Governor appeals for dialogue to solve loan problems

TIRANA, June 20 – Bank of Albania governor Ardian Fullani has called on bankers to strengthen their communication with the business community when dealing with delays in loan payment.
Addressing a forum organized by Raiffeisen Bank for businesses, Fullani stressed the necessity of sincere cooperation, which would be of reciprocal benefit.
“The bank-customer relationship is not only legal but also human,” said Fullani, adding that banks should also remind customers of how it would feel if they delayed paying interest rates for deposits.
Fullani said that with few exceptions, cooperation between banks and businesses has been functional despite the effects of the international financial crisis since the end of 2008. “On the one hand, the system found itself in a difficult liquidity situation, while businesses on the other hand had difficulties accessing the markets. If some subjective reasons are added, the result of all this was the deterioration in the credit portfolio and the increasing liquidity inability by the companies,” added Fullani.
The governor stressed that the Albanian banking system emerged safe from the international financial crisis, and guarantees increasing stability. Rising bad loans has been the main problem in the Albanian financial system.
Non-performing loans in Albania registered a rapid year-on-year increase at the end of 2008, when they doubled to 6.6 percent of the total portfolio, reflecting the first impacts of the global financial crisis. At the end of 2009, bad loans climbed further to 10.5 percent.
Bad loans, which the central bank and financial experts describe as the key risk to Albania’s banking sector, continued rising even in the first quarter of this year while banks’ profits more than halved. Latest data published by the Bank of Albania show bad or non-performing loans climbed to 14.42 percent of the total portfolio in the first quarter of 2011, up from 13.61 percent in the final quarter of 2010 and 11.46 percent in the first quarter of 2010.
The governor also stressed the necessity of adopting new philosophies in the administration of companies by increasing capacities and investment in human resources.
Raiffeisen Bank representatives said that a healthy, sound and liquid banking sector, providing an adequate protection of depositors’ interests is of the utmost importance.
Peter Lennkh, a member of the Managing Board of Raiffeisen Bank International, made it clear that achieving such a banking sector requires fair conditions, also when it comes to execution of collaterals. “In order to be able to ensure this customer protection, banks have no other choice but to go through the process of collateral execution as a last alternative, when all the other options fail.”
A recent decision by Raiffesen Bank to seize the assets of a local brewery in Albania following its inability to pay off a large loan sparked reactions among business representatives who oppose the drastic measure taken by the country’s biggest commercial bank. The owners of Birra Norga, based in the southern city of Vlora, said the bank acted unilaterally with the intention to ruin the beer company which has an important share in the Albanian market.