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Bank controls, BoA: Ensure active involvement of boards in governance

2025-04-11 14:32:00, Ekonomi CNA

The Bank of Albania's inspections of commercial banks last year showed the need to strengthen the culture of good governance, ensuring the active involvement of management boards in decision-making.

During 2024, one systemic bank and two non-systemic banks were covered by examinations. The main focus of the examinations was risk management, considering credit risk as the risk with the highest weight in the profile of the banks as a priority. In this context, the following were critically assessed: the appropriate division of responsibilities between business lines and control functions, ensuring the effectiveness of their work, rigorous supervision by senior management bodies, etc.

Regarding governance, the Bank of Albania highlights that, in addition to compliance with legal and regulatory requirements, banks must also ensure a sustainable culture for a qualitative implementation of the principles of "good governance".

This culture implies the active involvement of members of senior management bodies in the drafting and harmonization of documents for business development and those for maintaining acceptable levels of risk exposure, to the extent that they can be borne by the bank's available capital, etc.

An important place has also been occupied by the treatment of operational risks associated with rapid developments in the context of digitalization and the integration of various systems and technologies used during banking activities.

Meanwhile, during 2024, examinations of non-bank entities and savings and loan associations covered various categories of activity, including electronic money lending and microcredit entities. The focus was on the business model, governance systems, credit risk, market and operational risks, accuracy of reporting to the Bank of Albania, transparency with customers and money laundering risk.

The examinations show that the activity of these entities generates stable income, which has continuously supported the capital. In general, the internal organizational and regulatory framework is consistent with the size and complexity of the entities that have a consolidated position in the market.

Meanwhile, the newest entities in the market, especially those of electronic money, show shortcomings and need for additions and improvements, in line with the current level of activity and the principles of prudent governance and in relation to the accuracy of reporting to the Bank of Albania, transparency with customers and the prevention of money laundering.

For the violations identified, the Bank of Albania has taken the relevant supervisory measures, specifically: revocation of licenses for two non-bank entities; suspension of activity for two non-bank entities and for two savings and loan companies; fine and warning for administrators for one bank; drawing attention to one foreign exchange office; administrative measure (fine) for 12 foreign exchange offices and revocation of license for one foreign exchange office.

Following the revocation of the licenses of two entities, MCA and Final, the Bank of Albania states that extensive work has been done to address the concerns of borrowers.

In this context, dedicated personnel have been made available to explain to borrowers how to maintain relations with the entities, the continuity of loan obligations under the new conditions created, as well as the transfer of both entities to the Agency for the Administration of Sequestered and Confiscated Assets./ Monitor Magazine