PRESS RELEASE
Decisions by the Supervisory Council of the Bank of Albania, 6 April 2022

In the meeting of 6 April 2022, the Supervisory Council of the Bank of Albania reviewed and decided to:

• Appoint the Second Deputy Governor of the Bank of Albania

Pursuant to Article 44 of the Law No. 8269, dated 23.12.1997 “On the Bank of Albania”, as amended, on the proposal of the Governor, the Supervisory Council of the Bank of Albania, re-elected Ms Natasha Ahmetaj as the Second Deputy Governor of the Bank of Albania.

• Approve the Financial Stability Statement and Report, 2021 H2

The Financial Stability Report is an important periodic document prepared by the Bank of Albania whose main purpose is to identify and assess risks to the financial system and its infrastructure. The Financial Stability Statement, whose half-yearly release is a legal requirement set out in the Law “On the Bank of Albania”, prefaces the Report.

The Bank of Albania estimates that in 2021 H2, the activity banking sector was sustainable. Deposits and loans grew at a rapid pace, credit quality improved considerably and the other indicators of the financial system stability remain at adequate levels. Overall, the exposure of the banking sector to risks appears contained. Economic developments during 2021 were quite positive, although economic growth, decrease of the unemployment rate and supply-side shocks were accompanied by rising inflationary pressures at the end of the period. Russia's military aggression against Ukraine and sanctions against Russia have further exacerbated global problems with production (supply) chains and supply, leading to further increases in the price of oil and gas, grains and metals. The new projections suggest stable inflationary pressures in the short run, which may be associated with increase of production costs, decrease of consumption and investment, thus a slow-down of the economic growth. The response of economic and financial policies to mitigate this shock is considered appropriate in conditions when uncertainties about geopolitical developments and the energy situation are significant. The direct exposure of the banking sector to the countries in the above-mentioned conflict is insignificant and will not affect the indicators of financial viability of the activity. Indirect exposure is determined by the performance of the economy, macroeconomic stability and the performance of borrowers. These uncertainties evidence the need that the economic and financial policies retain the flexibility elements to react in line with the dynamics of developments. As before, the importance of the regular assessment of the exposure degree to risks, and preserving the proactive approach regarding the measures for mitigating and tackling these risks remains relevant for the banking sector. In this regard, the Bank of Albania remains ready to take all necessary actions pursuant to the law, to support the banking activity and contribute to the stability of the financial system.

The full Financial Stability Report will be published in the coming days on the Bank of Albania's website http://www.bankofalbania.org/.

• Some amendments to the Regulation “On basic management principles of banks and branches of foreign banks and criteria for the approval of their administrators”.

The changes aim to further improve the regulatory and supervisory framework of the responsible and effective management of banks. In order to ensure the effective implementation of the requirements of the regulation in force, banks will also consider the provisions of the new guideline "On the internal and effective management of banks", which will be published by the Supervision Department on the official website of Bank of Albania. 

The amendments in the regulation in force and provisions in the new guideline, set forth the requirements and core regulations for the improvement of the responsible and effective management in banks and foreign bank branches, through the establishment of the needed structures, individual and collective adequacy of the steering bodies’ members; compilation of policies, establishment of committees and definitions of roles and responsibilities for each committee, establishment of management culture and risk culture, and the establishment of the appropriate framework on risk appetite/tolerance.

The amendments ensure compliance with the requirements set out in the guidelines of the European Banking Authority, the Financial Stability Board, the International Finance Corporation, etc. regarding the management of credit institutions.

• Select the London School of Economics, Institute of Global Affairs as an external collaborator of the Bank of Albania

Based on this decision, the Supervisory Council approved the cooperation agreement of the Bank of Albania with the London School of Economics (LSE), the Global Affair Institute. LSE is ranked at the top 10 universities in the world in the field of economic and econometrics policy, social and administration policy and economic development studies. The selection of LSE as an external scientific collaborator aims to organize activities for the study, analyse and discuss the economic and financial phenomena that dominate developments in our economy in regional and global terms.

This cooperation aims at enhancing the analyses and research capacities of the Bank of Albania, to strengthen the knowledge on political and economic developments and challenges that Albania and South-Eastern Europe is facing. The analyses and discussions that will emerge from this cooperation will serve to assess the appropriateness of macroeconomic and financial policies, undertaken by the Bank of Albania.

The Supervisory Council was also informed on other daily functional and operational activities of the Bank of Albania.