TIRANA, July 5 – Albania’s Financial Supervisory Authority has licensed the Albanian Stock Exchange as the country’s first privately-owned stock exchange in a move that is expected to serve both the private sector and the government to find much-needed long-term financing on projects that commercial banks operating in the country are reluctant to support.
The decision comes two and a half years after the Albanian government closed down the state-run Tirana Stock Exchange in late 2014 after 12 years of remaining inactive.
Experts say the Tirana Stock Exchange failed because of the immaturity and fear by the business community to be listed in the TSE, the non-supportive role of policies followed by donors and lack of political will for the development of the country’s sole stock exchange. The Tirana stock exchange was completely inactive due to the small number of listed companies counted on the fingers of one hand and lack of interest because of the high informality of Albanian businesses.
The newly established Albanian Stock Exchange, ALSE, is a joint stock company, with three founding shareholders, including the majority Albanian-owned Credins Banks, the country’s third largest commercial bank, which holds a 42.5 percent stake.
U.S.-owned American Bank of Investments also holds a 42.5 percent of the initial 50 million lek (€373,000) authorized capital. The American Bank of Investments, ABI, the 10th largest commercial bank in the country, entered the Albanian market in late 2015 as a rebranded bank after U.S. based NCH Capital Inc, private equity and venture firm took over Credit Agricole’s Albania unit.
AK Invest, an Albanian-owned non-bank financial institution which has been operating for 15 years, mainly engaged in money transfer and micro-credit, holds 15 percent of the shares.
The stock exchange will also be a good opportunity for alternative financing resources at a time when credit offered by commercial banks is struggling to recover as lending standards remain tight negatively affected by non-performing loans at about 18 percent and demand for new loans is poor.
The Financial Supervisory Authority says it has licensed the Albanian Stock Exchange to trade government securities and other financial instruments, establish a multilateral trading platform facilitating the exchange of financial instruments between multiple parties and educating, promoting and providing information to interest groups regarding the capital market and issuers’ activity.
The Albanian Stock Exchange will use the “Quick Trade” e-system also used by regional stock exchanges in Ljubljana, Skopje, Sarajevo and Montenegro which can carry out about 100,000 transactions a day.
In its first year of operation, the stock exchange’s transactions will focus on trading government securities and shares of companies formed after privatizing state-run enterprises.
“In the Albanian market, the establishment of a stock exchange is a positive development for the country’s economy, a meeting place between economic units to find capital and make their business grow as well as the government to find financing on development projects and local government units,” says the Financial Supervisory Authority.
“From the macroeconomic point of view, the establishment of a securities market in Albania represents concrete and clear indicators of the level of maturity the Albanian financial market has achieved. It also makes it possible for companies and the government to find long-term financing on projects which banks could be unable to finance, allows profitable companies to grow by selling their shares to a big number of shareholders and diversifying them and enables investors to invest with greater confidence, transparency in a well-regulated market,” the Authority says.
The establishment of the stock exchange will give small investors the opportunity to engage in the securities market more transparently and minimize trading in online trading platforms, in some cases unprofessionally, and bearing a high investment risk for the public.
Officials say the stock exchange will also be a good opportunity to withdraw in the coming years companies from other Albanian-speaking countries and regions such as the Kosovo market, serving a unity platform for all Albanian investors.
The stock exchange establishment will also provide the opportunity to connect with regional projects. Currently, London-based European Bank for Reconstruction and Development has initiated a regional project which also involves the Slovenian, Bulgarian, Macedonia, Croatia and Serbia stock exchanges and targets setting up the infrastructure for the trade of securities in these countries and increasing cooperation among them. The EBRD has also invested in these stock exchanges, buying part of shares.
Integration in similar regional platforms will be an extra opportunity for Albania to find alternative financing resources, says the Financial Supervisory Authority.
