Konfindustria: State-owned bank a necessity

TIRANA, Oct. 23 – At a time when commercial banks have considerably tightened their lending standards and demand for new loans is dropping, the Albanian business community represented by Konfindustria has called for the establishment of a second-tier bank with a state-owned majority stake. “The establishment of a state-owned bank is a necessity considering that the Albanian economy and business are facing an unacceptable situation of lack of liquidity on the market which is revealed by the ongoing drop in domestic consumption by Albanian citizens and the continuous drop in lending to businesses at a time when the banking system is well-capitalized and has excess liquidity,” says Konfindustria in a statement.
The state-owned bank would also improve the situation in the government security markets which according to Konfindustria operates under conditions of oligopoly with high costs to the state budget and public investments.
Konfindustria also described as unacceptable the cut in lending by foreign commercial banks which own almost 100 percent of the Albanian banking market because of problems from their parent banks in EU countries. “All EU-member countries have at least one second-tier bank with a majority state-owned stake,” says Konfindustria.
The Association representing the country’s top industries has also introduced the idea to Prime Minister Sali Berisha who said government was examining the possibility of establishing a development bank. Speaking during a recent business conference, Berisha said “we should think of the establishment of an Albanian development bank with a destination of certain sectors. The crisis lectures are big but the key lecture is that it should never be refrained from agricultural production.”
Bad loans at a record high level of 21 percent, tighter lending standards and a sharp drop in demand by both businesses and individuals are seriously affecting Albania’s credit growth during this year. Latest central bank data show total lending grew by only 6.5 percent in the first eight months of this, almost half of the credit growth in 2012, reflecting the difficulty both businesses and consumers are facing as domestic consumption remains at low levels and new investments have been postponed.