Euro 100 mln EBRD loan to strengthen deposit insurance

TIRANA, July 16 – London-based EBRD is helping boost confidence in Albania’s financial sector with a Euro 100 million stand-by credit line to the Albanian Deposit Insurance Agency (ADIA). The credit line, fully guaranteed by the government of Albania, will provide funds to ADIA to compensate insured depositors, if and when required.
The facility, provided as a stand-by credit line rather than a loan, is designed to enhance the agency’s capacity to protect depositors.
In addition, a technical cooperation grant of Euro 300,000 is being provided by the EBRD Shareholder Special Fund and the government of Luxembourg with close cooperation from the US Federal Deposit Insurance Corporation to modernise ADIA and support institution building.
“The EBRD loan to the Albanian Deposit Insurance Agency will strengthen the country’s deposit insurance scheme and provide stability to the system,” said EBRD First Vice President Phil Bennett. “Supporting the financial sector in countries where the EBRD invests is one of the Bank’s core priorities and greater confidence will also translate into stronger growth.”
ADIA is an independent public institution established in 2002 with the task of protecting individual depositors and paying out insured deposits in case of bank failure, with the wider objective of strengthening the stability of the banking and financial system in Albania.
Since beginning its work in Albania, the EBRD has invested around Euro 795 million in 66 projects in various sectors of the economy.
As elsewhere in the region, Albanian banks witnessed substantial panic deposit withdrawals in the face of spillovers from instability of global financial markets, which were compounded by concerns about the health of the Greek banking system in the fall of 2008. Ample liquidity buffers were utilized to meet deposit withdrawals. To boost confidence, deposit insurance limits were raised fivefold to 2.5 million lek (25,000 US dollars), and deposits started to recover from the second half of 2009.