Banks increase loans for businesses
05/11/2014 00:00
The Washington Agreement Must Be Reactivated! 06/01 19:04
In the past two years, Albania has faced a strong slowdown of the loans
for economy. From the exploding pace before the crisis, loans for
businesses and individuals have entered in negative territory. For
banks, the reasons are many.
“There are a series of specific factors that have conditioned loans in the past two years. The existence of problematic sectors such as construction, the economic growth slowdown, the low demand from consumers and businesses and also low public and private investments… This environment has made banks be more careful”, declared Periklis Drougkas, General Director of Alpha Bank.
According to Drugkas, this stalemate might end by the end of the first semester, when loans went outside the negative norms of growth.
“From July 2014, the financial system has marked a turning point. Loans are higher than one year ago, and since then we have seen a constant enlargement. This process was helped by the liquidation of delayed payment and the positive norms of economic growth. I am optimistic and I believe that loans will keep growing faster in the months to come, but as private banks, we would want to see more successful business projects to finance”, Drugkas declared.
Edvin Libohova, a good connaisseur of the financial system, says that the revival of loans requires legal measures, especially for limiting banks from investing in treasury bonds, which makes them uninterested to credit private businesses.
“If the banking system has invested 42% of its assets in loans and 33% in treasury bonds, the Bank could establish a limit not more than 20% for treasury bonds. Funds from the treasury bonds would be freed and 1.4 billion USD would go for loans”, Libohova says.
He adds that the funding of the government debt can be made directly by the citizens rather than going through banks. Besides the legal measures, banks should also establish a new relation with businesses.
“I would recommend banking associations to sit in the insurance market and find a agreements for a good legal frame that supports agriculture. We have said that agriculture is a priority but there are no funds because there is no effective insurance market. There are huge risks that banks cannot undertake”, Libohova declared.
Experts say that the loan progress will be another factor that will define the recovery of economy.
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