ECONOMY

Small Albanian banks may not withstand growing competition

TIRANA (Reuters) – Growing competition could spark the consolidation of Albania’s banking sector and open the door to more international players, the central bank’s governor, Ardian Fullani, told Reuters. The country of 3.5 million people has 16 banks, and bankers have been predicting change since Austria’s Raiffeisen bought state-owned Savings Bank for $126 million last year to form Albania’s largest bank, with over 50 percent of market share. Fullani said the smaller Albanian banks could see their profit margins shrink because of growing competition. «It is expected that smaller individual banks will go through difficult times in the future,» Fullani said at a seminar organized by the International Monetary Fund. «We forecast a lowering of their profit margins, which might hinder their efforts to get a better position in the market… at the same time, the central bank thinks there is the possibility for the consolidation of the banking system,» Fullani said. The consolidation process might see banks «with an international profile» enter the growing domestic market, he said. Dardania Bank, owned by former officials of the exiled Kosovo government, has been sold to an Italian group and Albania is looking for buyers for its minority stakes in the Italian-Albanian Bank and the United Albanian Bank. Since Fullani took over from Shkelqim Cani in October last year, the bank has lowered its key repo rate to 5 percent, an historical low. Some 80 percent of loans in Albania are in hard currency and Fullani said the repo rate cut helped reduce the gap between borrowing costs in the local lek and foreign currency.