The Financial Stability Advisory Group (FSAG) met on 21 July 2020. The meeting, which was held online, was attended by the Minister of Finance and Economy, Governor of the Bank of Albania (BoA), Executive Director General of the Financial Supervisory Authority (FSA), Director General of the Deposit Insurance Agency (DIA), as well as other representatives from these institutions.
The agenda consisted in the assessments by each financial authority about the developments in the institutions and markets they supervise, in the view of the impact by
“Sars-Cov-2” (hereinafter “the pandemic”). The focus was on the assessment of the financial system’s situation, the risks arising from the pandemic’s impact, the resilience of the financial institutions and the necessary measures to mitigate risks and strengthen the financial system resilience.
Once being introduced with the prepared presentations and after discussing them, participants concurred on the following assessments:
Sheshi “Skënderbej”, No. 1, Tirana; Tel: + 355 4 241 93 01/02/03; Fax: + 355 4 241 94 08; www.bankofalbania.org; email@example.com
of banking sector slowed down, gross written premiums in the insurance market fell and the increase of net assets in the activity of investment funds almost stopped. Notwithstanding the gradual restarting of the economic activity since May 2020, its further performance is fully conditioned by the evolution of pandemic and its effects on consumption and investments in Albania, as well as by the international economic developments.
The Bank of Albania, as the monetary and supervisory authority, has undertaken some measures regarding financial market and banking activity. The further easing of monetary policy and the unlimited liquidity injection in the interbank market have maintained both low interest rates and the incentive for lending. In partnership with international homologue institutions, there are provided the instruments to support the market with euro liquidity. In parallel, legal actions and the regulatory amendments have provided to the affected borrowers by pandemic and banks, the time and possibility to restructure the respective exposures with the aim, whenever possible, to preserve both the solvency of the borrower and the credit quality. Although these measures will mitigate the fall of credit quality in the banking sector, pandemic might have a considerable effect on these indicators. Hence, banks’ costs related to the creation of provisions on credit risk will increase and in turn, the financial result may be declining. Based on this assessment, the Bank of Albania has required banks to suspend profit distribution (as a dividend), aiming at easing the impact of a possible fall of the financial result on the capitalisation indicators. Communication with banks has been enhanced and reporting requirements have become more specific and frequent.
The Financial Supervisory Authority has undertaken similar measures regarding the non-bank financial entities it regulates. In this view, requirements on frequent reporting on liquidity situation for these entities have been increased, and it has suspended profit distribution for insurance companies. In addition, FSA has increased the supervisory attention on the adequacy of business continuity plans regarding most relevant entities it supervises.
The Deposit Insurance Agency complements the institutional framework of public authorities that sustain the resilience of the financial system. The Agency has continued to adequately manage the deposits compensation fund, explore the possibility to extend the fund in partnership with international financial institutions and enhance its procedures framework.
In current circumstances, the above-stated measures taken by the authorities are assessed to have improved the capacities of the financial system to counter the economic shock of the pandemic.
At the conclusion of discussions according to the agenda, the senior officials representing the participating institutions approved this Press Release and authorized its publication.
© Ministria Financave dhe Ekonomisë 2020 - Të gjitha të drejtat e rezervuara.