Banking System - Finance - Investment


What are some of the problems that the Albanian banking sector has experienced in the judicial system?

As a result of the recent global crisis, the Albanian banking sector, too, has been negatively affected, albeit at a lower level than in other neighbouring countries, by a shortage of liquidity and the insolvency of a big number of borrowers. As the working capital fell and investment uncertainties increased, so rose the portfolio of nonperforming loans, which, in turn, led to an increased number of foreclosure cases. It should be noted that the increase in the number of foreclosures through debt collection or bailiff procedures is a clear indicator of the economic crisis and the shortage of liquidity on the market, because banks used to treat many of these cases through loan restructuring or loan buyouts on the interbank market. Debtors’ response through lawsuits filed to apply against bailiff procedures or for voiding enforceable acts soon pointed to some shortcomings of the Albanian judicial system in treating those cases, due to its inexperience. Since foreclosure-related grievance options are limited due to its very specific nature and due to the fact that a debtor’s sole remedy is to contest a Bailiff Officer’s actions or the validity of enforceable acts, lawsuits lodged with Albanian courts have been limited to the above types of subject-matter.

Monday, 22 April 2013 14:16

As the economic development of Albania advances so has the quality of legislation and the banking law which came into force in 2007 and was further amended and improved recently in 2011. As a result of the phenomenon of the collapse of the pyramid scheme in 1996, which was unprecedented due to its scale relative to the size of the economy, the fate of Albania’s banking activities looked extremely bleak. Not only was there huge economic loss and severe destabilisation of the country but it had shaken the public’s confidence in the country’s banking system. But the resilience of the country’s economy has shown through and now the financial stability of the country and people’s confidence is indeed restored. At present the banking law in Albania comprises of a Banking Act approved and passed by parliament, and several regulations issued by the Bank of Albania (BoA) that largely legislate for the way in which all banks in the country are being licensed and supervised. The regulations of the Bank of Albania are approved by a supervisory council that is mostly selected by parliament that is to act independently of the government. There is almost no case law to speak of that assists with the interpretation of any banking law or regulation in practice as banking litigation is almost non-existent in Albania. The law provides notably for the formation and the activities of banks as well as non-banking financial institutions including the micro-credit institutions, payment services, adequacy of capital of investment companies, credit institution monitoring and controls of the large risk exposures of the credit institutions, as well as the consolidated supervision of the credit institutions now to be regulated in compliance with European standards1. The Banking Act is also detailed in the description of the provisions leaving less room for interpretation and use of arbitrary powers. A fee payable by the banks has also been introduced in respect of the supervision of the banking activity indorsing principle 1 of the Fundamental Principles of the Bank for International Settlement (BIS). The act stipulates better rules to administer the way that banks and branches of the foreign banks are organized and managed, further minimising the risks related to the management of the banks. The act goes some way into detailing the powers of the board of directors while imposing liabilities on its members regarding bank management. It also contains more detailed provisions regarding potential conflicts of interest in the management of the bank. The law provides for stricter risk management through capital adequacy ratio. Under this Act, the branches of a foreign bank have to retain a certain amount of liquid assets within the Republic of Albania. A duty is also imposed on the banks to specify detailed methods for the calculation of the risks both on an individual and consolidated basis. Specific risk elements are detailed in the act.

In this chapter we consider some aspects of the Albanian banking law. The banking act centres around the regulation of two main areas, that of banking activities and that of financial activities carried out by banks or branches of foreign banks and more pertinently by non-banking financial institutions.

Monday, 22 April 2013 14:36

What is the main legal framework on the concessionary procedures in Albania?

The main law that regulates the concessionary procedures in the Republic of Albania is Law No 9663, dated 18.12.2006 “ON CONCESSIONS”. The latter has undergone to a number of amendments, which are found below in the following order:

  • Law No. 9995, dated 22.09.2008 “On some changes and addenda in Law No 9663, dated 18.12.2006 “ON CONCESSIONS“;
  • Law No.10157, dated 11.05.2009 “On some changes and addenda on Law No 9663, dated 18.12.2006 “ON CONCESSIONS”, as amended;
  • Law No. 10281, dated 20.05.2010 On the approval of the Normative Act with the power of law, No. 1 dated 5.05.2010, of the Council of Ministers “ On some changes and addenda on Law No. 9663, Dated 18.12.2006 “ON CONCESSIONS”, as amended.
Monday, 22 April 2013 15:19

Does the Albanian Law provide nationalization of a foreign investment?

According to the second article of Law no 7764/1993, foreign investments in the Republic of Albania are not conditioned upon prior authorization. They are permitted and treated based on conditions not less favorable than those afforded to domestic investments in similar circumstances, except land ownership, which is regulated by special law. In all cases and at any time, investments have an equal and impartial treatment and enjoy complete protection and security. Also, they are treated not less favorable than the one provided by generally accepted norms of international law.

Tuesday, 23 April 2013 08:50
GREEK LAW DIGEST REPUBLIC OF ALBANIA MINISTRY OF INTEGRATION Union of Chambers of Commerce and Industry of Albania
Nomiki Bibliothiki ALBANIA INVESTMENT DEVELOPMENT AGENCY Foreign Investors Association of Albania



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