Albania - Country Commercial Guide
Trade Financing

It covers payment methods and information on, banking systems, foreign exchange controls, and U.S. and correspondent banking.

Last published date: 2021-10-09

Methods of Payment: Trade financing options for imports to Albania have improved in recent years as the banking sector has further developed. The most commonly used international payment mechanisms to facilitate transactions include letters of guarantee and letters of credit, which are available through local banks.

Bank-to-bank trade financing alternatives can be structured with or without a letter of credit. Many importers regularly receive goods under a short-term supplier credit agreement. Importers are free to arrange payments through long-term supplier loans when making larger purchases. For transactions abroad, the most preferred forms of payment are letters of credit or payments in advance. The U.S. Export-Import Bank (Ex-Im) can provide insurance policies to U.S. exporters to allow more flexible payment terms. For more information about the methods of payment or other trade finance options, please read the Trade Finance Guide.

In August 2021, S&P confirmed the ‘B+’ rating for Albania with a stable perspective. , while  Moody’s maintained its rating for Albania’s government debt obligations at B1 with a stable outlook in May 2021.

The use of debit and credit cards has steadily increased over the last years as well as ATMs and point of sale. As of July 2021, there are almost 1,130,000 debit cards and 118,000 credit cards issued in Albania out of 2.8 million residents. Master card and Visa are the most common cards but Amex is also welcomed at some locations.  The number of transactions has increased significantly over the last year thanks also to the COVID-19 pandemic reaching almost 2.35 million through July 2021 marking a 15% increase compared to the previous year. The volume of transactions with cards reached about $250 million, approx. 1.5 percent of the GDP. Online transactions have also increased in terms of both transactions and volume. The latter has reached almost $1 billion or 6% of the GDP during the same timeframe.

Banking Systems

The banking sector is regulated by Law 9662, “On Banks in the Republic of Albania.” The law defines guidelines to ensure sound management and administrative procedures for domestic and foreign banks. The banking sector is fully private with domestic and foreign capitals and includes 12 operational banks, down from 16 in 2018 thanks to a significant consolidation process over the last couple of years. As of June 30, 2021, the Turkish National Commercial Bank remains sector leader with 25.8% market share, trailed by the domestic bank Credins with 15.7% and the Austria-based Raiffeisen Bank with 14.8%. The market share of Greek banks decreased to less than 5% in the second quarter of 2021 , down from more than 15% in recent years due to the departure of three Greek banks from the Albanian market. The American Bank of Investments (ABI Bank), owned by New York-based NCH Capital Group, is the only U.S. private capital firm in Albania’s bank sector. ABI Bank aquired the National Bank of Greece in 2018 and represents about 5.5% of the market. Hungary’s OTP Bank Group, one of the largest independent financial service providers in central and eastern Europe, entered the Albanian market in 2019 through the purchase of Societe General Albania.  Banking sector total assets have increased steadily reaching $16 billion at the end of 2020.

The banking sector is considered well capitalized, profitable, and liquid. It managed to successfully endure the economic slowdown following the COVID-19 outbreak and in 2020, profits reached around $140 million, with 18.3 capital adequacy ratio, 1.2% return on assets, and 10.65% return on equity. As of June 30, 2021 , total bank sector assets reached $16.5 billion, mostly bank deposits.

At the end of June 2021, the number of bank outlets nationwide decreased to 414 compared with 474 at the end of 2018, largely due to mergers and acquisitions. Non-performing loans continued to fall through even during 2020, reaching 7.05 % at the end of July 2021 compared to 8.4% in December 2019. The stock of outstanding loans has increased through 2019 and 2020 particularly to the private sector. As of June 2021, the stock reached almost $6 billion, about 37%  of the sector total assets. Capital adequacy, at 17.95%, remains above Basel requirements.

The regulatory framework aligns with international practice. The Bank of Albania (BOA) has tightened supervision rules over banks because of the global financial crisis and the risks of contagion posed by regional banks.

There are 34 non-banking financial institutions and 17 savings and loan associations in Albania. These institutions target medium-sized businesses that are not primarily served by the commercial banking sector. They offer loans from USD 1,000 to USD 500,000. A detailed list can be found here.

Foreign Exchange Controls

Albania has adopted a free-floating exchange rate and usually refrains from market intervention to influence the exchange unless it impacts the inflation rate which is the main target of the Central Bank. There are no foreign exchange controls in Albania. The Bank of Albania is entitled to impose exchange restrictions for payments and transfers for capital account transactions. Such restrictions can be introduced for a period not to exceed 12 months and extended for a similar period. In 2009, the BOA amended the Regulation of Foreign Exchange Controls, which does not include any restriction over international financial remittances. The export of hard currency by commercial entities, including juridical persons and sole traders, must be done through bank transfers.

Repatriation of income (dividends, royalties, and consultancy services) is allowed if no tax liabilities are outstanding in Albania. Transfers of current international payments (imports of goods and services, transportation, interest and principal payments, and other purposes defined in the regulation) must be supported by documentation such as invoices, certificates, or transport documents, to the transferring bank. There is a limit of USD 8,000 of hard currency and other assets that can be carried across border checkpoints. Violation of the rule is subject to penal charges.

U.S. Banks and Local Correspondent Banks: The only U.S. related bank in Albania is the Amer

ican Bank of Investments which is majority-owned by the U.S. based NCH Capital. JPMorgan Chase Bank National Association, New York, and The Bank of New York Mellon, New York are two U.S. correspondent banks.. Since banking relationships may change quickly, the best source of current information on correspondent banking arrangements is the banks themselves. Contact information for all banks in Albania can be found on the Bank of Albania website: List of Licensed Banks in Albania.