The government has approved a draft law prepared by the Financial Supervisory Authority that aims to increase oversight of financial groups operating simultaneously across several market segments. According to the official version, the initiative is intended to bring Albania’s framework closer to European Union rules and to limit risks that could spread within the same group.
What the new draft provides
The bill is titled “On the supplementary supervision of credit institutions, insurance companies and brokerage firms that are part of financial conglomerates.” It was drafted by the Financial Supervisory Authority and approved by the government.
According to the draft, the main goal is to strengthen supervision of financial groups operating in more than one market sector, an area where risk is not limited to a single institution but can pass from one link to another within the same group.
When a group is considered a financial conglomerate
The draft law states that a group will be considered a financial conglomerate when it includes at least one banking entity and one insurance or investment entity. In addition, activity in different sectors must meet certain criteria.
According to the authorities, the new framework has been built in line with European Union Directive 2002/87/EC, known as FICOD. This means the government is presenting the initiative as part of harmonisation with European standards in financial supervision.
Focus on capital, risk and intra-group transactions
The supplementary supervision will focus on capital adequacy at group level, risk concentration, intra-group transactions, risk management and internal controls.
According to the draft’s rationale, the aim is to prevent a chain effect, where financial difficulties in one entity of the group could spread to other entities as well. This is a sensitive point especially in markets where links between companies within the same structure can increase systemic exposure.
The role of AFSA and the Bank of Albania
The draft law also provides for closer cooperation between the Financial Supervisory Authority and the Bank of Albania in identifying financial conglomerates, exchanging information and coordinating supervision.
A coordinating authority will be designated for each conglomerate, while the draft also leaves open cooperation with foreign authorities when this is considered necessary. It remains to be seen how this institutional coordination will be implemented in practice and how effective it will be beyond the wording on paper.
Approval by the government moves forward an initiative that directly affects the supervision of financial groups with activity spread across several sectors.
In formal terms, the draft is presented as a step toward alignment with EU standards; the real test will be implementation, transparency between institutions and the ability to identify risks before they become a problem for the market.