(Continued from previous issue)
Text, tables and photos by Artan P쳮aska
apernaska@tiranatimes.com
The Albanian economy is generally described as “EU-oriented” and is closely linked to its European Union neighbors – Italy and Greece.
The banking sector offers, though, an uncommon picture compared to the general trends and tendencies in the Albanian economy.
From 16 banks operating in Albania, the Greek-controlled banks form the preponderant group with at least 4 banks. Though the Albanian economy manifests stronger ties with the Italian economy than with the Greek economy, the Greek presence in the banking sector in Albania outnumbers Italian-branded banks (at least 4 to 2). The Greek-controlled banks also outnumber the banks that are currently reported to still have Albanian shares (4 to 3).
On the contrary, statistical data show Italy to be the first-ranking country in trade exchange with Albania with the largest amount of import-exports. Greece ranks second but with a much lower volume of import-exports and a worse trade balance.
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The Greek banks are prominent in the Albanian banking sector either through direct branches or brand-name subsidiaries (Alpha Bank Albania, Emporiki Bank Albania, National Bank of Greece Albania) or through shares (Tirana Bank S.A. – Piraeus Bank Group). They are susceptible of showing the highest ratio of power concentration through branching or affiliation compared to share-control (3 banks out of 4).
In an economic and market analysis issued in 2008, concerning data collected in 2006, the National Bank of Greece (NBG) lists Italy as the first foreign direct investor in Albania with its percentage almost double to that of Greece which followed in the second place.
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The Italian-branded banks include the Italian Development Bank (Banka Italiane e Zhvillimit SH. A. – Banca Italiana di Svilupo, Gruppo Veneto Banca) and the Intesa Sanpaolo Bank Albania. Even combined, their market share is inferior to their Greek and perhaps even Austrian counterparts.
Combined, the Greek banks are thought to make over 40 % of the market shares in the Albanian banking sector. They represent one fourth of the banking institutions operating in Albania.
NATIONAL BANK OF GREECE ALBANIA (NGB ALBANIA)
Present in Albania for over a decade, NGB is a bank that has taken advantage of the opportunities offered by the fall of the Iron Curtain and has extended its activity in former-communist neighboring countries. NBG has subsidiaries in Bulgaria, Romania and FYROM and branches in Albania. It is reported that NBG Albania, with a total loan portfolio of 299 million Euro, total deposits of 153 million Euro and 28 branches in the third quarter of 2008, joined the NBG group in 1996.
Βy the acquisition of United Bulgarian Bank in Bulgaria (2000), Stopanska Banka in Macedonia (2000), Banca Romaneasca in Romania (2003), Finansbank in Turkey (2006) and Vojvodjanska Banka in Serbia (2006), NBG aims to become a leading banking group in South-East Europe and Turkey.
NBG Albania has contracted government debts over the past years, showing itself competitive in the loan market. Together with another Greek bank, Alpha Bank Albania, both institutions have lent the Albanian government 230 million Euros to be spent on the Rr촨en – Kalimash road. Alpha Bank A.E. and NBG S.A. presented a joint bid in the tender prior to the contract and showed capacities of joining forces. This capacity is expected to empower the Greek banks in the Albanian market even in the future.
The Rr촨en-Kalimash road is part of the corridor linking Durr쳠and Morin롡nd Albania with Kosov롡nd other northern Balkan neighbors. Albanian officials declared that the terms offered by the two banks were: a principal of 230 million Euros, maturity period of 15 years, a 5-year period of principal payment, payment by ten annual installments and interest rates plus 1.25%. Albanian authorities have declared that the interest rates offered by the two banks were approximately the same with those offered by international financial institutions such as EBRD, WB etc.
Historic background
Established in 1841 as a commercial bank, NBG enjoyed the right to issue banknotes until the establishment of the Bank of Greece in 1928. NBG reports itself to be a financial institution legally operating subject to the Greek and the EU banking legislation.
The National Bank of Greece takes pride in being the oldest commercial bank in Greece. The Bank has 579 branches and 1,446 ΑΤΜs in Greece and 1,218 branches overseas. The Group claims the largest network for the distribution of financial products and services in Greece. Overseas the NBG Group is active in 12 countries and controls 7 banks and 67 other companies.
The bank boasts of having been ranked among the top 150 corporations worldwide (Athens : 15/01/2009). NBG’s stock was at that time included in The Global Dow – Top 150 and estimates this “internationally recognized distinction to be particularly important, given that it comes during a period of global economic recession”. NGB informs that “The Global Dow is produced jointly by Dow Jones and the Wall Street Journal, and measures the performance of stocks of companies that are established global leaders as well as those poised for future leadership. The selection criteria for the companies on the list include size, reputation and the role they play in developing trends in the global economy”.
Dow Jones states that “The Global Dow is a 150-stock index of the most innovative, vibrant and influential corporations from around the world. It includes companies with a long history of success, and a wide following among investors. In recognition that global wealth is no longer concentrated in a few countries, The Global Dow has been designed to cover both developed and emerging economies. Preference is given to companies with global reach rather than those dealing solely or mostly in their domestic markets. In the interest of continuity, the index composition will be altered as seldom as possibleشypically only when a major event such as a merger or acquisition affects one or more of the index components. When this happens, all of the other components will be reviewed as well”.
The Greek bank has been deselected (as new assessments may have been made or as new entrants may have emerged) and does not figure in the current composition of The Global Dow. (The Dow Jones’ Global Dow featured the National Bank of Greece S.A. in November 2008, but does not feature it in its current composition).
The French Soci굩 Gꯩrale S.A. (present in Albania through shares in Banka Popullore) still figures in the components of the Global Dow.
Albania in NBG Economic Data
While the bank saw itself in the road of expansion of regional presence to achieve critical mass, considering the year 2007, the ratios calculated on the “Loans/GDP” show Albania with only 30 %, as compared to Serbia 34 %, Romania 36 %, Macedonia 38 %, Turkey 42 %, Bulgaria 65 %, Greece 94 % and Cyprus 177 %. The total amount of loans was close to that of Macedonia (Albania 2.4 billion Euros – Macedonia 2 billion Euros) and almost ten times less than that of Cyprus (27.4 billion Euros) or a hundred times less than that of Greece (215.4 billion Euros).
Describing the results of the first quarter of 2008, NBG states that regarding its activities in Albania, a larger network led to market share gain and claimed market share gains in all products. The network of NBG Albania has been developing at a lower pace than some of its Greek counterparts operating in Albania and today NBG Albania counts less branches and counters than, let’s say, Alpha Bank Albania. But even for the second quarter of 2008, NBG confirmed that in Albania the network expansion drove to market share gain and filed that from the first to the second quarter of 2008 the bank had opened a new branch and recruited 27 new employees (Q1: 25 branches, 276 employees / Q2: 26 branches, 303 employees). NBG reported 94 % growth in total loans and 36 % in deposits leading to market share gains in all products, and estimated that new branch network provides a platform for further growth.
NBG estimated, while presenting results for the second quarter of 2008, that “ample local currency liquidity facilitates loan expansion at manageable risk levels”. This may have changed over the last months, but economic data from another Greek bank, Alpha Bank Albania, also confirm this statement. In 2008, Alpha Bank Albania claimed total deposits amounting to 456 million Euros and total loans amounting to 478 million Euros, representing an almost balanced volume between loans and deposits.
NBG Albania reported a “Loans / Deposit” ratio of 47 % at the end of the second quarter of 2008, with total loans of 274 million Euros (152 million Euros in retail loans and 122 million Euros in corporate loans) and total deposits of 129 million Euros.
2009 previsions
In a report issued on the 31st of March 2009, the National Bank of Greece estimates that “In 2009, the macroeconomic picture in Albania, Bulgaria, FYROM, Romania, Serbia (SEE-5) and Turkey is expected to deteriorate, in line with the synchronized global recession and the deepening of the global crisis. In particular, the real GDP growth rate is expected to turn negative in SEE-5 and Turkey (around -2%) due to lower external demand, slowing domestic demand and the scarce and more expensive external financing”.
NBG expects however the ongoing economic crisis to have a positive impact on these economies. “The current account deficit of the SEE-5 and Turkey during previous years, will narrow significantly in 2009 on the back of the weakening domestic demand, the softening international oil and commodity prices and the curtailed credit to governments, banks and corporations (by about 40-50%). Specifically, the current account deficit is expected to be almost halved compared with the 2008 level in both the SEE-5 and Turkey (to 8.3 percent of GDP and 2.7 percent, respectively)”.
The report foresees that the bulk of the external gap should be covered by International Financial Institutions (IFIs) and indicates that Romania and Serbia have just agreed new Stand-by agreements with the International Monetary Fund (IMF), and Turkey is about to seal a new agreement with the IMF.
But while the report states that these countries should be able to meet IMF requirements in view of the strong political consensus for the need of IMF financing and the lack of upcoming elections, the situation is different in Albania where the upcoming elections will be held on the 28th of June 2009 and where the running government is timid in accepting the idea that the country is facing serious economic difficulties. Though claims have been reiterated for the Albanian government to accept the downturn and take measures, no domestic consensus has been found over the reality of the crisis and the need to take measures against it. Over the past weeks the government seems to have changed its stand, but no resolute or public attitude have yet emerged, though the local press (Shqip) reported that Albania has asked the IMF to be helped over the crisis and an IMF mission visited the country.
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NBG has been listed on the Athens Stock Exchange since the latter’s foundation in 1880. Since October 1999, the Bank has been listed on the New York Stock Exchange (NYSE).
Issue type: ADS common. NYSE code: NBG. Traded on the 14th of April at 3.72 $ (USD). Last full year (52 weeks) highest quote: 11.29 $ (USD) on the 2nd of June 2008. Last full year (52 weeks) lowest quote: 2.09 $ (USD) on the 27th of February 2009.
In 2008 it was also listed with ADS preferred. NYSE code: NBGPRA. Traded on the 14th of April at 18.70 $ (USD). Last full year (52 weeks) highest quote: 26.10 $ (USD) on the 19th of June 2008. Last full year (52 weeks) lowest quote: 7.84 $ (USD) on the 23rd of February 2009.
To be continued Š(In the following issues of Tirana Times you will read further insights on each of the second-level banks operating in Albania).
