PRESS RELEASE
Governor Cani held a lecture at the University of Vlora

The Governor of the Bank of Albania, Mr. Shkëlqim Cani, held today a lecture with students of the Economics Faculty, University of Vlora. The theme of the lecture focused on the Bank of Albania's role in banking supervision and forthcoming developments following the Savings Bank privatization from the Raiffeisen Bank.

According to Mr. Cani, the establishment and operation of supervisory institutions aim at monitoring markets and their products in order to provide an equal competition climate to all the participants, establish definite standards of services and products, avoid abuses and interest conflicts, insure an appropriate dissemination of information and transparency level, etc.

In the context of financial markets, the Governor stated that supervision and regulation are needed for two main reasons: to protect the consumer (the public) and foster financial stability. This is a key factor in avoiding economic, social and political crises.

The Governor dwelt upon arguments such as why banking supervision is carried out by the Bank of Albania mentioning: the high level of professional skills and financial sources in this mission: a high level of independence from executive and political bodies; a relatively developed level of the financial market, where the banking market plays a major role; the central bank's necessity to have available real data on banking system, in order to implement its monetary policy, etc.

Some of the banking system highlights in the course of the year could be:

• The number of second-tier banks has been rising, 16 for the moment, which suggests a stable economic climate in the country and the need for a greater role of the banking system in developing the economy.
• The bank's capital is dominated by foreign capital; however, the domestic one has given positive signs recently (2 banks of domestic capital).
• The state administration of second-tier banks ended with the privatization of the Saving Bank.
• The banking system marked a growth of its assets by Lek 40 billion, or 11.8 % compared to 2002.
• 13.2 % rise of total assets in lending activity (11.4 % by the end of 2002).
• Lending to the private sector and households increased to 12.5 % of total assets (10.9% by the end of 2002).
• Increase of mid-term and long-term credits (however, short-term credit comprises 41.4 % of total crediting).
• An increase of 5.5% security investments (4.9% by the end of 2002). Presently, there are 7 banks in the system having such a portfolio, from 3 they were last year. Two-year bonds of the Albanian Government play a significant role in the amplification of this portfolio).
• Net positive resulted Lek 4.5 billion, from Lek 3.9 by the end of 2002.

"Privatization of the Savings Bank- impacts on the banking system" - this was the last issue dwelt upon by the Governor. Privatization of the Savings Bank is certainly the most prominent development of the banking system in these recent years. As such, it is expected to have notable impacts in the Albanian economy and the banking system, impacts summarized as follows:

Bank-Client relationship. Under the new administration, the Savings Bank is expected to move gradually towards crediting to economy. This translates into greater chances for the public in profiting from services provided by banks. Savings Bank is assumed to take an active role in augmenting the use of up-to-date products for the public. Here are included payment methods such as debit and credit cards, ATM-s, e-banking, etc.

Banking system. Enhance competition and make some banks, used to a quiet activity, feel ill at ease; encourage the implementation of international standards, since it represents a well-known bank with its headquarters in the European Union, and those of corporate governance.
Overall economy. A higher crediting level is expected, which will increase the potentials of domestic production development; a growing interest of foreign investors on our economy and country. Well-known banks are often followed by potential clients.

Bank of Albania' monetary policy. This will be accompanied by an expansion of the transmission mechanism of monetary policy decisions, through brining up the intermediation level (crediting); a more thorough decision-making will be required, which will rely on opinions and assessments derived from major banks, etc.