In the framework of increasing lending by second tier banks, Bank of Albania has extended the time of implementation for several measures taken during 2014. The main regulatory institution of the country’s economy announced the latest changes made in the regulatory, “For the report of capital sufficiency”, following the package of measures taken to increase second tier banks’ lending capacity.
The regulatory changes predict that for the increase of given loans portfolio between 4% and 10%, private banks will not be obliged to cover the given amount of money with added capital. The second change foresees that if banks increase loans, this amount will be deducted by the total amount of banks’ capital, by increasing the report of capital’s sufficiency.
Following these changes, Bank of Albania extended until June 2015 the implementation of measures that aim to increase lending by lower requests per capital. Also, Bank of Albania declared that measures that deter private banks’ investments outside of Albania will be valid up to December 2015.
If banks increase investments outside of the country, Bank of Albania will request the increase of their capital. The measure will be in force during 2015, aiming to increase lending to the Albanian economy at least above 4%. This measure has started to give its positive effects according to the Central Bank, since six of the 16 second tier banks in the country have increased the lending limit beyond 4%.
News source/photo credits: ATA