bankieri no.12 - july 2014

1 www.aab.al Bankieri

2 3 www.aab.al Bankieri www.aab.al Bankieri REST IN PEACE, MR ARTAN SANTO!

IN LOVING MEMORY

On 26 June 2014 Mr Artan Santo, CEO of Credins Bank and one of its shareholders died tragically after several fatal shootings, near the bank headquarters. This event came a terrible shock and surprise, not only for his family but also for the entire banking community, a part of which Mr Santo used to be for many years in a row. Mr Artan Santo was a professional banker, who spent the last 25 years of his career in some banking institutions, at high ranks, like: as Deputy Director of Foreign Department of the State Bank of Albania, General Director of Savings Bank and Chief Executive Officer of Credins Bank. He successfully led the experts’ team which undertook the establishment of Credins Bank, the first wholly-owned Albanian private bank, thereby setting a milestone in the development of the Albanian banking system, in the era of market economy. The tragic death of Mr Santo interrupted and ceased an established and consolidated banking career and the Albanian banking system has a noticeable absence, already. Mr Santo will be missed to all, but his professional achievements will always be part of the journey made by the Albanian banking system!

fjalor i termave të bankës



kës fjalor i termave të

kës fjalor i termave të

termave të bankës fjalor



bankës fjalor i termave

bankës fjalor i termave

“The Dictionary of Banking Terms is a product of joint efforts of Terminology Division at the Institute of Linguistics and Literature and the Faculty of Economics at Tirana University.

The dictionary contains terms widely used in documents, textbooks, economic periodicals, publications on banking issues of various national and international organizations, but also in the economic activity in general.

This dictionary is expected to increase the interest of economists, especially that of banking specialists, regarding terminology issues, and to act as an incentive to expand and welcome their participation, through remarks and suggestions, for a further unification of such terminology.”

To obtain copies of the dictionary, please write to [email protected], requesting the type (soft or hard cover publication) and number of copies, as well as further information, if necessary.

4 5 www.aab.al Bankieri www.aab.al Bankieri

EDITORIAL TEAM:

Elvin MekaEditor–in-Chief

Eftali PeçiCoordinator

Junida Tafaj (Katroshi)Collaborator

Andis RadoPhotographer

Design & Layout: PIK Creativ

Printed by:

EDITORIAL BOARD:

Seyhan PENCABLIGILAAB Chairman & CEO of Banka Kombëtare Tregtare

Ioannis KOUGIONASAAB Vice Chairman & CEO of NBG Bank Albania

Christian CANACARISAAB Executive Committee Member & CEO of Raiffeisen Bank Albania

Periklis DROUGKASAAB Executive Committee Member & CEO of Alpha Bank

Frédéric BLANCAAB Executive Committee Member & CEO of Societe Generale Albania

Bozhidar TODOROVAAB Executive Committee Member & CEO of First Investment Bank

Endrita XHAFERAJSecretary General, Albanian Association of Banks

Hysen ÇELAChairman of Albanian Institute of Authorized Chartered Auditors (IEKA)

Adrian CIVICIPresident & Head of Doctoral School European University of Tirana

Spiro BRUMBULLIChief of Cabinet, Ministry of Finance

Enkeleda SHEHIChairwoman of Albanian Financial Supervision Authority

ALBANIAN ASSOCIATION OF BANKSStreet ‘Ibrahim Rugova’, SKY TOWER, 9/3, TiranaTel: ‘+355 4 2280371/2 Fax: +355 4 2280 359E-mail: [email protected]; www.aab.al

Contens BankieriNo.12, July 2014Publication of the Albanian Association of Banks

MORTGAGE LOANS...a revival?

Bankieri is the official publication of Albanian Association of Banks which mainly focus the Albanian banking industry. Bankieri provide readers with valuable information on the financial industry’s developments in general, and of commercial banks in particular.

Editor’s DeskMortgage Loans: Did they turn the corner? 5

Elvin MEKA

FrontlineMortgage loans have made a comeback 7

Aida APOSTOLI The real estate market gains momentum 8

Erjona ÇELAConstruction, the lost land of fantasies 10

Irena BEQIRAJ

InterviewSociété Générale Albania, a French touch of banking services 13

Frederic BLANC

Banking SystemInvestments in the Albanian banking market 14

Edlira HEBA dhe Rinald GJYLIAgribusiness, a challenge to be overcome 17

Anjeza KELMENDI

Experts’ ForumControlling Mergers & Acquisitions: Points to be considered 19

Ermal NAZIFI Security traps 22

Roland TASHIThe development of Card Sector in Kosovo 24

Fisnik BEHXHETI

Economist CornerHow real is the fear of a deflationary scenario? 27

Adrian CIVICI

Social capitalBanks’ Activities 31

News 35

Tech TopicsE-Channels and banking industry: Challenges and opportunities as recognized by HALCOM 37

Marko VALJAVECPrepaid cards, a successful innovation 39

Marsela KUSHTA

AAB Trainings 42

It is easily understandable that, despite problems of a cyclical and non-cyclical nature that usually accompany construction and mortgage loans, their financing will continue incessantly. At this point, the remaining challenge for banks is to ensure and obtain an efficient and balanced combination between a manageable exposure to them and selecting quality clients.

“Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world. Franklin D. Roosevelt!” It is for such interesting statement of the 32nd President of the United States of America, Mr. Franklin D. Roosevelt, that anyone could easily understand the exclusivity which characterizes the real estate, construction sector and its respective financing. Technically, the approach of banks and other financial institutions towards real estate, construction & housing and financial products, they model and design, differ quite substantially from all the rest of products and services they offer in the market. This is simply explained by the special role and place, the “home” plays and takes, as one of the most important investments throughout everyone’s life. On the other hand, the construction sector has, by contrast to all other sectors of national economy, the ability to create a typical interlinking net, between industries and many other sectors of the economy, be they in the manufacturing, or service

Editor’s Desk

Mortgage Loans:

by Prof. Asoc. Dr. Elvin MEKA1 Editor–in-Chief

sector, along with employing a relatively high number of labor forces.

Construction and housing remain quite interesting for bank financing, for many reasons, like: no one could provide that sort of collateral they do; mortgage loan installment would be reasonably among the first obligations anyone would pay regularly; no other assets are not assessed or revalued, over time, as real estate and assets do; the absolute advantage these assets have, in relation to other types of assets, to serve as underlying assets for designing and creating structured financial products, which are widely traded in global financial and securities markets. But the relatively high exposure to the construction sector and mortgage loans is usually associated with certain risks, particularly in the frame of financial and economic crises, and also when the economy enters its contracting and downswing cycle. Moreover, the long-lasting international experience has shown that abnormal exposure to real estate, construction sector and mortgage loans constitutes one of three elements that typically and classically accompany a financial crisis, along with the excessive use of financial leverage and weak risk management & analysis.

Now it is crystal clear the weight and effect, real estate, construction and mortgage loans portfolio, had and still continues to exert, on non-performing loans of the

Albanian banking system, as well as the actual situation and the near future of this sector, within the national economy. Surely, the cost weathered by banks in this regard was and is not modest, but nevertheless, it served to gain a valuable experience, to carry on with construction and mortgage financing, but through a more prudent and better quality management process. It is for this experience that is helping banks now to reshape their approach towards construction and mortgage loans, which in turn, is resulting in some interesting and attractive offers for customers. They are quickly adapting to the new trends of citizens’ lifestyle and market requirements, by paying maximum attention, of course, to comply with 5 Cs of lending process, at the fullest possible. It is easily understandable that, despite problems of a cyclical and non-cyclical nature, that usually accompany construction and mortgage loans, their financing will continue incessantly. At this point the remaining challenge for banks is to ensure and obtain an efficient and balanced combination between a manageable exposure to them and selecting quality clients. This is so, because the loan quality, which is fundamentally based upon the borrower’s creditworthiness, remains the cornerstone for a quality and profitable loan portfolio!

Did they turn the corner?

1 Deputy Dean & Head of Department of Finance, UET-EUT


Mortgage loan demand has seen an upward trend and borrowers have shown a changing client profile, as dictated by the lifestyle’s evolution.

In its first steps, the Albanian bank-ing system has been skeptical of lending to individuals, whereas

moreover the construction sector was financially supported by remittances. In the early 2000s, some banks weighted market needs and dared to undertake long-term investments (in the form of mortgage loan), but initially as a proj-ect to finance customers with secured and above average income, only. Initial-ly, the profit margin was too high and the maturity period did not exceed 10 years. It goes without saying that, under these conditions, the number of loan beneficiaries was very limited. As the economic indicators were somewhat stabilized and the economy flourished, the banking market reassessed its prod-uct positioning, by considering it not as elitist, but affordable for masses, thus implementing relaxing risk indicators, longer maturities and lower interest rates. Undoubtedly, this new approach had a positive effect on development of the construction sector.

Frontline

Mortgage loans have made a comeback

by Mrs Aida APOSTOLI Head of Retail Banking, NBG Bank Albania

GROWTH During the period 2005-2007, banks got interest and competed with each other for market share, taking into consideration the advantages of this product: a good re-lation between profit margin and loan risk, as well as the establishment of a long-term relationship between the client and the bank. It was that time when NBG Bank led the market, making it possible the dream of having a home to many citizens. The emblematic offer: “5x5”, backed by a simple and fast loan-making process, and an expert sales force, turned NBG Bank into a market leader for such product. The global crisis had an immediate effect in the Albanian financial market. Following the emergence of first signs of deteriorat-ing financial indicators and the apparent increase of non-performing loans, banks

adopted their lending policy immediately, by increasing prudence at all components, such as: financial analysis and quality of collateral. The establishment and func-tioning of the Credit Registry in 2008 marked a qualitative step for the whole banking system. Having information about the payment history for each cus-tomer was a remarkable contribution, in the process of loan analysis, by complet-ing this process with the key element of customer behavior. Surely, the crisis factor had a direct impact on individuals them-selves, by reducing the overall demand for loans, especially for long-term loans.

All the above factors as a whole, as well as directives from local and in-ternational supervisory bodies, pulled reins too hard on the lending process as a whole, whereas the lending rate for mortgages slowed significantly. But since two years from now, the situation is turning different. On one hand, mar-kets give positive signals and show im-proved financial indicators, and on the other hand, the clientele has displayed increased interest for borrowing. The message for a lending boost is clear in all directives, issued by supervisory bodies. REVIVAL Banks in Albania are well-capitalized, and this is achieved, inter alia, as a re-sult of prudent conservative policies, conducted by Bank of Albania. Also, the liquidity ratios are stabilized, and are currently at high levels. Although the level of non-performing loans re-mains high, proper changes made to the legislation have improved the collateral enforcement procedures. The above sit-

Now we have a banking system willing to lend, with enough experience and also a clientele which is able to accomplish its plans for a better life, with optimal offers and complete and transparent information. Of course, the solution of major problems, such as: the legalization and registration of immovable properties, as well as the reduction of informality will give a further boost to lending activity.


uation has created necessary conditions for financial institutions to turn back to lending process. Lending activity re-mains essential and with a direct impact on banking system’s profitability and of course is the promoter of economic de-velopment. Mortgage loan demand has seen an upward trend and borrowers have shown a changing client profile, as dictated by the lifestyle’s evolution. The number of family members is going low-er steadily, and a rising living standard

is becoming an important target. On the other hand, the falling interest rates, as cut by the Central Bank and with a di-rect impact on fostering lending, as well as competition among banks has driven interest rates at historical lows. Now we have a banking system willing to lend, with enough experience and also a clien-tele which is able to accomplish its plans for a better life, with optimal offers and complete and transparent information.

Of course, the solution of major

problems, such as: the legalization and registration of immovable properties, as well as the reduction of informality will give a further boost to lending activity. NBG Bank - Albania has adapted its strategy and policies, under the new mar-ket conditions, by improving structures, procedures and the lending process, it-self. Loan offers have been successive and very attractive, associated with com-municating and publicity materials, easi-ly understandable by all potential clients.

by Ms Erjona ÇELAManagerRetail Banking Products and Sales Department Alpha Bank Albania

The demand growth is mainly driven by a combination of several important factors, such as: the fall of apartments’ prices, the ongoing process of registration of collateral and growth of confidence indicator for the construction sector.

The real estate market gains momentum

tem, have been shrinking, under the effect of economic and financial crisis. Now we estimate that the demand growth is mainly driven by a combination of sev-eral important factors, such as: the fall of apartments’ prices by 30 per cent, the ongoing process of registration of col-laterals, guaranteeing mortgage loans, growth of confidence indicator for the construction sector, by 13.9 percentage points, referring to Q1 2014 data, etc.

On the other hand, banks have been consistently present with various favor-able offers and loan products for indi-viduals. As a result, during the year 2014 interest rates and other tariffs related to loan products, especially for housing loans, have been among the lowest, of-fered during the last two years. Such fact is also backed by a gradual decrease of

costs for bank deposits, thus supporting in the best way possible the individuals’ demand for bank financing with afford-able installments. Based upon positive forecast of key economic indicators, as well as the expectations on a real reduc-tion of the stock of unsold immovable properties and following the growing demand for apartments’ purchases (ac-cording to the survey on Businesses and Individuals Confidence), the con-struction industry have been increasing investments significantly, during the first six months of 2014. Also, individ-uals have expressed a higher interest and demand for investing in residential complexes, where other services are also offered. This change is recently reflected in projects that construction companies are currently developing, by including

children, recreational and amusement facilities, etc.

Another growing tendency is the demand for residential housing com-plexes on the outskirts of Tirana, or other touristic cities, which aim at im-proving the quality of life, in terms of privacy, air cleanliness, surrounding environment, silence, etc. Despite the fact that some indicators have shown a real improvement, it should be high-lighted, therefore, that income’s high informality is still one of the main fac-tors which hampers banks’ financing support for individuals or businesses. Following continuous and different of-fers launched during 2013 for individ-ual loans, Alpha Bank has launched in-novative products and offers for credit cards, consumer loans, etc., even during the first five months of 2014. The favor-able offers and products, launched by Alpha Bank, have been accompanied with relaxing criteria and requirements, employed during approval and risk management policies, applied to individ-ual loans. By the beginning of this year, Alpha Bank launched “Alpha Realizo” (“Alpha Accomplish”), a successful con-sumer loan product, which enables in-dividuals to obtain a loan amount up to EUR 2,000 (ALL equivalent) without guarantee or any guarantor, and up to EUR 7,000 (ALL equivalent), without collateral. It should be mentioned that, the actual housing loan offer “Alpha Plan”, which enables our customers to purchase a new house with the best pos-sible interest rates (starting from Euribor +4.75%, during the whole loan tenor for “Alpha Paga” (“Alpha Salary”) custom-ers), and loan costs, compared to other banks in the market. The offer package includes also the internal design project for the purchased house, as a gift fi-nanced from Alpha Bank.

Other innovative products for in-dividuals with relaxing terms will be designed, developed and launched by Alpha Bank, throughout the year. How-ever, Alpha Bank’s projections for the end-2014 and also for the mid -term period, are very positive and the bank is ready to inject proper liquidity in the market, by supporting various projects, as the case may be, by continuing to launch innovative and versatile prod-ucts, thus satisfying all customers’ needs.

Individuals have expressed a higher interest and demand for investing in residential complexes, where other services are also offered. This change is recently reflected in projects that construction companies are currently developing, by including children, recreational and amusement facilities.

Frontline

The results of the first half of 2014 represent a positive change relat-ed to the demand for purchasing

immovable properties; as a result, the disbursed loan volumes in favor of in-dividuals have shown signs of growth, compared to the 2013 year. It should be underlined, however, that according to statistics for the last three years, loan portfolios for housing in the banking sys-


by Ms Irena BEQIRAJ, CFAConsultant

Prosperity ends in a crisis. The error of optimism dies in the crisis, but in dying it gives birth to an error of pessimism. This new error is born, not an infant, but a giant.

Construction, the lost land of fantasies

that, such approach/behavior, seems to be caused primarily by banks’ “group-think” attitude in the market, which is supported by similar, if not same, loan terms, loan products offered and requirements the applicant must meet. Such reality feeds the idea that the vi-sion of such institutions for the busi-ness as a whole is unified, according to the principle: “One size fits all.” Con-sequently, the implementation of this philosophy, under tighten economic conditions, can lead to “en masse” ex-clusion of the construction sector from lending portfolio.

Now the construction industry is no longer the land of fantasies, neither for developers and constructors nor the banker, but we should not forget that it is relatively important sector for the Albanian economy and the base-line industry, which improves the infra-structure and transport. Construction is one of the most threatened sectors by crises, given the fragmented nature of the industry, stiff competition, low en-try barriers, high uncertainty in terms of cash flows and forecasting volumes of construction in the future. Default or bankruptcy in any business is the result of a complex process that rarely depends on a single factor, only. The study of Arditi 2000 clearly defines that financial management and cost issues are the main reasons which lead to de-faults of construction companies, along with industry’s weaknesses. According to the study, more than 80 per cent of defaults of such companies are caused

by: (i) insufficient profits (27%), (ii) in-dustry’s weaknesses (23%), (iii) consid-erable operating costs (18%), (iv) insuf-ficient capital (8%), (v) expensive (high interest) or financially unjustified bank loans (6%). In addition to those factors, the Albanian construction companies are negatively affected by lack of man-agerial experience and selective treat-ment in issuing permits for private commercial buildings. The main rea-sons for the default of a subcontracting companies for public works are: (i) mis-management of very rapid growth rate; (ii) contracts for works in previously unexplored geographical regions; (iii) contracts for various kind of works (some of them quite unknown); (iv) inadequate working capital; (v) inap-propriate assessment of cost of labor and materials; (vi) weak accounting systems; (vii) negative cash flows; (viii) lack of management and the last, but not least, very low profit margins.

FUNDAMENTAL ANALYSIS,FINANCIAL INDICATORS In the financial language, the oppor-tunity and the ability to distinguish “hedge borrowers” translates into a lower risk portfolio and less prob-lem loans in the future. Every analyst knows the general rule that, the high-er the profitability and liquidity level the lower the debt level, the better the company’s financial health. Ellis’ study (2006) suggests the following indica-tors (ratios) (see BOX), to define the “best” in the construction industry,

Frontline

The construction sector has been, for a long period of time before the crisis, the land of fantasies

and fueled the high profits fantasies of not only entrepreneurs, but also banks that provided lending to this sector. In “Financial Instability hypothesis”, H.P. Minsky categorizes borrowers into three groups: 1) hedge borrowers which can fulfill all of their contrac-tual payment obligations (interest and principal), 2) speculative borrowers that can meet their payment commit-ments on “income account” (only in-terest payment, by taking new debt to repay the existing one) and 3) Ponzi borrowers who are unable to pay ei-ther the principal or debt. During the period of Albania’s economic growth, building & construction companies were put in “hall of success”, whereas after crisis an altering approach is ev-idenced towards them. There are some well-understandable and objective reasons, affecting it, such as: financial information asymmetry, but I think

A) Profitability indicators RatiosReturn on assets (ROA) EBIT / Total assetsLong term return on assets (retained Earning + capital reserve + EAT) / Total assetsB) Efficiency indicators Assets efficiency [(Production – cost of production) + ( sales – cost of sales ) ] / Total assets Labor efficiency [(Production – cost of production) + ( sales – cost of sales ) ] / Labor costC) Capital structure indicators Debt ratio Total debt / Total assets Short term debt ratio (Short term liabilities + short term portion of long term debt & Overdrafts)/Total assetsLong term debt ratio (long term liabilities + long term debt & Overdrafts) / Total assetsD) Liquidity indicators Current ratio (L3) Current assets / Current liabilitiesCash ratio (L1) Current assets / Current liabilitiesE) Turnover indicators Total asset turnover [(production + ( sales – cost of sales ) ]) / Total assets Short term liabilities turnover [(production + ( sales – cost of sales ) ] / ( account payable+ short term bank loans & Overdrafts)Receivables turnover [(production + ( sales – cost of sales ) ]) / Account receivable

F) Other indicators % of long term assets % services offered by third parties (subcontractors) Age of the company and the legal form

indicators which differ a bit from usu-al financial reports. These differences reflect the characteristics of financial information, which derive from con-struction contracts’ accounting and the approach many companies have towards paying taxes.

Meanwhile, the study of McCall (2006) states that, the working capi-tal is the main indicator for SMEs in construction, and even more for com-panies hired as subcontractors for pub-lic works. Working capital is a direct indicator that displays the financial strength and the contractor’s ability to ensure the project’s continuance in the short-term. The characteristics that distinguish financially distressed con-struction companies from stable ones could be summarized as follows:

• Financially distressed companies

have not only a very low ROA, and often a negative one, but are featured by a low long-term prof-itability ratio. Financially stable companies display a good long-term profitability ratio, which is mainly as a result of retained earnings and provisioning.

• Financially distressed companies have, usually, significantly low asset and labor efficiency ratios, compared to those in good finan-cial conditions. The labor efficiency ratio is widely used in analysis of construction companies, due to the high need for labor force.

• Financially stable companies can afford a debt ratio up to 63 per cent. Such ratio is higher than the recommended debt ratio of 50 per cent, but it should be known that, the default of construction com-panies is caused by high levels of short-term debt. This level, espe-cially the bank loan level, combined with ongoing losses and low levels of equity, cause construction com-panies’ bankruptcy, in the frame of economic recession.

• The use of acid test (L2)1 of the con-struction companies is eliminated, because they have low inventories, so (L3) will produce approximately the same result as (L2). Construc-tion companies which experience problems with liquidity, usually

represent a 1.17 level of (L3) and a (L1) level well below 0.2.

• There are no differences in values of asset turnover ratio for finan-cially distressful companies, as compared to companies with a fi-nancial stability. What is noticed is that defaulting construction compa-nies sell their long-term assets, ether

to finance the existing operations, or to reduce idle assets caused by reductions in capacity.

• There are significant differences in the level of “Long-term assets / To-tal assets” ratio. Distressed compa-nies usually have a level of “Long-term assets / Total assets” ratio. They possess very short-term as-sets, primarily accounts receivable, which could reach up to 60 per cent of the assets.

By treating all construction com-panies under a pessimistic view, thus classifying them as “Ponzi” or “inap-propriate” clients, is not a proper ratio-nal decision. If investors (bankers and owners) are open-minded, and base their opinion upon fundamental anal-ysis, by leaving out the “groupthink” psychology, whether optimistic or pes-simistic, then the construction sector will never be “the land of fantasies”, but instead, an “arable and profitable” land for all those who know how to handle it carefully.

1 Liquidity Ratios: L1, L2 and L3.

If investors (bankers and owners) are open-minded, and base their opinion upon fundamental analysis, by leaving out the “groupthink” psychology, whether optimistic or pessimistic, then the construction sector will never be “the land of fantasies”, but instead, an “arable and profitable” land for all those who know how to handle it carefully.

(Arthur Pigou)


The bank has tried to provide sophisticated service excellence through a wide range of products and services, continuous network expansion and professional and well-trained staff.

Société Générale Albania, a French touch of banking services

tried to consistently play a very active role in the Albanian economic and social envi-ronment. As a result, these have been 10 years with a lot of work and quite impres-sive results and during all this period, the bank has absolutely proved to be a decent member of one of the most prestigious groups in the world and banking area.

BANKIERI: Could you please mention the key achievements to date for Société Générale Albania?Société Générale Albania is one of the main commercial banks, who operates in the Albanian market through a wide spread network of 42 branches and with about 400 employees. Today we have total loan portfolio of EUR 300 million and a deposit one of EUR 400 million. Not less obvious are the achievements in the other main indicators from whom we can point out a customer base of 130.000 customers and an outstanding quality of the lending portfolio, whose ratio of just 8% has be-come almost a reference in the whole sys-tem, which has a NPL ratio of 25%. We must also mention that during the last years, despite the presence of the financial crisis which is felt even on international level, we have never ceased financing dif-ferent sectors of the Albanian economy and we have succeeded to disburse almost EUR 100 million every year, thus keeping not only a very high pace, but also a high level of quality at the same time.

BANKIERI: As one of the most efficient banks in the world, what could be the most distinguishing pillars of Société Générale Albania’s activity?We have always put all our efforts to have a diversified but holistic approach, tailored upon our customers and Albanian society

needs. Lending is one of them. We have provided significant amounts of financing to almost every segment and to every sec-tor. Deposits and day-to-day banking ac-tivity is another one. We have maximally exploited our prestigious name and brand to build trust and confidence inside our customers, in order to make them choose us as their primary bank. We have tried to provide sophisticated service excellence through a wide range of products and ser-vices, network expansion and profession-al and well-trained staff. In addition, our Bank has always offered its collaboration in different projects and programs under-taken from domestic and international ac-tors and has played also a significant role through sponsorships and other social events.

BANKIERI: What could be the future po-sition and role of Société Générale Alba-nia within the Albanian banking system, as well as some key priorities for the years to come? We will continue to be a factor and a very active player not only of the bank-ing system, but of the overall economy at the same time. Our mission will continue to be alignment of the SG Group values with Albania characteristics. In this con-text, our key priorities will remain strong and clear as they have been in these last 10 years. Healthy, through being selective in financed transactions, close monitoring of the portfolio and proper liquidity posi-tioning. Sustainable, relying on new clients while consolidating the customer base by intensifying the relationships with existing clients. Innovative, bringing new ideas and solutions. Social, through offering support and sharing the international experience of a 150 years old gigantic Group.

Interview

BANKIERI: Société Générale has just celebrated its 150-th anniversary and is one the oldest banks in France and is ap-proaching its first decade in Albania. How would you summarize this French experi-ence within the Albanian banking system? Société Générale genesis goes a long way back to 1864, when the Bank was original-ly founded. During all this time our main target has been that to be not just another commercial bank, but a key positive play-er in the economy of France, and all the other countries we are present. This year we do not only celebrate the 150th anni-versary of Société Générale Group but also the 10th anniversary of our bank activity in Albania. Albania is a country with a lot of potential in many sectors therefore, being present here has been quite an experience, both, interesting and satisfactory at the same time. We have continuously worked on nailing all the above mentioned pillars of our SG Group and I must say that the positive ground we found in here makes it even easier. On the other side, we have

Mr Frederic BLANCChief Executive OfficerSociété Générale Albania


launching new financial products, in accordance with the directives set by Bank of Albania and the Financial Su-pervisory Authority, as well as comply-ing with international standards in this regard. Because of an easing monetary policy, conducted by Bank of Albania, the interest rates of time deposits have decreased significantly, during the last year. Investment opportunities are nu-merous and diverse, and therefore, in-vestors will have more requests for in-formation about financial products that offer more benefits and which are linked with world stock markets. A key point in the investment strategy, recommended to each individual, is that s/he must be advised by a bank and s/he must have

a clear understanding of products, as well as knowledge about characteristics of each investment product. The follow-ing points try to explain briefly some of these products.

Deposits with different maturities. This investment is widely recognized and preferred by individuals in Albania. In the frame of declining interest rates on deposits, individuals tend to transfer and deposit funds in time deposits with lon-ger than 12 month-to-maturity. Banks in Albania offer numerous types of de-posits, which add flexibility and benefits, according to the investors’ needs.

Participation in primary auctions for Treasury Bills and Government Bonds, in Albanian Lek. This is an investment

Banking System

Financial markets worldwide seem more calm and investors more hopeful, following troubles and

shocks, produced by the crises of 2007 - 2008 period. Peripheral economies and those of developing countries are increasingly influenced by global econ-omies and monetary policies, pursued by central banks of developed countries during recent years.

Investing in the banking market can be described, in a simplified way, as the pro-cess of purchasing a monetary asset now, with the hope of gaining more money in the future. Banks and financial institutions design and offer attractive and easy-to-un-derstand investment products for individu-als. Individuals should be careful in choos-ing the investments they want to make, by understanding all the risks associated with them. Of course, it is quite logical that, during the decision making process for a new investment, all questions by individ-uals are acceptable and banks should be prepared to provide proper clarifying and explanatory answers.

It should be emphasized that, “in-vesting in the banking market” does not mean get-rich-quick, because many indi-viduals misunderstand such concept. The investing individual should be aware s/he must work closely with the bank, to have control over their funds. It is worth noting that pretty much work is need-ed to find appropriate combinations of investments, by always considering the business and risk profile of each inves-tor. Well-defined techniques and strate-gies, each individual will pursue for her/his long-term investments in the banking market, since the initial phase of invest-ing, is the basis for a sound investment, and creates a robust relationship with the bank as a partner. Increasing revenues through investments in banking market is an established practice in developed countries for decades. Now it’s time that individuals in Albania could become par-ticipants in global financial market.

In recent years, commercial banks have accelerated the creation and

opportunity for individuals, where in-vestors can participate, not only in auc-tions for the short-term (up to 1 year maturity) papers, but also in those with long-term maturities, such as: 5 year, 7 year and 10 year-bonds.

Albanian Government Bonds in Euro. During the last two years these securities have created opportunities for investors to benefit returns from public debt even in foreign currency.

The establishment of investment funds. Their presence in the market has boosted the investors’ interest to invest idle funds in new financial opportunities. Regarding current conditions in the mar-ket for local currency, this option contin-ues to be related with long-term bonds of the Albanian Government and in terms of risk and benefits, it offers almost the same figures, as the individual participa-tion at government bond auctions would provide. In the near future, this will pres-ent the opportunity to invest in various financial assets, in foreign currencies, or securities of Eurozone countries.

Bonds issued by joint stock compa-nies. Private companies with a multi-

year history in Albania, have now the op-portunity to issue bonds with long-term maturities. Such bonds may offer inves-tors higher interest rates, compared with other products. Credins Bank issued, for the first time in the banking market, in December 2011, long-term bonds with a fixed coupon. Credins Bank’s bond issu-ance, through private offering, continues to be very successful and this shows that individuals are attracted by long-term investments and with higher interest rates. In an imminent functioning of the stock exchange in Albania, the securities market for joint stock companies has rooms for a fast development, because the interest offered is relatively high.

Investing in foreign exchange. It is one of the most popular investments in the world. This market provides the largest daily volume and banks offer the opportunity for exchange in more than 5 foreign currencies, with a very low cost. Profit opportunities in this popular mar-ket are vast, where liquidity is provided at any moment. In Credins Bank, the exchange facility is offered not only in major currencies, like: EUR, USD, GBP,

CHF, but also in AUD, CAD and JPY. Be-fore investing in foreign exchange some-one should make analyses of the risk, accompanying the currency, as well as the investing horizon for such position. Foreign exchange in different currencies offer diverse volatility, and not forecast-ed in one direction only, but instead are influenced by many macroeconomic fac-tors, and not only. Foreign exchange of-fers diversification opportunities in more than two pairs of currencies. The foreign exchange market is accessible by all in-dividuals, in banks where they have their own savings.

Investing in precious metals. This type of investment is particularly pre-ferred by investors, who believe more in precious metals, especially gold, com-pared to investments in other assets, or paper money. The investment in gold has recently motivated the Albanian buyers. Thus, investors who prefer investing in precious metals can actually buy and sell gold at Credins Bank, by following fluctuations of metal exchanges in the world.

Buying bonds issued by developed countries is another investment opportu-nity. However, under current conditions when central banks of developed coun-tries are pursuing ultra easing monetary policies and the respective interests of those countries’ (sovereign) bonds pro-duce are at record low levels. Investing in bonds of developed countries pro-vides a diversification in savings portfo-lio and security, too.

Trading in securities (stock) of for-eign companies that are listed on stock exchanges in Europe and USA would add up the list of financial products as investment opportunity in the domes-tic market. Daily volatility in stock ex-changes may enhance long-term benefits for individuals in Albania.

Individual investor should always be informed in advance about the financial products that banks offer, diversify her/his savings in some financial products and always consult with competent employees of the bank, with regard to products s/he wants to invest in. Credins Bank offers professional and dedicated advice for this purpose. The risk level in various investments is different for every investor and it directly affects the profit expectations.

A key point in the investment strategy, recommended to each individual, is that s/he must be advised by a bank and s/he must have a clear understanding of products, as well as knowledge about characteristics of each investment product.

Ms Edlira HEBA DirectorTreasury DepartmentCredins Bank

Mr Rinald GJYLI Deputy DirectorTreasury DepartmentCredins Bank

Individual investor should always be informed in advance about the financial products that banks offer, diversify her/his savings in some financial products and always consult with competent employees of the bank, with regard to products s/he wants to invest in.

Investments in the Albanian banking market


by Ms Anjeza KELMENDICoordinator for AgrobusinessRetail DivisionIntesa Sanpaolo Bank Albania

In order to ensure an effective and productive functioning in all sector’s components, and thus providing quality products and services, it requires huge and continued investments and substantial technical support.

Agribusiness, a challenge to be overcome

demand, but also as a result of the at-tention shown by subsidizing programs, or grants from international programs, such as: IPARD. Undoubtedly, busi-ness growth will be accompanied by the need for an increased support from the banking system. Investment plans in technology and business growth re-quire significant investments, so these businesses have increased their demand for support from the banking system. Financing is one of the most import-ant elements for businesses, but in case of agribusiness, financing from bank-ing sector is extremely at low levels. Over years, Intesa Sanpaolo Bank has demonstrated its ability to recognize the market needs, and therefore, even those of customers. Thus, the bank will need to respond to the market needs in the best possible way, by offering high ser-vice standards and thus contributing to the development of such very important sector for the economy. WHAT ABOUT THE CLIENTS’ INTEREST FOR LOANS IN THIS SECTOR?Clients’ interest for agro loans has been growing continuously; the sec-tor itself is in a developing stage and has a long way to go, to achieve the required standards of product quality and service. Albanian products are of high quality, but the European food standards require appropriate licens-

ing for these products and as a result, a very high quality. The vast need of businesses to improve their products, reduce production costs and grow their business, has led to the need for investments in technology. These in-vestments are partly covered by busi-nesses’ internal resources, but the rest of funding cannot be provided by the businesses, themselves. Also, the ini-tiative to invest is positively triggered by government subsidy programs for agribusiness and its products, as well as by subsidized interest rate programs for loans taken from the banking sys-tem. What is noticed is that, despite growing interest and specific financing of this sector, funding needs are even greater. In order to ensure an effective and productive functioning in all sec-tor’s components, and thus providing quality products and services, it re-quires huge and continued investments and substantial technical support. En-suring a healthy balance between three shackles of the sector (agro-production, agro-processing and agro-trading), i.e. continuous and simultaneous invest-ments in those three shackles, could cause a positive flow and overall devel-opment of the agribusiness sector. WHAT ARE THE DIFFICULTIES?The difficulties faced by the agribusi-ness sector itself directly affect its rela-

Banking System

The agricultural sector is one of key pillars of national econo-my, whereas the country has a

relatively significant rural population. Over the years there has been a large movement of population from rural to urban areas, or even abroad, which has conditioned the changing ratios, but the high concentration of population in rural areas is a remaining fact.

Also, the land structure and the country’s nature create a great impact on agriculture’s performance and re-sults. During the last five years there has been a very positive move, in terms of investment in this sector. These in-vestments are focused on three shackles of the agribusiness chain: (1) agro-pro-duction, (2) agro-processing and (3) agro-trading. A very positive trend is ev-idenced in the greenhouse business, milk processing, construction of collection & trading points, etc. These businesses are developed not only as a result of market


tionship with the banking system. Thus, the relatively small size of farms in Al-bania brings negative consequences for them, because they fail to use their re-sources well and this is associated with high production cost. In turn, this high cost of production, affects the overall production, which reaches the market with a high price, and is easily beaten by foreign products. The existence of free trade agreements between coun-tries of the region is a good element of cooperation between their economies, but in our case such agreements are of-ten turned against domestic produc-tion. Thus, once the Albanian farmers come to the market with their products, as a result of competition from foreign products, they encounter difficulties in selling these products, and in some cas-es they are forced to sell it at a price be-low the cost of products. This fact harms them and their business development. This is a very important point and a concern raised by farmers, who ask for a solution to establish a balance of this relationship, with the aim that the domestic market in is provided with quality products and affordable prices, while ensuring the market for domestic products.

Market orientation and finding it remains a crucial point for this sector. At the time these businesses want to establish and grow their own busi-ness, they should be capable to market their own products. The marketing of agricultural and livestock products is a very weak shackle in the country’s development chain and requires im-mediate development, because unless strengthening this shackle, there is no way to guarantee the agribusinesses market, and consequently, a sustain-able development for them.

In case of a loan application, in its financial analysis the bank takes into account the agribusiness tech-nical knowledge and management, along with aforementioned points. As long as the business is small, it is not-ed that a relatively good management is generally provided to it. When the business aims and heads to grow, it is exactly the point when the need for technical and managerial expertise is born, and this is currently lacking in the agriculture sector in Albania. The

formalizing process remains a point that hinders the lending process for Al-banian agriculture. Banks must have very good knowledge and specialized employees, in order to serve this sector, under such formalized conditions. The significant lack of financial documen-tation creates difficulties in analyzing these businesses, in the case of bank loan financing. Ownership issues are already a thorny problem. However, banks are constantly maintaining an open approach, to increase flexibility in this regard, by recognizing perfectly the difficulty of this case. Intesa Sanpaolo Bank has issued financial products which are flexible in terms of collater-al requirements, by responding to this problem, and also showing a desire to contribute to the sector’s development.

Intesa Sanpaolo Bank is conscious in dealing with these difficulties, by confronting the challenge of working with this sector. The bank has a direct support from the AgriVenture Bank in Italy, which contributes consistent-ly across the Intesa Sanpaolo Group, to increase and improve services to Agribusiness customers. Thus, we are aware that, the knowledge the bank owns, specialized and experienced em-ployees, tools and products tailored according to customers’ requirements it offers and is expected to offer to cus-tomers, and all our commitment, in co-operation with all relevant stakehold-ers in the agribusiness sector, will bring into the banking system a substantial contribution for this important sector for the national economy.

As long as the business is small, it is noted that a relatively good management is generally provided to it. When the business aims and heads to grow, it is exactly the point when the need for technical and managerial expertise is born, and this is currently lacking in the agriculture sector in Albania.

by Attn. Ermal NAZIFI PhD Candiate in concentrations’ control

An important aspect in this regard is considering the regulatory aspects and control of such transactions, by several public entities. The concentration’s control by Competition Authority is an important element of procedures to be followed and undertaken, because concentrations’ control is precisely one of main pillars of the scope of activity of this authority.

Controlling Mergers & Acquisitions:

investors’ group in 2007, valued at USD 100 billion, or the merger of Cit-icorp with Travelers Group, thus cre-ating Citigroup, with an approximate value of USD 70 billion.

According to CMS, a renowned le-gal services group in such field, a grow-ing number of M&A transactions are expected in financial markets of the Southeastern Europe, during the com-ing years, as banks from Western Eu-rope are curbing their presence in the region, with the aim to increase their asset value. Typically, Greek banks, according to this group, are pressed to withdraw their assets from the re-gion, following claims by country’s creditors, that commercial banks must not transfer funds to strengthen their branches in the region. 2 This situation could lead to an increase of banking M & A transactions in the region, which are likely to affect Albania, too. This means that Albanian banks and various interested investors should be prepared for this process, thus con-ducting their proper financial analy-sis to successfully accomplish these transactions. However, an important aspect in this regard is considering the regulatory aspects and control of such

transactions, by several public entities. The concentration’s control by Com-petition Authority is an important element of procedures to be followed and undertaken, because concentra-tions’ control is precisely one of main pillars of the scope of activity of this authority. The Competition Authori-ty conducts an analysis, ahead of any concentration’s practical implemen-tation, in order to assess whether the proposed transaction will bring any negative consequences, or not, for competition within the market.

WHAT IS A CONCENTRATION? The competition protection act pre-scribes concentration as operations bringing about a lasting change in the control of the undertakings concerned and therefore in the structure of the market (kete formulim perdor rreg-ullorja e BE)Practically, it occurs when:

• the merger of two or more previous-ly independent undertakings or parts of undertakings, or

• the acquisition, by one or more per-sons already controlling at least one undertaking, or by one or more un-dertakings, whether by purchase of

Experts’ Forum

The first mathematical exercise we all have learned is: 1 + 1 = 2. No one has ever doubted

such simple equation, as even the most skeptical could prove the validity of such equation, by counting the fingers. However, there are cases when 1 +1 > 2, and sometimes, 1 +1 < 2. This is true in the case of mergers, acquisi-tions, or similar transactions between companies, called as concentrations, by the competition legal framework, or simply M & A, under international terminology. So, in case of a success-ful M & A transaction, the combined value of two companies will be larger than the value of each company be-fore M&A transaction, and vice versa. Concentrations in financial markets, especially banking M&A transactions, are undoubtedly the most important ones. According www.businessinsider.com, the list of most important M & A transactions in history, since 19981, includes the acquisition of Royal Bank of Scotland (RBS Holdings NV) by an

Points to be considered


securities or assets, by contract or by any other means, of direct or indirect control of the whole or parts of one or more other undertakings.

• The creation of a joint venture per-forming on a lasting basis all the functions of an autonomous eco-nomic entity.

It should be noted, however, that not all the above – mentioned transactions should be notified and reported to the Competition Authority, because the legal framework requires that only those transactions, which have a turn-over higher than the legally required levels, must be notified and reported. This is so, because not all types of con-centrations may affect the competition in the market. Specifically, the eligible concentrations to be notified for au-thorization to the Authority include those cases for which the combined turnover in the international market for the last financial year, preceding the concentration, for all companies con-cerned, exceeds ALL 7 billion, whereas the turnover of at least one company, as part of the domestic market, exceeds ALL 200 million. Meanwhile, in cases of companies with no international turn-over and activity, the domestic turnover of all companies in concern should be more than ALL 400 million, and turn-over of at least one company, as part of the domestic market, is more than ALL 200 million. Given banks’ turnover, it is more than likely that their concen-trations are eligible for notification to the Authority, and therefore, such no-tification should not be overlooked by bank managers and respective experts. The law prescribes hefty fines, up to 1% of the annual turnover for the pre-vious year, should a company fails to notify about the concentration, within a prescribed 30 day-period, from the date of signing the merger agreement, acquisition of control, or the estab-lishment of the joint venture. In cases when the purchase will be effected through a public offering, the 30-day period begins from the moment of its disclosure, irrespective of the fact that such transaction is made in cash, or through exchange of shares, percentag-es of assets, etc. Even the agreements, which are in a verbal form within the

prescribed time period, must be noti-fied to the Authority. CONCENTRATION’S ASSESSMENTThe concentration’s assessment aims at avoiding negative consequences for the competition. So, the first step is to analyze whether the concentra-tion will constitute, or strengthen any dominant position in the market. Also, the assessment considers the increasing happening of other anti-competitive practices, i.e. colluding on prohibited agreements, even silent ones, between remaining companies in the market, af-ter the concentration is accomplished. However, the concentration is prohib-ited, only in cases when it significantly impedes effective competition in the market, or in some parts of it, in particu-lar as a result of the creation or strength-ening of a dominant position. So, con-centrations’ control is subject to a detailed assessment, as it is not simply the establishment or strengthening of any dominant position, in order to not allow it. Another important element to be considered in this regard is the ef-ficiency that is expected to follow the concentration. If the efficiency is great-er than the cost or damage, which may

be caused to the competition, then the concentration should be allowed. If a company is on the verge of bankruptcy and there is no other competitive way rather than concentration, the concen-tration will be allowed; even if it would not be allowed, under normal condi-tions. The Competition Authority may allow a concentration, should the par-ties accept certain conditions and take appropriate measures to mitigate the anti-competition effects of the trans-action. Such measures may constitute the enterprise’s behavior, but also structural measures, such as the sale of certain parts of the company.

Concentrations could make com-panies more efficient, increase compe-tition and bring benefits to consumers, but companies involved in these trans-actions must show proper prudence and be prepared to obtain approval form the Competition Authority, as a legal requirement, without which the transaction risks to be annulled.

1 http://www.businessinsider.com/16-biggest-acquisitions-of-all-time-2014-2 ,

2 http://www.cmslegal.com, Emerging Europe M&A deals report Dealwatch 2013/2014.

As the practice of Competition Authority has shown, there are countable cases where banks have encountered problems with delays in notifications, thus being fined for such breach. This has occurred since the early days of the Authority, but also by end-2012, practically after a decade of its operation.


The “security trap” means building a protective tactic, which hinders criminal initiatives, and enables the investigation of occurred events, thus helping in capturing the perpetrators.

Criminal actions committed against banking business units, foreign exchange bureaus and

other financial entities that handle monetary values, do not primarily intend to damage and injure physi-cally the employees serving in these objects and their customers therein; they only intend robbing the money as quickly as possible. It should be un-derstood that the psychological pres-sure exerted by displaying and using of firearms or other strong objects, through heavy camouflage and other elements, including kidnapping, aims only at achieving a rapid act of rob-bery. In order to prevent robberies, physical and psychological violence, and to protect human life and mon-etary values, banks use various forms and methods of physical and electron-ic security, depending on their securi-ty policies, as well as on the trends of criminal activities.

Experts’ Forum

Security traps

HOW TO UNDERSTAND THESE “TACTICS” AND HOW TO BUILD THEM UP? “Security trap” means building a pro-tective tactic, which hinders criminal initiatives, and enables the investigation of occurred events, thus helping in cap-turing the perpetrators.

“Cage Systems” at the entrance of the business units, are typical physical traps that do not allow the access to the bank by criminals who carry fire-arms, strong objects or camouflaged people. Such systems not only impede wrongdoers to enter the bank, but they can are trapped within, if they have committed a robbery at the bank and attempt to exit. By blocking and catching a robber inside such cage, has a significant restraining effect for the robbery, as robbers are reluctant to undertake any robbery on banking facilities that implement such system at their entrance. Currently, in Albania this tactic is used by some banks only, which for the period 2000-2013 have not experienced any robbery cases.

“Banknotes” can also be used as a “trap” to capture robbers. A simple, but very effective method, is the iden-tification of the serial number of the banknotes in one stack (pack of 100 banknotes), which is always placed, along with other monetary values, in the cash counters, or in the safes. If during a robbery, this stack with the registered serial numbers is stolen along with other monetary values, it will serve as a very valuable material evidence for the police, prosecution and the court, in proving the crime.

This trap worked for capturing rob-bers in the event at the American Bank of Albania, back in 6 June 2005. The police found in the apartment of one of the authors of the robbery several notes with serial numbers previously recorded by the bank, which served as proper evidence needed from the law enforcement authorities to arrest the criminals.

“Painting” the banknotes with a special ink, invisible to human eye, is another way of building traps. The painted banknotes stand together with other monetary values at counters, safes, etc., as described above. The color used is personalized for specific banking subjects and is verified after laboratory examinations, which deter-

mine accurately the color and the bank they are robbed from. These notes will be used for the detection of bank rob-bers.

“Dye Pack” is a more advanced trap for catching robbers. The “dye pack” device is a small metallic box, hidden inside a stack, usually filled with red pressured paint. The stack, holding inside the “dye pack”, stands along with other monetary values in counters, cash transporting vehicles, safes rooms, etc. The small metallic “box” is equipped with an electronic system, which activates its explosion, once the box is removed from its en-vironment, marking the stolen cash with red dye. The security trap in this case shall be the stained money, which serve as a proof for capturing the rob-bers. It should be emphasized that, while leaving quickly the crime scene, and under psychological pressure, the robber does not pay attention to sto-len goods. The dye explosion may not stain only the money but also clothes and body parts of the robber him/her/self, thus providing valuable proof for law enforcement agencies. A stained robber “confesses” to have committed a robbery.

The person who commits criminal act, operate almost with the driver mentality, who thinks he cannot make an accident, while driving the vehicle. Similarly, the robber shall not step back from the crime, thinking that he will not be detected, stopped and punished. The reality is different: the sophistication of physical and elec-tronic security measures, as well as the setting up and functioning of se-curity traps, influence the change of such mentality, posing the bank as a place hard to be robbed, where traces are left, where money and you can be dyed, etc., thus taking evidences with oneself, which prove the crime and enable its punishment.

Executives in charge of the securi-ty structures in banks must be familiar with these alternative security meth-ods, in order to be able to convince the high levels of management on their necessity and effectiveness and to im-plement them in business units, by as-sessing beforehand the level of risk of these units.


by Mr Roland TASHIChairmanAAB Bank Security Committee


AAB and Kosovo Banking As-sociation (KBA) co-organized together, for the first time, the

Third National Forum: “On Bank-ing Security”. The Forum, held on 28 May 2014, at Theranda Hotel, in Prizren, Kosovo, was attended by representatives from commercial banks in Albania and Kosovo, central banks of both countries, Police and National Agency of Data Protection in Kosovo, and representatives from companies which provide services in relevant fields.

This year, the Forum covered two fields of banking security: the Physi-cal Security and Information Security.

In their greeting speeches, Mr. Ilir Aliu, Deputy Head of KBA’ Board of Directors, Mr. Petrit Balija, KBA Secretary General and Ms. Endrita Xhaferaj, AAB Secretary General, welcomed the cooperation of the two Associations and emphasized the need for further local and regional cooperation in this sector.

Mr Balija appreciated this event as one of the most important events in the banking industry and said that: “Given the fact that this forum is or-ganized by KBA and AAB, we aim at organizing such forum in a region-al level, where we may discuss and

Albanian Association of Banks and Kosovo Banking Association organize the 3rd National Forum on Banking Security

exchange experiences between our banking industries in the region”.

Representatives from commer-cial banks in Albania presented the work done by AAB Bank Security Committee and Information Security Committee, as well as current issues in Albania in these two fields.

Mr. Roland Tashi, AAB Bank Se-curity Committee Chairman, during his speech quoted: “The function of the physical security structure and its efficiency in commercial banks is the cornerstone, from where it starts to raise, develop and operate the whole edifice of security”.In order to prevent robberies,

physical and psychological violence, and to protect human life and monetary values, banks use various forms and methods of physical and electronic security, depending on their security policies, as well as on the trends of criminal activities. In addition to physical security, a very efficient method for the prevention and capture of crime perpetrators is setting up and functioning of the “security traps”.


FIGURES OF CARD SECTOR DEVELOPMENT IN KOSOVO

In 2002, the Kosovo market had In 2013:• 15 ATMs • 500 ATMs• 200 POS • 8,700 POS• 15,000 issued cards • Approximately 2.8 million issued cards (including the expired cards, lost/stolen, etc.)

THE RANGE OF ELECTRONIC PRODUCTS, OFFERED BY BANKS IN KOSOVO:

• Credit cards with instalments, with minimal payments and rewards;• Prepaid cards, with functions of virtual card and P2P (opportunity for payments to

friends and family)• Debit cards for ATM/POS with opportunities to pay through internet and with bonuses • E-banking and Mobile Banking• Payments for local services and other utilities (electricity, water, heating, customs, and

landline phones, insurance policies, foreign exchange)• SMS Banking/Top up/Info• cell phone balance recharges, internet services payments• E-commerce

The roots of services related to cards, are found back in 2002, when banks began printing them. In 2002 there were 15 ATMs only, throughout Kosovo, and some 200 POSs, with just 15,000 cards printed, by all banks together. The number of card increased in 2004, with the introduction of cards licensed by Visa and Mastercard.

More resources are now involved on the education of the bank clients, and as a result the use of cash is replaced with cards.

Kosovo started developing its card sector immediately after the war of ’99, much later than the other

Central & Eastern European countries. The infrastructure of network terminals (ATM and POS) is growing and devel-oping but not at a comparable pace as that in other countries in the region. The number of banking cards is increasing; however Kosovo still lags behind other countries in the region and Central Eu-rope. Currently the number of ATMs in Kosovo has reached 500, so 4 times less than Slovenia and 2 times less than Macedonia. In terms of POS terminals, Kosovo comes second largest in the re-gion, with an estimated number of POS at roughly 8,700. In Kosovo, the ATMs provide additional services like: utility payments, mobile Top Up, Credit Card Payments, Inter Bank Transfers/Nation-al Transfers, Obtaining 3D Secure PIN, increasing credit card limit, etc., along with standard services, such as: balance

Experts’ Forum

The development of Card Sector in Kosovo

inquiry, PIN change, cash withdrawal, etc.

The roots of services related to cards, are found back in 2002, when banks began printing them. In 2002 there were 15 ATMs only, throughout Kosovo, and some 200 POSs, with just 15,000 cards printed, by all banks to-gether. The number of card increased

in 2004, with the introduction of cards licensed by Visa and Mastercard. The certification by these two companies enabled card holders to use them even beyond the network of card issuer (the bank). Card business in Kosovo mar-ket has been developing rapidly after 2010 and especially in 2013, where all banks invested heavily in marketing,

by Mr Fisnik BEHXHETISenior Officier of Card OperationsTEB, Kosovo

security, infrastructure, launching of new products and customer education. Banks pay more attention on educating bank clients, and as a result they are in-creasingly using cards instead of cash. Also, a sizeable slice of banks’ budget is allocated for marketing purposes of various products they offer, aiming at promoting banking services. Now, bank cards are displayed everywhere on billboards, televisions and various advertising/informative channels. On the other hand, banks in Kosovo have invested heavily on increasing the level of card security, especially during the last 3 - 4 years. It should be emphasized that, new cards issued in Kosovo mar-ket are personalized with DDA chip, while some banks have started to im-plement the 3D Secure for cards they issue.

THE FUTURE OF E -PAYMENTS IN KOSOVOIt is estimated that there are over 1 mil-lion people in Kosovo who own a mo-bile phone, and 1 out of 4 phones are smartphones. This group is thought to be potential clients for various bank-ing payments through mobile phone, which is expected very soon to revo-lutionize the payment system in the fu-ture. At the same time, considering the efficiency, the ease of use and practical-ity of mobile payments, therefore they will be an easy and preferable choice for clients.

25 www.aab.al Bankieri 25 www.aab.al Bankieri 25 www.aab.al Bankieri

AAB and its Card Committee, comprised of representatives from member banks of AAB,

organized, for the fourth consecutive year, the Albanian National Card Forum on 16 May 2014, at Sheraton Hotel, Tirana. The forum with main topic: “Card Business – Develop-ments and Innovations”, was chiefly focused on card industry develop-ments. The forum was attended by representatives from commercial banks in Albania and Kosovo, Bank of Albania, Visa and Master Card, Paylink, local and international companies which provide technol-ogy services in electronic payments services and utility companies.

In the opening speech, Ms. En-drita Xhaferaj, AAB Secretary Gen-eral and Mrs. Irida Huta, AAB Card Committee Chairwoman, greeted the participants and emphasized the role of this roundtable which gath-ered experts of card sector and pay-ment systems, and briefly presented the developments and opportunities, that card business have in Albania. During the first section of the forum, the presenters brought and explained card industry innovations and ana-lyzed the development trend of the sector. During the second section, banks’ representatives presented the new payment models that banks of-fer to their clients.

AAB organized for the 4th consecutive year the Albanian National Card Forum

At the end of the forum, now an annual opportunity for presenting the opportunities offered by this sec-tor, participants discussed on con-clusions and suggestions, regarding the domestic card sector and e-pay-ments growth.


The experience has shown that fight against deflation is far more delicate and difficult, as compared to inflation, whereas monetary policies are recommended to be “reactive” against inflation and “preventive” against deflation.

The unstoppable drops of the in-flation level in Albania, Eurozone and in a wider specter, in many

other developed countries of the world, are unfurling fears and deep concerns about facing with deflation. It seems that central banks are focusing their monetary policy analyses and decisions on base interest rate precisely on the is-sue of a possible confrontation with the devil called “deflation”. However, some substantial questions are prevailing in all debates, explanations and views of central and commercial banks, in the context of expectations and adaptations with a potential deflationary reality, such as: Is it a real the fear of a deflationary scenario? Are central banks taking “his-toric decisions”, intended to prevent a deflation show up? Is this a real war and imminent risk, or it is mainly done for psychological effects and as a preventive therapy? The last 12-15 months proved that these doubts or assumptions came true, not only for large systems such as:

How real is the fear of a deflationary scenario?

Eurozone, U.S., etc., but also for small and developing countries. The Euro-zone’s prices rose merely 0.5 per cent in May, while the ECB’s target is 2 per cent; in Albania they hovered between just 1.6 - 1.7 per cent, whereas the BoA’s minimum floor (objective) is 2 per cent. In all cases, it appears that the most dis-turbing fact is that “factors which affect the drop in inflation are currently result-ing more powerful and more influential than factors affecting the opposite side.” For their part, monetary policies appear to be approaching limits of their con-ventional nature and central banks are starting to think about a possible need to apply selective or largely unconvention-al monetary policies. However, a cer-tain category of experts and specialists of monetary policy and inflation/defla-tion relation think that “no one should be afraid of deflation,” at least for the time being, or for a short period of time ahead.

Anytime the word “inflation” is mentioned, the economists in general and bankers in particular, perceive it as a “more harmful phenomenon compared to high inflation”. Based upon the nega-tive experience of the Great Depression crisis of 1929-33 in US, the Asian defla-tion, and especially the Japanese defla-tion of 1990-2002, etc., it is concluded that, “when the deflationary spiral ex-

pands and extends in time, monetary policies start to lose efficiency and the economy slips, unavoidably, towards recession, ths making governments and central banks powerless. The experience has shown that fight against deflation is far more delicate and difficult, as com-pared to inflation, whereas monetary policies are recommended to be “reac-tive” against inflation and “preventive” against deflation. The above mechanism goes through several stages: 1) it begins with the outbreak of the real estate or monetary bubble, following the failure of monetary policy, or the exchange rate, as a result of structural problems produced by the economy or the bank-ing sector, which hinder the efforts to recover and stabilize the economy, after various shocks from crises, which above all, trigger a constant decline in prices; 2) the decrease in prices does not stimulate demand at all, but instead weakens and asphyxiates it, so that the decrease of in-flation provokes a decline in production or undercapacity performance in many branches of industries and services. In order to stimulate the economy, central banks walk up to the limits by reducing the key interest rate near (or almost) zero, but such move does not produce the expected effects, because budgetary policies are not likely to be expanding ones, in a time when fiscal incomes will

by Prof. Dr. Adrian CIVICIPresident & Head of Doctoral SchoolEuropean University of Tirana

Economist Corner


follow a downward trend, as a result of declining economic activity; 3) At the moment when the the deflationary trend emerges, central banks are far more in-terested in having a higher inflation rate, possibly in the range of 3-4 per cent, in order to avoid “catastrophic scenarios”, that economists describe as “the liquidity trap”, because handling and containing the deflation, in the frame of a low infla-tion situation, ensures a limited outma-neuvering by monetary policies, if not a deterioaration in their creditworthiness. So, in other words, deflation is charac-terized by 5 basic parameters: a signifi-cant decrease in price levels and staying in such levels for a long time; a declin-ing demand and consumption; meagre economic growth or recession-like sit-uations; almost zero base interest rates applied by central banks; and significant reduction of credit to economy.

In theoretical terms, such scheme is specifically analyzed by economists like: Fisher, Summers, Akerlof, etc., or gen-erally by the supporters of the financial theory of cycles. In an empirical plan, alongside classical cases of deflation of end - nineteenth century (caused by the contradiction between a limited money supply and the explosion of technologi-cal progress and industrial revolutions), and Great Depression of 1929-33, during the last 2-3 decades the world has experienced some difficult cases of deflationary situations: Japan during the 1990-2002 period (as caused by the out-brake of the real estate bubble and the banking system crisis), U.S. during 1996-97 period (by an overvalued consumer price index), the Asian crisis of 1997-98 (massive depreciation of assets), Argen-tina and Hong - Kong in 2000-2002, several sporadic cases of stock exchange shocks in U.S. and Europe in the coming years, etc. But, is deflation an “absolute” phenomenon, is the “Japanese disease” a virus that could contaminate every econ-omy of different countries in the world, and above all, is there any recipe to be saved from deflation? Some economists such as: Becker, Sterling or Blanqué think that “some economies are more immune to deflationary risks, thanks to their structural rigidity in their banking and economic sphere”, so when talking about the likelihood of facing a deflation situation, someone must carefully anal-

yse “the structural situation of key stra-tegic markets” in each country. The situ-ations could be different in U.S., Japan, Eurozone, BRICS countries, developing countries, etc.

Mrs. Christine Lagarde, IMF Man-aging Director, joined the deep concern about such global-scale issue, when in January 2014 from Washington, she de-clared that “with inflation running be-low many central banks’ targets, we see

rising risks of deflation,”…“if inflation is the genie, then deflation is the ogre that must be fought decisively. [...] We see rising risks of deflation, which could prove disastrous for the recovery.” In these conditions, Lagarde advises that, “central banks should return to more conventional monetary policies only when robust growth is firmly rooted.” It is the first time that one of the most im-portant international institutions, such

as IMF, so openly articulates the risk of deflationary scenario, while most central bankers believe and estimate that “such danger is still hypothetical and is not a threatening one in the short-term”, al-though they admit, in figurative terms, that it is like “Sword of Damocles”. Ac-cording to them, the deflation material-ized in a general price decrease for long periods, should be distinguished from disinflation, which means a situation in which the price decrease follows a slow pattern. In such situations, “public pol-icies should not put more emphasis on budgetary rigidity and austerity, because such policies may provoke a reduction of public expenditure, incomes and they do favor deflationary expectations, thus reinforcing a deflation happening.

The real fear is based upon doubts that perhaps “the current disinflation of last months or year, as evidenced in the U.S. and Europe, could evolve into a deflationary spiral.” Such a situation, may inter alia, risk provoking a decline in investments and consumption, and it will overvalue and overprice real interest rates, by making more difficult public and private debt repayments. It was typ-ically the fear of inflation which drove some of most powerful central banks in the world, such as: Fed and ECB to make “drastic” decisions in their monetary policies and key interest rates, noting that “a very low inflation requires ultra loosening monetary policies.” In early 2014, the European Banking Authority (EBA) decided, under the pressure of deflationary risk, that the key criterions of passing the stress-tests by European banks should include indicators which showed banks’ stress resistance and their abilities to weather a hypothetical deflationary situation, that may emerge within the eurozone, in the months or 1-2 years to come.

In the U.S., the fear of deflation emereged since the 2008-2010 period,

when Fed was headed by Mr. Ben Ber-nanke, an expert on deflation issues, with many academic work and contribution in this area. Bernanke’s motto was “De-flation: Making Sure “It” Doesn’t Hap-pen Here”. By imagining the devastating consequences, a long cycle of low prices and a meagre economic growth could produce, Fed embraced an unprecedent-ed supportive policy for markets and the U.S. economy. This policy, called “quan-titative easing”, led the U.S. to “create” dollars, via Fed, aiming at buying long-term government bonds, from January 2008 to March 2014, which in turn increases the monetary base by 467 per cent, while keeping an almost zero key interest rate (0-0.25%). By “responding to the demand for currency,” Fed “en-couraged economic agents to abandon their logic of reducing expenses, regain confidence and intensify borrowing to invest and consume.” Actually, the U.S. economic growth appears in a positive trend, which is reflected in a changing course of Fed’s monetary policy, in the form of “tapering” , that aims to stabi-lize the dollar, by reducing the mone-tary base with USD 10 billion in several stages (from January 2014). However, Fed does not think the U.S. economy is immune from the “deflation virus” and it does not exclude the possibility of experiencing a period characterized by a decrease in prices, credit and wages, that would in turn provoke a decline in investments and consumption, would complicate the public debt service, as a result of increasing percentage real in-terest rates, as well as deepening the gap between rich and poor people. There-fore, the “quantitative easing” policy is not considered as lapsed and closed, but it is kept “in vault”, in case of any real emergence of the deflationary scenario.

Even ECB, which has privileged the LTRO (Long Term Refinancing Opera-tions) policy until recently, which unlike

the American model, has privileged the lending method. In this case, ECB has provided commercial banks with a sig-nificant loan amount, thus increasing the monetary base, not as a direct and outright intervetion, but instead as a response to banks’ needs for borrowed funds. The larger or smaller the loans’ demand, the more the monetary base was increased or decreased. This policy gave significantly less positive effects, compared with the U.S. model; the mon-etary base in Europe during January 2008 - March 2014 period grew by only 25 per cent, whereas the inflation in May 2014 fell to historical levels of 0.5 per cent, significantly below the ECB’s target of 2 percent.

In response to the deflation risk and the necessity of increase the European economy’s competitiveness, the ECB took an “historic” decision: it lowered the euro base interest rate at 0.15%, announced the launching of two ma-jor 4-year loan packages to European banks, and decided the remuneration rate for liquid deposits with the ECB “in a negative territory (-0.10%)”. This unconventional measure provoked immediately a significant decrease by EUR 25.4 billion for bank deposits at eurozone’s central banks, although it remains unclear whether these liquid-ity will be injected immediately into the economy in the form of loans, and therefore will affect the rise of inflation, within the ECB’s objective. Mr. Draghi, ECB President, described these mea-sures as “encouraging lending and in-jecting liquidity into the real economy” and as a challenge in efforts to stem dis-inflation and more importantly, the fear of deflation’s emergence. Meanwhile, Mr. Weidman, President of Bundesbank noted that, “we did our best to encour-age the increase in inflation. Now it is important to look at a return of eco-nomic growth in the Eurozone “. Even Mr. Noyer, Governor of the Banque de France, stressed that “the largest chal-lenge the eurozone is facing is the risk of an installated low inflation rate and strong deflationary pressures” that, among others, are caused by a “strong euro”. Under these conditions, during coming months, “the ECB should seri-ously consider the implementation of unconventional monetary policy.”

Monetary policies appear to be approaching limits of their conventional nature and central banks are starting to think about a possible need to apply selective or largely unconventional monetary policies.

Deflation is characterized by 5 basic parameters: a significant decrease in price levels and staying in such levels for a long time; a declining demand and consumption; meagre economic growth or recession-like situations; almost zero base interest rates applied by central banks; and significant reduction of credit to economy.


ALPHA BANK ALBANIA

Volunteer Day Every year Alpha Bank Group organizes “The Volunteer Day - Alpha Bank”. This year, the Bank chose to revitalize the “Selman Stermasi” park in Tirana, and another park in the town of Ballshi. Ms Brunilda Isaj, member of management board and retail banking business unit manager at Alpha Bank Albania said: “The goal was to provide citizens with a clean and friendly environment and I think we achieved it. Today is the National Children Day and it’s everyone’s duty to provide them with a healthier environment to grow and teach them about loving and caring for the nature.

Together we donate blood!Alpha Bank Albania, in collaboration with Red Cross Albania, organized for the fourth consecutive year the Blood Donation Day, on 11 June 2014. Mr. Periklis Drougkas, CEO of Alpha Bank Albania said that the bank regularly undertakes initiatives to support various social issues. In order to increase the community’s awareness about the importance of blood donation, Alpha Bank launched a Facebook campaign named “I donate 5 minutes of my time! What about you?’’

Social capitalBKT

Close to the new generation In the occasion of 1st June, Credins Bank supported financially the feast of children, organized at Kindergarten no.24 and also supported the charity show, “You should love, too”.

The bank organized a gala evening, in support of orphaned children, where special guests attended the event, with the aim to raise awareness about real needs of this special social group.

Sport supportCredis Bank provided financial support for Albanian Weightlifting Federation, which was prepared for a decent participation at the World Weightlifting Championship, in Kazakhstan.

CREDINS BANK

“Let’s Clean up the Coast”organized by Green Line Albania.This initiative, supported by BKT, aims at mobilizing citizens in a one-day voluntary action to clean the coast and raise awareness on keeping the environment clean.

The National Circus The Albanian National Circus, with the support from BKT, hosted “The Knocks of Spring” show. The great masters of circus, who shared the same passion for art and circus, played many tricks for children in the arena.


Social capital

INTESA SANPAOLO BANK ALBANIA

CREDIT AGRICOLE

Crédit Agricole and TKOB bring back Angelin Preljocaj on stageThe bank joined the National Theater of Opera and Ballet (TKOB) to support two ballet shows of Maestro Angelin Preljocaj, titled: “Le Royaume Uni” and “La Stravaganza”, from 9 - 11 May 2014.

PROCREDIT BANK

For a clean environment On the eve of opening the tourist season, the bank undertook the initiative to clean up the largest tourist areas in the country. On the same day, the bank’s staff divided into areas of Dajti National Park and 4 largest beaches of the country, such as: Velipoja, Durrësi, Vlora and Pogradeci, gave the example of a responsible civil behavior.

Meeting with Albanian and Macedonian businesses About 40 businesses, clients of ProCredit Kosovo and Macedonia, were gathered in a meeting on 27 May 2014 in Tirana. The customers had the opportunity to promote their products in a mini-fair and at the same time introduced their financial services, such as ProPay transfers.

SOCIETE GENERALE ALBANIA

Societe Generale Albania sponsored several initiatives, both in Tirana and other cities, through a network of 43 branches, located throughout the country. One of the initiatives was sponsoring Hudenisht Municipality for the lake shore cleanup in Lin, on the occasion of touristic season opening.

RAIFFEISEN BANK

Bank to donate 20 computers to “Zyber Hallulli” Children’s HouseRaiffeisen Bank donated 20 computers to “ZYBER Hallulli” Children’s House, in Tirana. In his welcome speech, Mr. Christian Canacaris, CEO of the bank, gave his thanks for organizing such event and for the opportunity given to the bank to become part of it.

The inauguration of the first service centre for children with Down syndrome The bank supported the reconstruction of new premises for Down Syndrome Albania Foundation and its centre of services for children, individuals with Down syndrome and their families. This is the first center of its kind in Albania.

Sponsorship for new uniforms of the employees of QSUTBank joined the initiative of the University Hospital Center Directory “Mother Teresa”, in supporting financially the project for producing the uniforms.

Social activities and initiatives •A story of altruism in the International

Thalassemia Day, 8 - 9 May •Gifts to orphaned children and their

families in Gjirokastra, May 20 •Work & Career Fairs, more

opportunities for students •TEDx Tirana - in support of

innovation, May 3

Activities and initiatives in the environmental field•Let’s Clean Uup the Coast,

23 May, 2014! •World Environment Day, 5 June,

2014 – “Let’s raise our voice not the sea level!”

Arts & cultural activities and initiatives •The Feast of the Italian Republic,

2 June 2014

Financial education activities and initiatives•Donation to support “De Rada”

elementary School•Children visits at the Bank, 6 June, 2014

“Burn calories, not fuel”Crédit Agricole Albania and Ecovolis continue to promote the clean environment, through raising the awareness of citizens to use bicycle as a healthy form of movement. Such cooperation is made possible through the joint bicycle station, positioned at “Skënderbej” Square and under the motto: “Burn calories, not fuel”

“French Feast” in GjirokastraIn the frame of the Francophone Spring, the bank and the “Rumbo Urani” elementary school organized a “French Feast” in Gjirokastra.

Promoting memory book: “Albania in the trenches of wars”The photo album: “Albania in the trenches of wars”, prepared by the researcher Walter John, with the support of Crédit Agricole Bank Albania, was promoted on 18 April 2014, at the National Historic Museum.


Social capital UNION BANK

Summer DayUnion Bank supported several activities organized in Elbasan, on 14 March 2014, on the occasion of the “Summer Day” Feast.

Children’s Festival - Fest 2014Union Bank supported, for the third consecutive year, the organization of Children’s Festival “Fest 2014”, held in Kukës, on 29 May, 2014.

TIRANA BANK

Tirana Bank supports Opera “Orpheus”Tirana Bank was one of the main sponsors in putting on stage the opera “ Orpheus and Eurydice”, by bringing this masterpiece to the Albanian audience.

Tirana Bank supports excellence in teaching system Tirana Bank helped the Directorate of Education in Pogradec, in its new project: “The digitalization of teaching classes.” In this context, Tirana Bank sponsored the purchase of a digital interactive board (Smart Board), which will help in updating teaching methods.

VENETO BANKA

Sponsor of a children’s show Veneto Banka supported the show of children of Shkodra: “Promessi Sposi”, organized by the Italian Embassy. This show was part of the celebrations organized in the National Day of the Republic of Italy.

Rally Albania - “Smiles and Energy” The “Smiles and Energy” team from Veneto - Italy, consisting of Giampietro Dal Ben and Michele Sartori and the supporting team, competed in Rally Albania. Together with Veneto Banka they donated a truck with aids for people in need in Durrës and Elbasan. The aid distribution was supported by Mr. Erion Veliaj, Minister of Social Welfare and Youth.

Ecovolis - Clear the lanes! Ecovolis Albania, with the support of Veneto Banka, is successfully continuing the campaign to raise awareness for the use of bicycles in the city, and especially clearing the bike lanes.

News

The European Bank for Recon-struction and Development (EBRD) presented on 21 May

2014 the “Enterprise Expansion Fund” (ENEF) at Tirana International Hotel. The event brought together representa-tives of banks and business community.

ENEF is a financial instrument for Western Balkan countries which sup-ports established SMEs with a high-growth potential, incorporated in the Western Balkans or investing in projects implemented in the Western Balkans, by providing equity finance to support the development and expansion of these businesses. ENEF supports innovation and introduction of technologies which help boost competitiveness, improve quality and efficiency of production. This fund aims to introduce standards for corporate governance, encouraging companies to raise the bar in business behavior.

The fund size is €77 million and it provides funding to local SMEs whose ever growing needs are not fully met by other funding sources.

Mr. Fabio Serri, the head of the EBRD Office in Tirana, said that Al-banian businesses and companies can obtain investments under ENEF and ex-pressed EBRD’s readiness to work with banks in this regard. “Banks can be part-ners in this financial instrument and the EBRD is willing to work with banks,” he added.

Mr. Arben Ahmetaj, Minister of Economy, said that this innovative fund, comes at the right time to Albania as it brings ideas, innovation and finance, as well as a need for further development. Mr. Ahmetaj continued: “This financial instrument is fantastic. It doesn’t require collateral. The instrument will encour-age all of us, enterprises and the gov-ernment, to think more about the new structure of SMEs”.

ENEF focuses on SMEs in the West-ern Balkans (Albania, Bosnia and Her-zegovina, Croatia, Kosovo, Macedonia, Montenegro and Serbia) with a high growth potential.

WHAT IS ENEF?ENEF supports established SMEs with a high-growth potential, incorporated in the Western Balkans, or investing in projects implemented in the Western Balkans, by providing equity finance to support the development and expansion of these businesses.

ENTERPRISE EXPANSION FUND (ENEF)• Key features• For SMEs with a high growth

potential,• Provides equity financing for the

expansion of these businesses,• Eligible SMEs can obtain invest-

ments of EUR 1 million up to EUR 10 million on average,

• Advised by the European Bank for Reconstruction and Development (EBRD),

• Expected financing available at second closing: up to EUR 110 million.

WHICH TYPE OF FINANCING DOES ENEF PROVIDE TO SMES?ENEF provides primarily equity and quasi-equity, as well as convertible bonds, to the selected investee compa-nies, with the aim to strengthen their

balance sheet and support their growth potential by providing liquidity.

WHO ARE ENEF PARTNERS?The initial investors into ENEF are the European Commission, EBRD, the Eu-ropean Investment Fund (EIF), Kredi-tanstalt für Wiederaufbau (KfW) and the Italian Government.

WHO IS MANAGING ENEF?ENEF is internally managed and advised by The European Bank for Reconstruc-tion and Development (EBRD).

THE ENTERPRISE EXPANSION FUND – BACKGROUNDThere is a growing demand in the West-ern Balkans to finance expansion capital of local SMEs. There has been few suc-cessful homegrown equity funds in the Western Balkans, because of high costs associated with establishing and devel-oping investment funds in the region.

In this context, ENEF was created to encourage the expansion of SMEs in the Western Balkans. SMEs can clearly ben-efit from cooperation with equity inves-tors to make the transition to the next level of development and realise in full their growth potential.

EBRD and partners provide financing for Western Balkans’ SMEs with high growth potentialEnterprise Expansion Fund (ENEF)


Halcom’s strong initiative is to support Albanian banks and other financial institutions with offering a full range of banking and financial services in a modern digital environment.

Halcom has been established in 1992 and has pioneered mod-ern e-banking and e-payments

systems, focusing on generating value for banks and their customers. HAL-COM provides modern, reliable and val-ue-based solutions to its customer base, consisting of more than 70 commercial banks, 150,000 companies, processing over 20 million transactions in a value of USD 80 billion monthly, across 10 glob-al markets in Southeast and Eastern Eu-rope, North Africa and the Middle East (Albania, Bosnia and Herzegovina, Iran, Kosovo, Montenegro, Qatar, Morocco, Poland, Serbia and Slovenia).

HALCOM IN ALBANIAHALCOM is present in Albania from 2005 and since then HALCOM is striv-ing to shed all the experiences, gained in 10 different markets across the world, into the solutions that it is developing for the Albanian market, too. In Alba-nia, HALCOM provides e-banking ser-vices to 4 commercial banks (Société

Tech Topics

E-Channels and banking industry:

Générale Albania Bank, Crédit Agri-cole Bank, Raiffeisen Bank and Veneto Bank). HALCOM has also a presence in Kosovo (servicing Raiffeisen Bank and ProCredit Bank) and in Montene-gro (servicing Erste Bank, Komercijalna Bank and NLB Montenegro Bank).

AREA OF BUSINESSHALCOM is committed at attaining the very highest standards of quality. Through innovation, HALCOM is thus constantly at the forefront of the following areas:

• e-banking: a suite of products, which represents an effective, end-to-end solution for all areas of electronic banking services, supported accord-ing to specific needs of all customer segments (Retail, SME, Corporate),

• mobile banking: is a simple, fast and safe solution for usage of electronic banking services on mobile devices,

• e-invoicing/e-billing: the solution for distribution of e-invoices uses your electronic bank as a safe communi-cation channel. Recipients of e-in-voices can thus prepare payment or-ders with just one click, while issuers of e-invoices can entirely automate

coordination between payments and invoices due to accurate data,

• inter-bank clearing systems: for au-tomated processing of payments on national level within a central bank or a clearing house,

• mobile payments: it is a solution offer-ing an easy-to-use and secure mobile payments with protection that func-tions on all mobile telephone handsets.

CHALLENGES OF BANKING INDUSTRY WHEN IT COMES TO SERVICING CLIENTSBanks have been striving to align their access channels (branches, ATMs, e-chan-nels, etc.) as close as possible for a long time. Benefits behind this are obvious - a financial institution can be twice as prof-itable and experience greater customer loyalty when its channels are aligned. But aligning the channels is a complex task that places new demands on the bank and means overcoming two considerable ob-stacles - complex organizational barriers as well as fragmented legacy IT systems. The name of the game is Omni-Channel. In an organization where channels are well converged, clients access the services they want on their preferred channel mix and

by Mr Marko VALJAVEC, Ph.D.Chief Executive OfficerHALCOM d.d.

Challenges and opportunities as recognized by HALCOM


their experience is consistent, regardless of the entry point, comprehensive customer information is available on any channel irrespective of where the information orig-inate from, and finally, the client has ac-cess to real-time progress or status on his activities, be it a mortgage application or a complaint letter.

OBSTACLES TO OMNI-CHANNELChannels usage varies across different products, segments, activities and it changes overtime, not least because of banks’ efforts to direct activities into channels that are able to handle them most effectively. More-over, clients are increasingly using multiple channels to complete a single activity.

Consequently, in the past years the chal-lenge for banks was to achieve an optimal customer journey that gives the most effi-cient balance between different channels in online and physical worlds. Achieving this kind of seamless channel integration is very difficult under the current set-up. Banks have to struggle with multiple disparate yet often overlapping systems, which are usu-ally inflexible, hindering the bank’s ability to respond to fast-changing business re-quirements. As a result, processes are often duplicated in each channel, data are stored locally in the channel, and messages across all the bank channels are inconsistent and their language is not adapted to the specific channel audience.

BENEFITS OF OMNI-CHANNELA number of banks on the global market currently lead the game in terms of Om-ni-Channel. Among the most important takeaways are:Support of the customer centricity / relationship management initiatives:• Decrease in attrition rates;• Spreading out of retention efforts:

from only physical to all channels;

• Increase in the number of interac-tions per customer;

Improved efficiency:• Increase in channel efficiency, “inter-

action specialization”;• Increase in service agent and branch

employee productivity;• Increase in channel transparency and

flexibility;• Increase in time-to-market of ser-

vices and products;Increased revenue:• Increase in the first-contact sales ratio;• Increase in cross-sell ratio.

WHAT DOES OMNI-CHANNEL IMPLY FOR INTERNET BANKING?

An Internet Banking solution is just another channel in bank´s overall chan-nel mix. Nevertheless, being part of a complex multi-channel strategy, judging a solution by the range of its function-alities is no longer enough. Among the most important demands towards Inter-net Banking are the following:

• The bank needs to make sure that the solution provider has sufficient experience in bringing together mul-

tiple electronic channels (internet banking, mobile and tablet banking, invoicing, mobile payments, social networks etc.) under a single umbrel-la for a seamless and complimentary end-user experience.

• As banks are fighting systems frag-mentation and the overcapacity locked into each of those disparate systems, banks should also consider opting for solutions that are able to cover multiple client segments, such as retail, SME and corporate.

• As channels will become more open and interconnected between each other, hu-man resources administering them will also be shared. A single Contact Centre will be sitting on top of all bank-client relationships, having a single overview of all customer information as well as environments. The Internet Banking channel should be flexible to allow “handing over” of client management tasks to the Contact Centre.

HALCOM’S E-BANKING PLATFORM1

One of the main goal of Halcom´s solu-tions is enabling banks to lower the costs of servicing clients, by transferring a ma-jor part of banking business with clients from branches into the e-banking envi-ronment, especially for low-added-value services (checking balances, statements, monitoring transactions, submitting payment orders, etc). Halcom’s integrat-ed Omni-Channel e-banking platform enables banks to engage customers via multiple channels providing them with a seamless customer experience. Alter-natively to visiting branches, custom-ers can conveniently connect with their bank using various touch points such as the Internet, mobile phones and tablets.

Halcom’ solutions are designed to help banks sell more products and services to their customers. Modular architecture em-powers banks to roll out all the channels at once or individually and provides a quick time-to-market of new services. On Hal-com’s e-banking platform, the banks can leverage the e-channels to cross-sell and up-sell new products and services to their customers, anytime and anywhere.

Prepaid cards can be recharged with a limited amount, especially designated for purchases and payments, thus preventing the risk of financial losses, in cases of fraud. Also, the charge in the desired amount allows the cardholder to have control and manage better her/his expenditure budget.

CREDINS Bank is the first bank in the country licensed to issue the prepaid VISA card, one of the

latest forms of the use of electronic mon-ey. The launch of prepaid cards follows bank management’s vision and objec-tives to be close to customers and offer-ing them products and innovations com-ing from global markets, in the area of electronic payments. The comfort, safety and speed these new forms of electronic payments offer, are the reasons that Cre-dins Bank introduced the prepaid VISA card into the banking market, by offer-ing more flexibility and opportunity for individuals, be they bank clients or not.

The project with VISA Internation-al and the licensing for prepaid cards was finalized with the issuance of the first card in February 2012. The pre-paid cards performance exceeded the project’s forecasts and expectations, by

Tech Topics

Prepaid cards, a successful innovation

marking an increase of 124 per cent of issued cards in the first quarter of 2014, compared with the total number of cards issued in 2013.

WHAT IS THE PREPAID VISA CARD?Prepaid Visa cards are VISA Electron debit card, designed for different clients segments. Currently, the following three types of cards are launched in the mar-ket by Credins Bank:

• General Purpose Card• Student Card; and • Internet Card.

According to their type, prepaid cards have specific functions and limits, up to a five-year term of their validity. They are used for pre-determined pur-poses, although they operate essential-ly as normal debit cards. As the name implies, prepaid cards can be recharged with the needed amount, within the lim-its defined in contract terms, depending on the type of card and the primary pur-pose of its issuance. Like all other cards issued by Credins Bank, even the prepaid card is a safe one, equipped with a mag-netic strip and chip, which is valid and works with PIN, only. As an instrument of electronic money, the prepaid card is linked to an account in the system, which uniquely identifies it. Through its use, the cardholder is provide with ac-cess to available funds in the account.

WHO MAY OBTAIN THESE CARDS? Prepaid cards are easily obtainable by all. They are not personalized and do not have restrictions on their issuance. Anonymity makes them accessible for any person, be a bank client or not, em-ployees or even students. Specifically, an identification document is the only requirement to apply at any counter of Credins Bank. The prepaid VISA card offers customers who do not have a bank account, or contacts with banks, access to banking system and interna-tional markets through online shopping,

by Ms Marsela KUSHTAHead of SectorOperations, Risk Management and Fraud Card DepartmentCredins Bank

1 For more information regarding efficient and successful servicing of clients at your Bank via e-channels please write us directly at [email protected].

Halcom’s next generation Omni-Channel products

Halcom Omni-Channel Experience

Prepaid card is an optimal solution for customer categories that do not have a bank current account, such as: students, or other segments with irregular incomes. Since such cards are not personalized, therefore they are easily transferable from one person to another, by adding also another usage feature as Gift Card.


giving them the opportunity for a life-style beyond cash usage.

Prepaid cards can be used anywhere where VISA logo appears, for domestic and abroad purchases, where a POS is located, online purchases and ATM cash transactions. The transactions processed by merchants in this case are quite iden-tical, as those in case of any other debit or credit card. The prepaid VISA card is used along with an existing debit or credit card. It is the best solution for all users and regular online buyers, who do not want to risk their personal account limit, or to expose existing card data.

Prepaid card is an optimal solution for customer categories that do not have a bank current account, such as: students, or other segments with irreg-ular incomes. Since such cards are not personalized, therefore they are easily transferable from one person to another, by adding also another usage feature as Gift Card.

THE FUNCTIONS OF PREPAID CARDS - SPECIFIC ACCORDING TO CARD TYPEStudent Card aims mainly the students who do not have a personal bank ac-count, but on the other hand are poten-tial consumers for products and services, possibly for online shopping, among others. In this point of view, the prepaid cards for students could be considered as a strategic product, which brings closer to the bank this segment of clients. Stu-dent cards can be used for domestic and abroad purchases, POS terminals, inter-net transactions and cash withdrawals at ATMs, within the usage limits of the card.

Internet Card is a card designed to be used mainly for online transactions. By using this card and recharging it with the desired amount, the risk of copying card data during online transactions is significantly reduced. For this purpose, the recharging amount may be limited up to the value of the product or service, intended to be purchased.

General Purpose Card has a more general character, compared to the first two types of prepaid cards. The list of allowed transactions with this card is longer and includes both cash and online transactions. The principle of its func-tioning is based upon advance recharge

of account balance with funds which be-come available to the card client.

Prepaid cards can be recharged with a limited amount, especially designated for purchases and payments, thus pre-venting the risk of financial losses, in cases of fraud. Also, the charge in the desired amount allows the cardholder to have control and manage better her/his expenditure budget.

With the proliferation and devel-opment of technology it seems that

money is becoming ever more elec-tronic. The payment system and the opportunities that business brings into the system will continue to evolve with technology progress. The prepaid cards offered by Credins Bank are the latest innovation in electronic com-merce. Further challenges of Credins Bank will lie in the field of providing the newest products and technological developments, especially designed to best suit the growing clients’ demand.

Prepaid cards can be recharged with the needed amount, within the limits defined in contract terms, depending on the type of card and the primary purpose of its issuance. Also, as an instrument of electronic money, the prepaid card is linked to an account in the system, which uniquely identifies it. Through its use, the cardholder is provide with access to available funds in the account.

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This training seminar addressed the following issues: the integral treatment of Civil Procedures provisions, regarding the collateral enforcement; the judicial and unified procedures, regarding the issuing the security measures; objections in cases of dropping the security measure; application procedures, in cases of execution of bank loans contracts.

AAB Trainings

TRAINING ON RISK, CONTROL AND GOVERNANCE, 07-08 MAY 2014 AAB, in cooperation with the Albanian Institute of Internal Auditors, organized a two-day training course on Risk, Control and Governance. The training was attended by 10 participants of 8 member banks.

TRAINING COURSE ON DYNAMIC PRESENTATION, 10 - 11 APRIL 2014 AAB, in cooperation with “Lincoln Center” in Tirana organized a two-day training on “Dynamic Presentation”, focused on presentations’ structure, the use of visual aids, and delivery.

TRAINING COURSE ON EXCELLENCE IN SALES, 16 APRIL 2014 AAB in cooperation with WIFI organized a training course designed for sales managers, who want to refine sales’ planning techniques, build leadership skills and become more powerful decision makers, motivators, communicators and counselors. The course, lectured by the international trainer Mr. Eric Molin, was attended by 9 managers from 4 member banks.

TRAINING COURSE ON BANKS GUARANTEES, 16 - 17 APRIL 2014 ICC Albania organized with the support of AAB and Raiffeisen Bank a two-day course on bank guarantees. The training was headed by Dr. Andrea Hauptmann, Member of ICC Austria. More than 25 participants from banks, legal firms and other companies attended the training course.

TRAINING COURSE ON LEADERSHIP SKILLS, 21-22 APRIL 2014 Mr. Paul Gauci delivered a two-day training course on Leadership Skills for Mangers, Supervisors and Team Leaders. The training course was attended by 10 employees from member banks.

TRAINING ON CIA EXAM REVIEW (PART 1), 09-10 MAY 2014 AAB Internal Audit Committee members, with the support of AAB, attended CIA Exam Review Part 1: Internal Audit Basics Training, offered through a partnership between JP Consulting and Albanian Institute of Internal Auditors (AIIA). The Certified Internal Auditor® (CIA®) is the standard by which professional internal auditors demonstrate their knowledge and competence.

TRAINING ON INTEGRATED MARKETING COMMUNICATION, 29- 30 MAY 2014 AAB, in cooperation with WIFI Albania, organized a two - day training on Integrated Marketing Communication (IMC). The seminar provided the 9 participants of member’s banks, who attended the training, with the opportunity to equally understand and apply the IMC-contents on their individual companies and walk out with a bunch of new ideas how to best promote the product.

Training Seminars organized in cooperation with the School of Magistrates

“EXECUTIVE TITLES IN CIVIL PROCEDURES AND EXECUTIVE TITLES IN THE SPIRIT OF THE SPECIFIC LAW”, 9-10 JUNE 2014The seminar were addressed and discussed issues such as: the objection to the bailiffs’ actions and the invalidity of executive titles; the standards according to Article 6 of the European Convention of Human Rights and the jurisprudence of the European Court of Human Rights, regarding the execution of a final decision within a reasonable timeline; the acts of lending as executive title; legal problems faced in court regarding the issuance and the objection of the order of execution.

“ON CIVIL SECURING MEASURES FOR LAWSUITS”, 25-26 JUNE 2014

TRAINING COURSE ON SELLING IN A PHYSICAL CHANNEL, 17 APRIL 2014AAB, in cooperation with the “EP & partners consultancy”, organized a one-day interactive seminar with the participation of 13 bank employees.

bankieri no.12 - july 2014

Documents

ceo of credins bank

albanian banking system

albanian private bank

bank headquarters

banking institutions

banking specialists

mr artan santo

termave t banksfjalor