Albanian Regulatory Framework on Banking or Financial Group Supervision

This paper analyzes the legal and regulatory framework regarding consolidated supervision for banking and financial groups in Albania and the compliance with the existing Law “On banks in the Republic of Albania” (no. 9662, dated 18.12.2006, amended), particularly EU Directives and core principle for effective banking supervision on consolidated supervision.The regulatory authorities have to consider the revision of the regulations on consolidated supervision setting out the terms, conditions, requirements, references and principles for the consolidated supervision of banks and non-bank financial institutions which are principal entities in a banking group or a financial group and operate under the Law on Banks and Albanian banking regulatory framework, approaching as well the Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013, Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013, and the Core Principles for Effective Banking Supervision of the Basel Committee on Banking Supervision (BCBS).Consolidated supervision (qualitative and quantitative) has to be considered as an essential element by the supervisory authorities in Albania based on the fact that a bank or a non-bank financial institution is exposed to risks that result not only from its operations but from the operations of its group entities (subsidiaries, affiliates and/or holding companies) and the real adoption of consolidated supervision is imperative for the implementation of the risk based approach supervision (either off site or onsite)