Fullani: Collateral execution a major problem for banks

TIRANA, May 24 – Central bank governor, Ardian Fullani, says barriers for the execution of collateral remain a major concern for the Albanian banking sector– as bad loans stand at their highest levels of 14.4 percent. Presenting the Bank of Albania 2010 annual report at the parliamentary economic committee, Fullani criticized delays caused by courts in collateral execution, saying that it remained a key concern for the normal activity of the banking system and lending in particular. The governor called on government and parliament to strengthen the bailiff’s office system, warning that the current situation could bring severe consequences to the country’s economy. With regard to the high interest rates in Albania, Fullani said “When we compare Albania to regional countries we should be aware of the shortcomings of the banking and financial system regarding the registration and execution of collateral which is a major problem and needs important structural intervention.” Governor Ardian Fullani recently called on the 16 commercial banks operating in Albania to cooperate with their customers in case of temporary difficulty in paying off installments but to be strict and timely in executing collateral in the case that bad loans are identified. Fullani described developments in the Albanian economy, which in 2010 grew by 3.9 percent, as positive and the banking system safe. The governor also reiterated his appeal to restructure the country’s economic growth agenda. “The new agenda of structural reforms should target the creation of conditions for a more balanced and sustainable growth in the long-term. The bigger orientation of the Albanian economy toward exports and the increase in the competitiveness of Albanian products in foreign and domestic markets dictate the need to continue structural reforms in the macro and microeconomic levels,” said Fullani. Albania’s 2010 GDP growth was mostly based on exports which grew by a record 60 percent, while domestic demand and private investments had a lower contribution due to insecurity about the future economic situation. Credit to the private sector grew by 10 percent in 2010, but total lending continued suffering from lack of demand and realistic business plans. This year, the government expects the country’s economy to grow by 5.5 percent which is far higher than the predictions of international financial institutions.