PRESS CONFERENCE
Q&A during the press conference on monetary policy decision-making of the Supervisory Council of the Bank of Albania, March 24, 2010

Question: The Minister of Finance, Mr. Bode raised a concern. According to the Minister a more severe supervision is needed regarding banking system as the crisis in region may penetrate into Albania. What kind of extra measures, Bank of Albania may undertake in this view?

Governor Fullani: Bank of Albania has always been attentive. If refereeing to the crisis effects in a lot of countries in the region and worldwide, Bank of Albania reveals better results in terms of capital indicators, liquidity and profitability as well as regarding lending activity of the banking system. Bank of Albania showed active, through the accomplishment of the respective arrangements, such as: the amendment of the banking law, the operation of the credit registry, the change of supervision philosophy in the previous year regarding risk assessment, the construction of an open and constructive dialogue with banking system dealing with the problems of banks' governance and the transparency of the internal control.

In terms of new measures, Bank of Albania, obviously, is always adopting the global initiatives for a vigilance and supervision, which shall guarantee a long-term stability of the banking system in Albania. Notwithstanding, we should admit that the performed alternations of the philosophy carried out in previous year, and the regulatory amendments to conduct a supervision based on risk assessment are expected to give their positive results regarding the increase of banking supervision efficiency at home. We do guarantee that the banking supervision ensures a full financial stability in Albania.

Question: What is the size of non-performing loans' portfolio? Do you think this indicator is a result of the tightened policies that banks continue to apply so far?

Governor Fullani: The latest figure points to 10.5%. We deem that the second six-month period and the next year, shall provide better conditions to reduce this indicator as a result of less provisions and the re-beginning of a new lending stage of the economy at home. I share the opinion that the judgement is quite complex regarding lending growth at home. This is not only an aspect of banks, meaning, it is not a problem of the demand, but it depends on the supply as well. Bank of Albania suggests the business and banks to collaborate together, be coherent and transparent with each other.

In this stage, when the tightening and contraction of lending is a global issue, their relationship should be constructive to work out an effective financing way of the Albania economy. I believe that the entrance of deposits into the system, the better performance of banks and the positive arrangements in the banks' balance sheet provide the ground that the supply problems be more positive, but on the other hand, it depends a lot on the demand, which should be based on efficient projects that guarantee the timely repayment of the loan.