The remaining 5 percent of depositors having more than 2.5 million lek in their bank accounts possess around 58 percent of the total amount of deposits in the 16 commercial banks operating in Albania
TIRANA, May 15 – The overwhelming majority of Albanian depositors have managed to save up to 2.5 million lek (Euro 17,667, USD 22,737) which is the threshold making them fully safe and guaranteed by the Deposit Insurance Agency.
The remaining 5 percent of depositors having more than 2.5 million lek in their bank accounts possess around 58 percent of the total amount of deposits in the 16 commercial banks operating in Albania, according to data presented in the annual report of the Deposit Insurance Agency this week. The data reconfirm the deep social gap between the rich and the poor. Average deposits for the rich stand at 55,000 USD while the average savings for the overwhelming majority is at around USD 2,000.
Introducing the report at the parliamentary economy committee, Silvana Sejko, the agency’s head, said 85 percent of total deposits are owned by individuals and the majority 54 percent of deposits are in the national currency lek.
The agency said individuals’ deposits at the end of 2011 reached 740 billion lek, of which 430 billion lek belongs to 78,000 people and the remaining 310 billion lek is shared by 1.5 million people.
Meanwhile, deposits in the credit-saving unions, which are classifies as non-banking financial institutions, is not covered by the Deposit Insurance Scheme. Credit-Saving Unions hold a relative small amount of 640 million lek in deposits with 43,000 customers mostly in rural areas.
While domestic consumption and investments remain sluggish preventing the country’s economic recovery, Albanians continue depositing considerable amounts in banks uncertain about their futures and fearing a possible escalation of the crisis.
After panicky withdrawing around 10 percent of total deposits (Lek 62.7 bln, Euro 440 mln) in the final quarter of 2008 and in early 2009 in the face of spillovers from instability of global financial markets, Albanians have returned to deposits and cut down on credit seeing less investment opportunities in a saturated market where consumption is declining for consecutive quarters as shown by INSTAT data on retail sales.
The latest central bank data show deposits grew by around 193 billion lek (Euro 1.35 bln) to 881.3 billion lek in 2011, registering an 11.7 percent increase, lower compared to the 18.5 percent growth rate in 2010, but better compared to 2008 and 2009 at 2.2 percent and 6 percent respectively.
As elsewhere in the region, Albanian banks witnessed substantial panic deposit withdrawals in the face of spillovers from instability of global financial markets, which were compounded by concerns about the health of the Greek banking system in the fall of 2008. Ample liquidity buffers were utilized to meet deposit withdrawals. To boost confidence, deposit insurance limits were raised fivefold to 2.5 million lek (25,000 US dollars), and deposits started to recover from the second half of 2009. Stress tests assessing key risks suggest that the banking system had sufficient buffers to weather the expected downturn.
Bank of Albania data show Tirana held 38.5 percent of the total deposits of 892 billion lek at the end of the first quarter of 2012. Differently from other districts, the majority 58 percent of deposits in Tirana are in foreign currency mostly euro.
Second comes Durres, the country’s second largest city which holds 8.9 percent of total deposits, followed by Vlora with 6.7 percent and Elbasan with 6 percent.
Both lending and deposit growth rates slightly decelerated during the first quarter of 2012, standing at the same levels of around 11 percent, revealing an ongoing saving trend and hesitation about new investments as domestic consumption fails to recover.
