TIRANA, July 22 – The escalation of the crisis in neighboring Greece, Albania’s second top trading partner and the host of around 500,000 Albanians, has only had a psychological impact on Albania’s banking system with sporadic deposit withdrawals from the three Greek bank subsidiaries, says central bank governor Gent Sejko.
“I would say that the situation in Greece has had a psychological impact on commercial banks in Albania, but has not affected them economically or financially,” Sejko said in a TV interview.
The governor says deposit withdrawals and transfers from the three Greek subsidiaries have been sporadic and negligible compared to the liquidity and capital these banks possess.
Speaking about the deal Greece reached with its creditors, governor Sejko said the situation would also have a positive impact on Albania.
“The deal will calm down the situation of parent banks in Greece and this will also be reflected on the general psychological condition in Albania as well as in the banks’ activity which is the most delicate part related to financial stability,” said Sejko.
As for the spillover effects on the Albanian economy, the governor says that there could be a slight decline in remittances and a return of immigrants but assured the Albanian economy has already handled the major impacts from the six-year recession in the neighboring country.
The Albanian government and the IMF have recently reduced Albania’s GDP forecast for 2015 to 2.7 percent, down from 3 percent on lower exports affected by declining oil prices and possible spillover impacts from the crisis in neighboring Greece.
While Greek banks reopened this week after a deal with Greece’s creditors over new austerity measures, the limits on cash withdrawals remaining in force have had a negative impacts on some regions in southern Albania where dozens of companies are engaged in trade exchanges with Greek partners. In addition, hundreds of seasonal workers in Greece, mainly working in the agriculture sector, have returned home without receiving their payments because of the closure of banks. Several transport companies are also reported to have been affected.
Experts say the spillover risks from the Greek crisis are relatively low and mainly affect exports and remittances, already on a downward trend since Greece plunged into recession in 2008. Meanwhile, the three Greek bank subsidiaries in Albania are considered safe because of operating as independent from their parent banks.
Greek banks account for less than one-fifth of Albania’s banking system with their share having dropped to around 16 percent down from 25 percent in the pre-crisis years.
NBG Bank Albania, a subsidiary of the National Bank of Greece, holds 3.3 percent of the total assets in the Albanian banking system. The two other Greek banks operating in Albania, the Tirana Bank part of Piraeus Bank and Alpha Bank Albania, part of Alpha Bank, hold 7.4 percent and 5.9 percent respectively, according to an IMF report.
