Germany offers support to supervise investment funds

TIRANA, March 19 – The German Federal Financial Supervisory Authority (BaFin) will assist Albania supervise the newly established investment funds. In a recent seminar this week, Albania financial supervisory authorities were trained on supervising investment funds based on the EU regulatory framework and market manipulation practices.
In its latest financial system stability assessment, the International Monetary Fund says systemic risk in the financial system has increased with the recently established investment funds. “While these funds have helped diversify the ownership of government securities, they are inadequately supervised and regulated, invest mostly in longer-dated securities and their clients appear to consider these funds as substitutes for bank accounts. Given the lack of a functioning secondary market for government bonds, the funds face high liquidity risk. Moreover, given the close links with banks, redemption pressures may spill over into deposit runs on banks,” says the IMF. The two newly established investment funds operating in Albania more than trebled their total assets to 50 billion lek (Euro 352 million) in 2013 according to a report by the Financial Supervisory Authority. The market is mainly dominated by investments in government bonds which account for 84 percent of the funds’ assets, where around 28,442 people have invested.
Currently only two investment funds, Raiffeisen Prestigj and Raiffeisen Invest Euro operate in Albania. The funds were established in early 2012 by Raiffeisen Bank Albania, the leading commercial bank operating in Albania.