TIRANA, July 2 – As the Greek financial crisis dominates global headlines this week, Albania and other countries in the region are bracing to cope with further negative effects to their economies. But these effects are unlikely to include any immediate problems for Albania’s banking system, several local and international experts said this week.
Albania’s economy has for years been affected by the crisis south of the border, where more than half a million Albanian migrants live and work. There have been less trade with Greece and fewer Hellenic investments and traditional remittances from Albanian migrants who live in Greece have dropped to minimal levels.
But officials insist that despite medium-term issues, no immediate effects are expected from Greece going into arrears with the IMF this week, after talks with creditors failed and a referendum was called for Sunday to decide on further austerity measures.
In Albania’s parliament this week, Finance Minister Shkelqim Cani told lawmakers Greek-owned banks in Albania were forced years ago to register as separate legal entities and operate as locally-owned banks, despite being subsidiaries of Greek institutions.
“We have gotten used to call them ‘Greek banks,’ but they are Albanian banks … that have no direct link to Greece other than shareholder shares in them,” Cani said in parliament.
Three commercial banks in Albania are owned by Greek parent institutions. They make up about 17 percent of the total banking market.
However, Albania – like other countries in the region – has already imposed strict rules on these banks to ban the transfer of their capital from local deposits to their parent companies in Greece, explained Zana Guxholli, a university professor and former economic adviser to the Albanian prime minister.
That makes sure that in the worst-case scenario, if the parent Greek banks fail, the Albanian subsidiaries can still go on independently, Guxholli told the local media in an interview.
Several experts have pointed out that the crisis in Greece has also helped Albania, because many Albanian migrants have chosen to move their savings to Albania, where they feel the money is safer.
Albania’s central bank governor, Gent Sejko said that bringing new capital into Albania was a “positive development for the Albanian economy.”
“We are seeing this trend,” he said. “There is an increase of the deposits at the Albanian banks due to the lack of trust in Greece.”
Sherefedin Shehu, an opposition lawmaker and former deputy finance minister, warned, however, that the long-term effects to the Albanian economy are worrying.
If Greece leaves the eurozone and switches to its own currency, he said, Albania may also feel the devaluation effects.
“We cannot but take into consideration the fact that a possible Greek collapse would be felt in Albania too,” Shehu said. “I believe the first impact will be in [lowering] the country’s economic growth.”
Erion Brace, the lawmaker who heads the parliamentary economic commission, said he had full confidence that the central Bank of Albania and the government have been applying a concrete set of steps to counter with the negative impact of the Greek crisis, but he provided no specific details.
– IMF: Greece has lost influence in Albania –
The IMF mission to Albania, which has been advising the country’s government for the past two years, said Tuesday the Albanian economy was immune to a possible bankruptcy of Greece.
“The IMF does not predict any serious risk from the Greek crisis since Greek banks have lost their influence on the Albanian market” in recent years, said the head of the IMF delegation to Albania, Nadeem Ilahi, adding that Albania’s banking system is safe.
He urged the government, however, to be attentive to every new development and added the IMF would continue to monitor Albania’s financial progress.
– BoA: ‘Banking system is immunized’ –
Central Bank of Albania Governor Sejko said Monday in a television interview that during the last five years Albania has also had the negative impact of the lower remittances and the fall of the import-export trade exchange.
“Albania’s banking system is immunized as the Bank of Albania for years now has taken some regulatory and monitoring steps since the start of the Greek crisis to create a normal functioning of the Greek banks here,” he said.
Sejko said there will be a decrease of remittances and trading exchanges, but the Albanian market has seen these effects since the start of Greek crisis.
In addition, Sejko highlighted that the Greek banks that are operating in Albania are not in danger of any collapse. Albanian banks with Greek capital have an excess of liquidity and capital, that is, they are well-capitalized, he added. And these banks’ depositors are totally Albanian, he said.
Sejko said they have already noted some hesitation from the Albanian depositors but “we do not forecast any problematic situation.”
– No major concern among Albanians –
Despite the earlier noted hesitation, currently, the situation in the Greek subsidiaries and other banks in Albania is normal, and Albanians appear to have heeded the advice of the experts that there is no reason to worry. It’s a sentiment echoed by the association that represents Albania’s banking sector.
“The Albanian Association of Banks, on behalf of its member banks wants to reassure the public and all depositors and customers that the developments in the banking systems of the neighbor country do not affect the stability and normal functioning of the Albanian banks,” said a statement issued Monday.
The association also assured that “the banking system in Albania operates at high levels of capital adequacy and liquidity which guarantees its stability, normal functioning and independence from negative developments in neighboring countries.”
Greek banks account for less than one-fifth of Albania’s banking system with their share having dropped to around 16 percent down from 25 percent in the pre-crisis years. The situation is also a result of the acquisition of Emporiki Bank by France-based Credit Agricole. The same unit was recently acquired by U.S.-based NCH Capital Inc, private equity and venture firm.
NBG Bank Albania, a subsidiary of the National Bank of Greece, holds 3.3 percent of the total assets in the Albanian banking system. The two other Greek-owned banks operating in Albania, the Tirana Bank part of Piraeus Bank and Alpha Bank Albania, part of Alpha Bank, hold 7.4 percent and 5.9 percent respectively, according to an IMF report.
