Banks send Albanian money abroad

The data show that compared to one year ago, the investments of banks have increased with 36.3% or 700 million USD. Banks have sufficient liquidity, and only in the last two years the deposits have increased with 1.5 billion USD.

But the savings of the Albanian people have not been used as loans to revive the economy. Banks have invested that money abroad. Three years ago, almost 70% of the deposits was given back as loans. By the end of 2012 it was 58.6%, and the ratio of loans over deposits has fallen from 110% to 75%, while the World Bank has classified Albania as the country with the lowest financial intermediation in the region, since in other countries 90 to 120% of the deposits has been distributed for loans.

To resolve this situation, Bank of Albania approved a measure that classifies the investments of foreign banks with a maximal risk coefficient, obliging them to keep reserve funds in Albania for every other fund that they were sending abroad. The banks reacted immediately by opposing this measure.

In a declaration for the media, they consider it unnecessary, claiming that they have been obliged to send the money abroad because there is no demand for loans in the country. Some Bank of Albania experts say that this is partially true, since the stalemate has not been caused only due to the low demand, but also because of the banks’ bad conditions. Besides the reasons, the financial system has entered a whirlpool that is deepening the Albanian economy crisis even more.

Citizens hesitate to spend more money and they have increased their bank deposits. But the money that should be used as business loans and investments are going abroad. The economic growth during these years of crisis is 3% lower than before. Last year it went at around 1.6%.

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