Tirana Approach: BoA aims to regulate banks’ dealings with large borrowers

Bank of Albania has drafted a new project for settling the issue of large non-performing borrowers, which have exposures in several banks that operate in the system.

Announced since last year as Tirana Approach, the project foresees the establishment of a common platform between banks to address these cases.

The project foresees that joint treatment of these cases by banks would take a mandatory form, while previously this was done in co-operation between banks, but without a mechanism that legally binds them to pursue this process up to the end.

According to BoA’s regulation, all commercial banks are obliged to engage in this common platform and the platform is granted the right of to supervise and to impose sanctions against non-cooperative banks.

The issue of large borrowers with exposures to several banks has been one of the most important points of the BoA’s strategy to cope with the ratio of non-performing loans.

Some of the cases were resolved with restructuring, some others with the takeover of assets by the lending bank, while a handful of bad creditors were sent to trial for bankruptcy.

Tirana Approach platform will primarily aim at resolving the remaining cases, which according to unofficial data from the Bank of Albania are less than ten.

The regulation proposed by the Bank of Albania has been sent for consultation to commercial banks and is expected to be approved within September.

According to Bank of Albania’s statistics, the ratio of non-performing loans in the first half of this year has stabilized close to 13.5%, while the operational objectives aim to reduce it to the level of 10% by 2019.

SCAN

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