TIRANA, Feb. 6 – The Albanian subsidiary of Greek-owned National Bank of Greece is on track to be acquired by a local bank, becoming the second Greek bank to leave Albania in the past six years.
The acquisition by the American Bank of Investments, an American-Albanian bank that has been operating in Albania since 2016, comes after NBG Albania has been losing significant market share in the past decade and amid financial trouble its Greece-based parent bank has been facing in the aftermath of the 2008 crisis and the worst-ever recession in neighboring Greece.
The sale operation which is subject to approval by Albania’s central bank and the country’s competition authority, comes as part of a restructuring plan agreed with European authorities that has forced Greece’s troubled second largest lender to sell assets in several South-East European countries including Turkey, Bulgaria, Romania and Serbia.
“The National Bank of Greece S.A. has entered into a definitive agreement for the sale of its entire stake (100%) in its subsidiary, Banka NBG Albania Sh.A. (NBG Albania) to the American Bank of Investments SA (ABI). The transaction is being implemented in the context of NBG’s Restructuring Plan and in-line with its commitments towards European Commission’s DG Competition,” NGB Greece says in a statement, without proving any financial details about the sale transaction.
NBG has been operating in Albania since 1996 and is currently one of the three remaining Greek-owned in Albania, whose market share has considerably contracted since the outbreak of the global financial crisis and Greek debt crisis in 2008.
NBG Albania’s assets at the end of the third quarter of 2017 dropped to 2.8 percent of total assets in an ongoing downward trend since 2008 when it held a 6.7 percent market share in terms of assets that include loans, investments in securities and placement with banks. NBG Albania is currently the tenth largest bank operating in Albania in a banking system composed of 16 overwhelmingly foreign-owned commercial banks, according to the Albanian Association of Banks.
Meanwhile, the American Bank of Investments, which is only slightly larger in terms of assets compared to NBG Albania is set to double its market share to about 5.7 percent in terms of assets following the merge.
The American Bank of Investments, ABI, launched its Albania operations in December 2016 as a rebranded bank after U.S. based NCH Capital Inc, private equity and venture firm took over France’s Credit Agricole’s Albania unit.
In Albania, NCH Capital Inc has been operating with its Tranzit non-banking financial institution offering various debt and equity financing opportunities to companies and individuals since 2010.
Subsidiaries of Greek banks operating in Albania saw their assets in Albania’s banking system drop to about 13.5 percent at the end of 2016, down from 25 percent in 2008 just before the onset of the global financial crisis when four subsidiaries of Greek banks operated in the country. The situation is also a result of the acquisition of Emporiki Bank by France-based Credit Agricole in 2010. In 2015, the same unit was acquired by U.S.-based NCH Capital Inc, private equity and venture firm, and rebranded the American Bank of Investments.
Alpha Bank and Tirana Bank are the two other Greek-owned banks operating in Albania with a market share of 5.3 percent and 5.4 percent respectively at the end of third quarter of 2017, according to the Albanian Association of Banks.
Commercial banks to be cut 14
The number of commercial banks operating in Albania is expected to be cut to 14, down from a current 16 following two internal market acquisitions in the past year.
In mid-2017, Italy’s Intesa Sanpaolo Albania unit, the country’s fourth largest bank acquired the bankrupt Veneto Bank in Italy and its subsidiaries in several European countries including Albania.
The Veneto Bank branches in Albania, currently holding about 1.8 percent of total assets in the banking system, are expected to merge and be rebranded this year.
The same thing is also expected to happen with the ABI acquisition of NGB branches.
The merge process is also expected to cut the number of some inefficient branches and could possibly reduce the number of staff in the banking system, already at a standstill due to the introduction of e-services.
The Albanian banking system has been well-capitalized, liquid and profitable during the past eight years with the Albanian-owned assets increasing their share to 11.5 percent at the end of 2016.
Commercial banks operating in Albania posted record high profits of about 17 billion lek (€125.5 mln) in the first three quarters of 2017 as non-performing loans continued their downward trend and credit returned to positive growth rates, according to the Bank of Albania.
The banks’ record high profits, almost treble compared to the same period in 2016, came at a time when deposit rates are close to zero, spending on provisioning against loss sharply dropped and net income from other activities mainly related to commission fees and foreign exchange operations increased.
