Category: News from the Market

In its largest equity investment in the tourism sector to date, the EBRD has signed investment agreements to become a shareholder in D Marinas B.V., the holding company for a network of currently 10 marinas in Croatia, Greece and Turkey, operating under the brand name D-Marin.

The EBRD is investing €70 million for a stake of approximately 25 per cent. The funds will be used to finance the company’s growth plans, including the development of marina management operations, further acquisitions and deleveraging.

D Marinas B.V. is the largest and only international chain of marinas in the Eastern Mediterranean offering approximately 8,000 berths. The company’s ultimate beneficial owner is Doğuş Holding A.S., one of Turkey’s leading business conglomerates and a long-standing partner of the EBRD.

The company’s expansion will support the development of the local tourism sector, promote growth and create jobs. Technical cooperation funds provided by the EBRD Shareholder Special Fund will be used to finance training programmes and work-based learning opportunities for young people and women.

The investment comes under the new EBRD Inclusive Tourism Framework for the Eastern Mediterranean which aims to support local tourism sectors to grow and upgrade through investments in hotels and tourism operators.

EBRD First Vice President Jurgen Rigterink signed the investment in Zagreb today and said: “With this investment the EBRD is demonstrating its long-term commitment to supporting the progress of Croatia’s economy. Tourism is a major driver of growth for the country and we expect this investment to open up new opportunities for local businesses as well as create new jobs. The beginning of the tourism season is the right time to sign such an important investment where the EBRD can provide much-needed capital for the next steps of development in the tourism sector which is so important for Croatia, Greece and Turkey.”

Ferit F. Şahenk, Chairman of the Board of Doğuş Group, said the partnership highlighted Turkey’s efforts and success in terms of becoming a world renowned brand. He added “We are proud that Doğuş Group’s long-term strategy of investing in the tourism and specifically the marina business has been recognised by such an important institution such as the EBRD. This agreement is testament to D Marinas’ success, especially in the Eastern Mediterranean basin where the potential for tourism is still rising and accordingly our strategy is to expand further in the region. I hope that we will continue to look for other valuable investments with the EBRD in and around Turkey. This agreement also underscores the great progress that Turkish businesses have made in recent years globally. I believe our partnership will contribute positively to the cooperation between all sides and create a constructive momentum and motivation for the Turkish business community. I would like to thank both the EBRD for the trust they have shown in us and also my colleagues at Doğuş Group for their substantial support.”

The EBRD signed its first project in Croatia in 1994 and has invested over €3.6 billion in 198 projects in the country to date. The Bank’s activities cover all areas of the economy but are especially strong in the infrastructure, corporate, financial institutions and energy sectors. The EBRD is also engaged in policy dialogue, capital market development and regulatory reform.

TIRANA (Reuters) – Albania’s under-resourced government signed a deal with accounting firm Ernst & Young on Monday to get hands-on help in fighting rampant tax evasion and other economic crimes.

Prime Minister Edi Rama said Albanian authorities had quintupled the amount of wealth seized from criminal activities since his Socialists took power in 2013.

Police have frozen assets worth some 10 million euros (8.73 million pounds) in the last five months, an official said.“We have done a lot but we feel the need to do much more because there is still money out there that belongs to the people and the country and is now where it should not be,” Rama said at the signing ceremony. The black economy in Albania is estimated to be worth about a third of its gross domestic product despite a government campaign to get everyone to issue receipts for all goods sold. Tax evasion amounts to nearly 8 percent of GDP, or 810 million euros, equal to six times the defence budget, a 2017 study showed.

The Ernst & Young team will be led by an American who has worked for the Federal Bureau of Investigation (FBI) and a German who managed his country’s economic crime unit. The European Union has recommended that Albania start membership talks, but some member states still doubt Tirana’s ability to tackle drug trafficking and organised crime. The EU is due to decide by end-June whether to start the talks.

The Financial Supervisory Authority organized a national conference on financial education on Thursday. The activity saw the presentation of works of students and professionals on issues related to markets under the supervision of FSA. In his speech, Chairman of the FSA Governing Board Pajtim Melani said financial education is the safest investment for a long-term economic growth. He called on financial system companies to invest more in promoting education.

Executive Director Ervin Koci once again underlined that financial education is one of the priorities of the Authority’s work. Better recognition of financial markets is a prerequisite for development, but also for their stability. Since last year, the FSA has adopted and started implementing the strategy named “Increasing consumer and investor confidence in the markets under supervision”. This strategy is particularly aimed at expanding student and youth knowledge about financial markets.

The licensing of the first private Albanian securities exchange ALSE is a significant step forward in meeting the financial and economic criteria of Albania in the European integration process.

The European Commission says that in evaluating the progress of the country towards the European Union, this very important step is to be emphasized.

“Progress has been made towards financial market infrastructure with the licensing of the first private Albanian securities exchange, which started work in February 2018. While state-owned stock exchange meanwhile is still closed,” emphasizes EC in its report.

Expert have considered the licensing of the first Albanian private securities exchange as a very important step forward as Albania has been the only regional country without an active stock exchange so far.

Its presence will significantly diversify the investment portfolio of Albanians and in the future will come to the aid of various companies to raise capital.

Among other things, the Albanian Securities Exchange (ALSE) licensing is a step that in the general institutional framework approaches Albania even more with the European Union.

Governor of the Bank of Albania Gent Sejko said on Thursday during the annual report to the Albanian Parliament that A higher economic growth would require improvement of the business climate and further development of financial markets. The Governor reiterated the optimism that in the coming years, demand growth will boost higher output, employment and wages in the economy. But, according to him, in a longer-term horizon it is imperative that the business climate improves, especially in terms of guaranteeing fair competition. He put a special emphasis on the need to expand financial markets. If lending so far has relied almost entirely on the banking system, the growth and further dynamism of the economy will necessarily require the development of the stock markets and the stock exchange instruments. The Bank of Albania estimates that low interest rates contributed by 0.7 percentage points to last year’s economic growth, thus becoming an important factor in the recovery of economic growth. According to official statistics, last year, the Albanian economy grew by 3.84% and 79,000 new jobs were created.

The Financial Supervisory Authority has introduced the strategy of developing the markets it oversees for the period 2018-2023.

Chairman of the Board Pajtim Melani said that FSA supervised markets are increasingly gaining weight within the financial market and now account for over 10% of its assets.

Mr. Melani emphasized that the opening of the Albanian Securities Exchange as a major development of great importance for furthering the financial market in the country.

ALSE Executive Director Ervin Koci said that the development of financial markets is indispensable for rising economic growth above the 5% target, set by the Albanian government.

Although it was announced that the presentation of strategy would include the participation of two government ministers, Arben Ahmetaj and Sonila Qato, none of them was present.

The second deputy governor of the Bank of Albania, Natasha Ahmetaj, said that the financial system is a promoter of supply in the economy, supporting new projects and innovation.

She added that non-bank institutions, starting from private pension funds, have to compete more with banks to provide a healthy expansion of the financial market in the country.

The strategy presented by the FSA places a strong emphasis on stabilizing markets and increasing consumer confidence, in particular the insurance market.

According to the FSA, these elements are a prerequisite to further design the pillars of development and promotion of financial markets in Albania.

The governor of the Bank of Albania, Gent Sejko attended the spring meetings of the International Monetary Fund (IMF) and World Bank Group in Washington.

There he held several important meetings with important figures of the world of finance.

In these meetings, he briefed them on the latest developments in the Albanian economy, stressing that the country’s economic growth is following a positive development curve.

During these discussions, the Albanian government underlined that in order to strengthen the country’s macro-economic stability and to enable a sustainable growth, there needs to be coordination of the monetary policy with the tax policy.

He added that the implementation of the monetary stimulating policy has assisted economic growth and salary increases.

Meanwhile, as far as the banking system in the country is concerned, Sejko said that the system is in good shape, however, he stressed that lending should be promoted and more measures should be put in place to reduce the number of nonperforming loans.

The stability of the banking sector in Albania has improved considerably.

Albanian banks are generally well-capitalized, while liquidity is also firmly estimated at minimum levels, states the European Commission in the progress report for the country.

Deposits, it reads, remain the main source of funding, while covering almost twice the total bank lending.

Even the level of non-performing loans has fallen sharply in 2017, estimates Brussels.

Sector profit rates have also improved during 2017, while financial results point to double earnings in annual terms.

But the European Commission does not hesitate to emphasize the still high use of the European currency in borrowing.

This makes the payment of installments sensitive to the depreciation of the domestic currency, states Brussels, which lists the use of domestic currency as one of the long-term recommendations for the Albanian economy.

Among other things, the European Commission emphasizes the fact that banks have room and opportunities to boost lending by supporting economic recovery as a result.

Commercial banks have considerably increased borrowing from the central bank through repurchase agreements.

According to data from Bank of Albania, in March this year the value of the loan for the banking sector amounted to ALL 42 billion, about 60% more compared to the same period of the previous year.

The growth of central bank lending has risen sharply since the second half of last year.

Among other things, this is an indicator of the vitalization of lending to the economy.

According to the Bank of Albania, loan portfolio in ALL was 7.2% higher at the end of March compared to the same period of the previous year.

When banks require more loans from the Central Bank for short-term needs, this usually shows that they are more active in lending or in other forms of financial investment.

One-week repurchase agreements are the most common form of Central Bank liquidity short-term support for commercial banks.

The price of this instrument represents the key interest rate, which is currently 1.25%, the lowest rate ever applied in Albania.

The base rate reduction makes it cheaper for banks to borrow from the Bank of Albania and, through the transmission mechanisms, it is conveyed in other interest rates of long-term financial instruments such as deposits and bank loans or government debt securities.

The more banks use this instrument, the more the Bank of Albania reaches its goal of conveying its monetary policy in the financial market.

In the present case, the Central Bank’s goal is to make money as cheap as possible to fuel consumption and investment.