BoA Proposes Creation of Safety Fund for Second-Tier Banks

TIRANA, December 5

The Bank of Albania (BoA) will establish a special safety fund for assisting second-tier banks in cases when financial stability may be hampered by the possible failure of any of the banks that operate in Albania.
The draft-law compiled by the central bank on restoration and special intervention in banks has been submitted to the Parliament. The measure will be taken on behalf of the public interest, while savings are protected.
The bank shareholders will bear the burden during a difficult situation, but when the bank cannot meet its obligation, BoA is going to interfere with a special authority that administrates the safety fund. The latter will be created with contributions provided by the banks and completed during the years. Special interventions cannot exceed more than five percent of the bank obligations. The special authority also will have the competence to dismiss or appoint the administrators of the bank. On the other hand, banks should draft periodical safety plans and inform BoA.
In the case when the fund provided by the Extraordinary Intervention Authority are not enough, loans may be granted from the state budget. The loan amount must guarantee the sustainability of the financial system and also be conforming to Albania’s public finances.
The Albanian association of Banks approves the new draft-law and the secretary of this institution, Spiro Brumbulli says that the law has been consulted with the banks and it is conforming to the European legislation on the financial crisis.

News Source: TCh

Photo Credit: gazetaprogres