PRESS RELEASE
Decisions by the Supervisory Council of the Bank of Albania, 7 September 2016

On 7 September 2016, the Supervisory Council of the Bank of Albania reviewed and decided to:

• Approve the Financial Stability Report, 2016 H1

The Financial Stability Report is an important periodic documents prepared by the Bank of Albania to identify and assess the risks facing the financial system and its infrastructure. The Financial Stability Statement, whose half-yearly release is a legal requirement stemming from the law "On the Bank of Albania", prefaces the Report.

This is the sixteenth approved report and analyses the developments that occurred in 2016 H1.

The situation of the banking sector's capitalization, liquidity and profitability level, during the period under review, is good. The liquidity risk was assessed as low, while the market and operational risks need continuous monitoring. The increase in the non-performing loans ratio, during the period under review evidenced the difficulties of their resolution process and the volatile performance of non-performing loans in the short run. However, the expectations for faster economic growth, the implementation of the measures set out in the action plan for reducing the non-performing loans and the process of writing off loss loans from the balance sheet of the banking sector support the Bank of Albania's expectations for the downward trend of non-performing loans in the medium term.

As before, stress tests were conducted to assess the resilience of the banking system in terms of financial stability (solvency) and liquidity.

Concluding, the Bank of Albania deems that overall the activities of the banking and financial sectors have performed steadily during 2016 H1. The main financial indicators of the banking sector's activity - including capitalization; liquidity; and profitability - evidence its full capability to withstand operational risks under normal conditions as well as to show resilience toward stronger shocks.

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

• Grant prior approval for the transfer of (indirect) control to 97.64% of the capital of Veneto Banka sh.a. to Quaestio Capital Management SGR S.p.A., Italy

Based on this decision, the Bank of Albania approves the transfer of (indirect) control of Veneto Banka sh.a. to Quaestio Capital Management SGR S.p.A., Italy.

Veneto Banka sh.a. is licenced by the Bank of Albania to conduct its activity in the Republic of Albania. It is part of the Veneto Banca group, directed by the Veneto Banca S.p.A., Italy.

Quaestio is an asset management company that acts on behalf of the closed-end alternative investment fund called Atlante Fund. Recently, Quaestio Capital Management SGR S.p.A., Italy has signed and bought 97.64% of the capital of the Veneto Banca S.p.A., Italy. The European Central Bank has also granted the prior approval for this transaction. As a consequence of this transaction, Quaestio Capital Management SGR S.p.A., Italy has acquired the indirect control of Veneto Bank sh.a. in Albania.

In the end, the Supervisory Council was also informed on the daily functional and operational activities of the Bank of Albania.