TIRANA, Feb. 10 – The rapid growth of the emerging investment funds has forced the Albanian government to undertake legal changes strengthening the funds’ risk administration and increasing investor protection.
The new bill which has already been submitted to Parliament obliges the investments funds to establish risk administration systems and allows the Financial Supervisory Authority to adopt a full framework of rules under normal and financial stress conditions. The draft law also envisages operators can temporarily suspend the payment and sale of investors’ shares only under extraordinary circumstances to protect investors’ interests.
The International Monetary Fund has also warned that “while these funds have helped diversify the ownership of government securities, they are inadequately supervised and regulated, invest mostly in longer-dated securities and their clients appear to consider these funds as substitutes for bank accounts.”
While traditional bank deposits struggle to remain at positive growth rates due to a sharp cut in interest rates, the emerging investment funds continue registering moderate growth rates fuelled by more favourable interest rates although at slower pace compared the boom following their establishment in 2012.
A report published by the Financial Supervisory Authority, shows net assets in the two investment funds, controlled by Raiffeisen Bank, the country’s biggest commercial bank, rose by an annual 6 percent to 67.6 billion lek (Euro 479 mln) in the first three quarters of 2015.
Currently only two investment funds, Raiffeisen Prestigj and Raiffeisen Invest Euro operate in Albania, making it a pure monopoly market. The funds were established in early 2012 by Raiffeisen Bank Albania, the leading commercial bank operating in Albania. The timing coincided with the decision of Raiffeisen decision to scale back its participation in the public debt market to limit its exposure to the Albanian sovereign debt.
Investments funds represented the second biggest financial market at the end of 2014 with assets estimated at 4.6 percent of the GDP.
