Overwhelming 95% have deposits insured

TIRANA, Sept. 23 – The overwhelming majority of 95 percent of depositors in the Albanian banking system have their deposits insured by the country’s Deposit Insurance Agency. This means their savings are less than 2.5 million lek (Euro 17,500), the deposit insurance limit set by the Agency.
However, in terms of amount, only two-thirds of household deposits, some 557 billion lek (Euro 3.9 billion), are 100 percent insured.
Data published by the Deposit Insurance Agency shows total deposits in the country’s banking system stand at around 1 trillion lek (Euro 7 billion), of which 82 percent belong to household depositors.
Toni Gogu, the director of the agency, says some 7,000 depositors in more than 100 savings and credit associations will benefit insurance for deposits up to 2 million lek (Euro 14,000) under a new amendment to the deposit insurance law.
“We target including savings and credit association in the deposit insurance scheme by March 2015 although we are aware that this deadline will be challenging,” he said in an interview published on the agency’s website.
London-based EBRD is helping boost confidence in Albania’s financial sector with a Euro 100 million stand-by credit line to the Albanian Deposit Insurance Agency (ADIA). The credit line, fully guaranteed by the government of Albania, will provide funds to ADIA to compensate insured depositors, if and when required. The facility, provided as a stand-by credit line rather than a loan, is designed to enhance the agency’s capacity to protect depositors.
ADIA is an independent public institution established in 2002 with the task of protecting individual depositors and paying out insured deposits in case of bank failure, with the wider objective of strengthening the stability of the banking and financial system in Albania.
Albania has 55 individuals with a wealth of at least 30 million USD each, according to findings of a World Ultra Wealth Report, ranking the country 37th among a list of 45 European countries. Their total wealth is estimated at 7 billion USD.
Wealth-X, the world’s leading ultra high net worth (UHNW) intelligence provider, has uncovered Samir Mane as Albania’s first billionaire. He is the president and CEO of Balfin Group, who introduced the first shopping mall and logistics park to the south-eastern European nation. His fortune is estimated to be US$1.2 billion.
As elsewhere in the region, Albanian banks witnessed substantial panic deposit withdrawals in the face of spillovers from instability of global financial markets, which were compounded by concerns about the health of the Greek banking system in the fall of 2008. Ample liquidity buffers were utilized to meet deposit withdrawals. To boost confidence, deposit insurance limits were raised fivefold to 2.5 million lek (25,000 US dollars), and deposits started to recover from the second half of 2009.
Central bank data show the deposit growth slowed down to 2.1 percent in 2013, down from 6.3 percent in 2012, and 11.7 percent in 2011, unveiling the downward trend in consumers’ saving trend.
The slowdown in deposits is also a result of sharp cuts in interest rates and more favourable interest rates in the emerging investments funds.
“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,” warns the IMF in its latest report.
Albania’s banking system remains well capitalized, liquid and provisioning appears to be adequate but high financial euroization, low profitability and non-performing loans being the highest in the region are a significant risk to the banking system, says the IMF in its financial system stability report after an IMF mission visited Albania in late 2013 at a request by Albanian authorities.