3.1 lek.

This decrease was affected by the banks’ inability to transfer their currency abroad, which made them conduct limited transactions in currency. The currency exchange rate started to slowly stabilize, but on April 19 they started experiencing a new decrease. Euro lost its gained 0.31 points, to be exchanged at 123.83 lek per 1 euro. Market actors claim that the currency exchange market will still remain uncertain regardless of the resuming of money transportation, as the transit risks will be on the banks. Also concerning is the weak demand for foreign currencies, for which market actors claimed a continual drop in exchange rates if the demand remains low.

Silvio Pedrazzi who is director of the Albanian Association of Banks and CEO to Intesa San Paolo, said that apart from the negative effects in the currency exchange rates impacted from the money transfer suspension, banks have stopped receiving deposits in the currency as they are already overloaded in euro liquidities. This comes due to the fact that Albania has large foreign currency inflows from foreign direct investments, remittances and exports. But Pedrazzi said that the Albanian economy also suffers from high euroisation due to the Albanians’ tendency to use foreign currency.

However, a low money circulation and the political turmoil in the country have also affected the currency market. Governor to the Bank of Albanian Gent Sejko said yesterday that robberies affect both the banks and the country’s economy, as it harms current investors and the image of the country for potential ones. However, Sejko said that it is due to the destabilized political situation as well to harm the economy and potential foreign direct investments.

 

Banking business costs

Pedrazzi said that the costs generated because of the recent years thefts are transferred in two ways, either lower profits for shareholders, or higher service fees. Each bank can choose its cost transfer mode itself. And after the robbery of the 6.5 million euros which happened in April 9, these costs are expected to increase more.

Pedrazzi said that abroad cash transferring from banks is not a choice, but an obligation stemming from regulatory entities. Banks are required to hold compulsory capital reserves and provisions for other activities, and these cash values should be cash-settled and invested abroad in the form of securities, deposits or loans to foreign corporations. At present, Albanian banks have low exposure to corporate investments. Of all banking operations, cach management has costs also due to the high security elements that accompany the transportation of monetary values. Repeated events in recent years have increased operational costs for banks and risk premiums.

After these events the insurance companies will reconsider risk premiums for securing monetary values in transport and also correspondent banks, such as the Raiffeisen Bank Group for Albania in this case, will be reviewing the terms of the cash transfer agreement. Currently, all parties involved in the cash transfer process abroad are trying to find a solid solution. The process has many parties, including airline companies, security companies, correspondent banks and insurance companies. And thus, all parties are working to find a solution to eliminate the operational risk of cash transportation. 
Note: this article was updated from yesterday, as the Austrian Airlines reported to resume transportation TODAY.

 

Tirana Times
By Tirana Times April 23, 2019 16:09