EBRD supports Albanian Deposit Insurance Agency

By Viktorija Melohina

The European Bank for Reconstruction and Development (EBRD) is helping to boost confidence in Albania’s financial sector with a €100 million stand-by credit line to the Albanian Deposit Insurance Agency (ADIA). The credit line, fully guaranteed by the government of Albania, will provide funds to ADIA to compensate insured depositors, if and when required.

The facility, provided as a stand-by credit line rather than a loan, is designed to enhance the agency’s capacity to protect depositors. The stand-by credit line will enable ADIA to improve its deposit coverage ratio thus offering greater protection to depositors and strengthening public confidence in the financial system as a whole.

In addition, a technical cooperation grant of €300,000 is being provided by the EBRD Shareholder Special Fund and the government of Luxembourg with close cooperation from the US Federal Deposit Insurance Corporation to modernise ADIA and support institution building.

A well-functioning deposit insurance scheme is an important part of the financial infrastructure that helps build public confidence in a country’s banking system.

ADIA is an independent public institution established in 2002 with the task of protecting individual depositors and paying out insured deposits in case of bank failure, with the wider objective of strengthening the stability of the banking and financial system in Albania. By providing depositors with insurance, ADIA increases confidence in local banks and savings and credit associations, and encourages households to deposit their money in these institutions.

“The EBRD loan to the Albanian Deposit Insurance Agency will strengthen the country’s deposit insurance scheme and provide stability to the system,” said EBRD First Vice President Phil Bennett. “Supporting the financial sector in countries where the EBRD invests is one of the Bank’s core priorities and greater confidence will also translate into stronger growth.”

“We welcome this agreement with the EBRD as evidence of the confidence that important strategic partners have in the country’s financial sector and ADIA in particular. We are confident that the funds will positively contribute to higher depositor confidence in the overall financial sector and provide more opportunities for local financial institutions,” said ADIA General Director, Toni Gogu.

The EBRD has previously launched three similar credit lines to support deposit insurance schemes in Bosnia and Herzegovina, Kosovo and Montenegro in order to prevent systemic impacts in the event of an isolated bank failure.

Since beginning its work in Albania, the EBRD has invested around €795 million in 66 projects in various sectors of the economy.