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Who needs BKT, besides Sehyan and Çalik?

2025-04-02 13:34:00, Ekonomi Klodian Tomorri

Banks are essential institutions for the economy for two reasons. First , they provide citizens with a safe place to store their savings, and second, they provide credit to stimulate economic activity.

In short, through financial intermediation, banks play a critical role in the allocation of resources, economic growth, and financial stability of a country. And the larger a bank, the more vital this role is in an economy.

In Albania, the largest bank is the National Commercial Bank. Founded in 1993 by the merger of the Commercial Bank of Albania and the National Bank of Albania, BKT was privatized 7 years later.

In 2000, Parliament approved its sale to an international consortium consisting of Kentbank, IFC, and EBRD. In 2009, all of BKT's shares ended up in the hands of the Turkish Çalik group.

At the end of last year, BKT's total assets reached 5.2 billion euros, accounting for 24.5 percent of the total assets of the banking system in Albania.

At the same time, it is the largest deposit aggregator in Albania. According to official data, BKT currently has 435 billion lek in deposits, or 25 percent of all savings held by Albanian citizens in the banking system.

But despite being the leading bank in terms of assets, capital, and deposits, BKT has a major anomaly. It is a bank that does not lend.

According to the data, at the end of 2024, BKT had a total of only 103 billion loans granted to businesses and citizens, being the fourth largest bank in the country in terms of loans. And the huge anomaly is better revealed by another indicator. This is the ratio between loans and deposits.

BKT currently has a loan/deposit ratio of less than 24 percent. This means that for every 100 lek in deposits it receives from citizens, the bank credits less than 24 lek to the economy.

This indicator is two times lower than the national average loan/deposit ratio. And when compared to other major banks in neighboring economies or developed Western countries, it is several times lower.

But where does BKT take citizens' deposits?

The answer is very simple. In bonds. At the end of last year, BKT had an investment portfolio in securities of 325 billion lek. So, 75 percent of BKT's deposits go to buy government bonds. A large part of them abroad, financing the debt of foreign governments.

This is not illegal, but it is a very big anomaly. With these indicators, BKT functions as a restraining factor of the Albanian economy. Or at best, it does not properly play the role it should have in financing the economy.

In short, the entire management philosophy of BKT is this. Take deposits from citizens and hunt for bonds with maturities that offer higher interest. Hunting for maturities.

At first glance, this may seem like responsible management that invests only in safe assets. But that's not necessarily true.

Three years ago, this management brought BKT to the brink of collapse. Holding large bond portfolios creates major financial problems when interest rates rise. This is because rising interest rates reduce the price of securities, thereby affecting the value of assets, but above all, capital indicators.

Three years ago, BKT was forgiven. This was a fate that Silicon Valley Bank and Silvergate Bank in the United States did not have, which, like BKT, flirted heavily with investments in securities. There, the regulator decided to force them into bankruptcy. Here, it was good to forgive it.

But the question that arises is: who needs BKT besides the shareholders, to whom it delivers a minimum of $50 million in dividends per year?

This answer is difficult. Normally, the country's largest bank has at least a moral obligation to mediate and finance the economy. Not to play pickpocket with microcredit scammers, extorting pennies from the poor.

And the irony of fate lies in the fact that from time to time BKT also receives awards as the best bank in Albania.