Natasha Ahmetaj: Recovery and resolution planning for the banking sector Opening remarks by Ms Natasha Ahmetaj, Second Deputy Governor of the Bank of Albania, at the Regional Conference on Recovery and Resolution Planning, Tirana, 15 November 2018. * * * Dear ladies and gentlemen, Welcome to this regional conference organized by the Bank of Albania in cooperation with FinSAC, a valued partner in our path towards development. The financial crisis of 2008 remains the starting point of a number of discussions, as many of our present efforts originate from this period. The 2008 crisis was a tough test for the capability of a state to manage national and cross-border crises. This test became even more relevant for its global capability, if we take into account that the crisis originated in advanced economies, but spilled over into emerging markets and developing economies. In order to safeguard core financial services for their citizens and firms, governments were forced to use public funds, by injecting money and issuing guarantees for distressed financial institutions at unprecedented levels. From October 2008 to October 2011, the European Commission approved EUR 4.5 billion from public funds to support financial institutions. Naturally, this support helped to curb, at least in the short-term, a massive bankruptcy of banks and the collapse of the real economy. On the other hand, it burdened taxpayers with deteriorated public finances. This forced situation strengthened the need to reflect on the protection of the taxpayers and public finances in times of crisis, without sacrificing the prevalence of public interest.
The model of global integration is the economic model that has been adopted by most of the transition countries, such as Albania. Under this guidance, the Albanian banking market has demonstrated clear willingness and objectives for a swift harmonization with the legal framework of the European Union’s banking system, as well as with its significant changes since 2008. Although there are no cases of bank failures in the history of the Albanian banking sector, we have identified in our banking legislation the same loopholes found in other European economies. The development of hypothetical scenarios for coping with a potential exposure of the Albanian economy to the Greek sovereign debt crisis evidenced that the Bank of Albania – as the supervisory authority of the banking sector – did not have all the necessary legal instruments to manage insolvency situations in systemically-important banks. This need for a new legal framework is addressed in both national and cross-border aspects, by the Bank Recovery and Resolution Directive. In fact, the initial efforts to prepare and present the first recovery plan to the Bank of Albania started in 2012. The relevant Regulation was approved by the Supervisory Council of the Bank of Albania in 2014. But, of course, these efforts were made within the supervisory legal authority and, as such, they were not sufficient. For this reason, during 2015, with the support of World Bank’s FinSAC project, the Bank of Albania started the difficult but necessary work of harmonizing the European Directive into a new Albanian law.