Banks’ customer transparency remains problematic

TIRANA, May 8 – Lack of customer transparency continues remaining a problem in Albanian financial institutions. Citizens or businesses borrowing from banks often sign a credit contract without being acquainted with the calculation of interest rates and the changes the contract may undergo, says the Bank of Albania in its 2011 report.
“Further improvements are needed to increase transparency over the determination of loan contracts which have been a source of complaint by customers and the focus of transparency examinations and preventive measures undertaken by the Bank of Albania. Practices on the determination of deposits and accounts and the treatment of customers’ complaints are reported to be less problematic,” said Bank of Albania governor Ardian Fullani recently presenting the central bank’s 2011 annual report.
A Bank of Albania survey has reconfirmed the difficult financial situation both consumers and businesses are facing as the Albanian economy strives to recover since more than three years now. Unable to afford high interest rates from loans, Albanian households have returned to informal lending, borrowing from friends and relatives, which accounts for a majority of 54 percent. Businesses are also facing tough times to pay off loans and 2/3 of the surveyed say they do not plan to get new loan for the first six months of 2012.
Last year, the Competition Authority warned commercial banks operating in Albania are not transparent with their customers and charge higher fees even compared to regional branches in the Balkans, creating barriers in the use of banking services.
The study covering the end of 2009 and 2010 showed banks often charge fees in euro and not in the national currency, lek, for some services such as current accounts or cheques putting consumers at risk of facing negative currency exchange rate effects. The monitoring also revealed second-tier banks in Albania, which are overwhelmingly foreign-owned, apply different fees for the same services and do not notify their customers when commissions increase, violating the regulation on the transparency of banking products and services.
Lack of transparency is also observed in lack of flexibility of demand in banking services which makes analysis of effective competition among market operators difficult. Another problem observed by the competition watchdog is that not all 16 banks operating in Albania have websites, failing to provide information in the Albanian language.
However, Albania’s Association of Banks rejected accusations of high fees, saying a study it had commissioned showed fees were on a par or cheaper than those in the rest of the region.