The move is part of a new strategy for Albania announced this week. The strategy aims to Albania’s further development by addressing the key challenges for the Albanian economy.
By Tirana Times Staff
TIRANA, Dec. 21 – Albania’s banking sector will get further support by the European Bank or Reconstruction and Development, providing equity and debt funding, including credit lines for on-lending to micro, small and medium-sized businesses, and energy efficiency loans, as well as risk sharing products with the view to enable local banks to increasing lending to the real economy sector, according the EBRD.
The move is part of a new strategy for Albania announced this week. The strategy aims to Albania’s further development by addressing the key challenges for the Albanian economy.
The new strategy underlines the progress achieved by Albania in the recent years through policy reforms, which helped improve the overall business environment in the country and has given an impetus to the country’s ongoing EU approximation, the EBRD said in a press release.
According to the new strategy, in the coming years Albania’s key challenges will be to strengthen the state institutions, to continue to improve the investment climate in the country, pursue further investments in infrastructure and to ensure further development of the banking system. Through its activities the EBRD will support the country in addressing these challenges.
“Sound economic policies, continued investments from abroad as well as Albania’s still limited exposure to global markets have helped to mitigate the negative impacts of the global financial crisis,” the EBRD said in its statement. “Although experiencing falling exports and reduced remittances, the Albanian economy is still registering a positive dynamic, albeit at lower rate. Albania is expected to see a 3 percent growth in 2009 and a further 1.5 percent in 2010.”
The bank will support further investments in infrastructure, energy and municipal and environment projects, encouraging the government to pursue further public-private partnerships and concessions in order to attract private capital.
Another EBRD priority in Albania will be to continue to support the development of the corporate sector either by lending directly to companies or via the Bank’s financing facilities such as EBRD-Italy Local Enterprise Facility and the new EBRD Western Balkans Sustainable Energy Direct Financing Facility.
Since the beginning of its operations in Albania, the EBRD has invested 545 million in various sectors of the economy, of which 55 million Euros committed in 2009. With a strong pipeline of projects ahead, the EBRD will increase its business volume in Albania in 2010.
Union Bank gets 2 million euro credit line
As part of its strategy in the Albanian banking sector, the EBRD also announced this week that it is increasing the availability of financing in Albania with a 2 million euro medium-term credit line to Union Bank for on-lending to small and medium-sized enterprises (SMEs).
In the wake of the financial crisis and limited access to long-term financing, banks in Albania have reduced their lending activity, which has particularly affected the small and medium-sized businesses.
Established in 2005, Union Bank is a privately-owned universal bank, in which the EBRD holds a 12.5 per cent stake. Union Bank has a strong regional network, operating throughout Albania via 31 branches.
As part of its strategy, Union Bank aims to further expand its network and increase its lending activities with particular focus on the SME sector. The EBRD financing will help Union Bank develop its portfolio of SME loans and strengthen its funding base.
The proceeds of the EBRD credit line will be used to provide working capital and capital investment financing for small and medium-sized businesses in Albania.
“Supporting the real economy and strengthening the financial sector are among the EBRD’s core priorities in Albania and we are pleased to support Union Bank in its drive to expand activities throughout the country. This transaction will increase the competition in the banking sector in Albania, to the benefit of local businesses”, said Daniel Berg, Head of the EBRD Office in Albania.
“This credit line is important for Union Bank for many reasons. It marks another page in the fruitful relations between Union Bank and EBRD, demonstrating our mutual commitment to raise our standards. But, most important, we are pleased that the credit line will help in a small way to better meet the needs of our clients. While much of the banking world is retrenching lending activities, Union Bank is looking to use new resources to develop new lending opportunities.” said Edmond Leka, Chairman of the Board of Directors of Union Bank.
Since the beginning of its operations in Albania the EBRD has committed 545 million euros in various projects in infrastructure, corporate, energy and financial sectors, which attracted additional investments of 945 million euros.
