Last update: Saturday, May 25, 2019

Domestic debt holders 2010-2015, Banks and Financial Institutions

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Open Data Albania is exploring the structure of domestic debt by providing details on debt holders throughout 2010-2015. The stock of domestic debt consists of treasury bills and bonds, which are short-term and long-term instruments. Bank of Albania holds a part of the government debt as a way to keep under control the rate of treasury bills trading through sale and purchase. The Central Bank should influence the supply and demand for these debt instruments. Commercial banks invest in domestic debt some of their deposits they receive from customers.

This investment of commercial banks, or differently known as second level banks is considered as a low-risk investment alternative. Non-bank financial institutions and non-financial institutions in Albania are represented mainly by insurance companies, pension funds and investment funds.

These institutions, involve the funds they receive from their clients into marketable government securities as the only form of securities investment in Albania, instead of investing marketable securities on the stock exchange. Individuals mainly participate in the auctions conducted on domestic debt securities in order to ensure returns from the rates offered by bonds or debentures, as a better direct investment alternative compared to bank deposits at the second level banks.



Source: Ministry of Finance
Comments and analysis: ODA



Source: Ministry of Finance
Comments and analysis: ODA



Source: Ministry of Finance
Comments and analysis: ODA

Bank of Albania over the years has reduced the weight it is holding with its investment in government debt total from 15% of the total in 2010 to nearly 10% of the total at the end of the second quarter of 2015. This is due to disinvestment in additional new debt issued over the years. The value of the Central Bank investment in government debt remains roughly the same standing at approximately ALL 62 billion, excluding years 2012 and 2015 when its reductions is respectively ALL 58 and ALL 59 billion. The same tendency was witnessed even among individuals over the years.

The weight to the total of individual?s debt holding runs at 12% with the exception of 2012 when this weight amounted to about 15% to be reduced in the coming years. This testifies that individuals are inclined to invest their savings into domestic government debt as an option that is not posing any risk and that generally brings about higher returns compared with bank deposits. Growth of the rates from ALL 49 billion to ALL 70 billion is a clear indication of this situation.

As for the second level banks and their investments in domestic debt, their behavior is different. National Commercial Bank (BKT) has increased this form of investments and it recorded also the highest value and weight to the total stock of debt up to the end of 2014. In 2015, this bank recorded a decline of nearly five billion. Regarding the other group of the second level banks, the value of the domestic debt stock has been on the rise over the years, where the largest growth is recorded in 2013 running at nearly 24 billion ALL and in 2014 at around 21 billion ALL.

Raiffeisen Bank is a commercial bank that currently invests more in the domestic debt compared to a total. Meantime, during the recent years this bank has reduced the weight of direct debt holding as a result of the creation of Raiffeisen Prestige, which is a joint fund investing in securities. This is associated with the phenomenon of debt holding from non-bank institutions.



Source: Ministry of Finance
Comments and analysis: ODA

The weight that these companies invest begins with a rate of 1% in 2010 to reach the rate of nearly 15% in 2015, almost as much as the rates of BKT, or Raiffeisen Bank. The largest increase is recorded in 2013 by nearly 6% of the debt stock that is a year after the creation of the Prestige Fund. In 2015, this rate went high to ALL 85 billion compared with ALL 4 billion in 2010. A similar increase is recorded with regard to the Prestige Fund, which amounted to 9. 22% in 2015.



Excel datasets : XML, N3 datasets :
    Contributer: ODA
    Translated by: Mimoza Backa
    Edited by: ODA