How does the Development Bank differ from other commercial companies? - It will report directly to the BoA. Supervisory Council, independent of the state
After the public consultation process was closed, the draft law on the Development Bank has been submitted to the Albanian Parliament with several new additions and changes. But what are these changes?
Initially, the draft law provides more details on the relationship that the Development Bank will have with the Bank of Albania. Citizens can open deposits at the Development Bank, by transferring their savings to the Albanian Post. Despite the fact that the Albanian Post has been operating in the market for years, in order to guarantee the security of citizens' savings and the reliability of the latter, the activity of collecting savings products from the Albanian Post will be supervised by the Bank of Albania. Albanians' savings in deposits will be used to finance development and infrastructure projects.
The Albanian Development Bank will report to the Bank of Albania for statistical purposes and for the credit registry. However, the supervision of the Bank of Albania will soon be regulated by a special regulation.
Regarding the relationship with commercial banks, the activity of the Development Bank will be regulated through a special law and not through the existing law on banks. This is because the Development Bank does not have the same role as a commercial bank, because it does not compete in the financial market, but supports economic and public policy projects, does not aim to make a profit, but to finance economic development in underfunded sectors, and has a specific development mandate.
The Albanian Development Bank will also not include several points of the law on commercial companies. Using the commercial company model would make the bank dependent on government decision-making, exposing it to short-term political influence, which could change the strategic direction of the bank, unstable decision-making due to changes in government, inability to function with professional independence, as the board would be forced to follow the interests of the state shareholder.
In the same way, with the exception specified in the special law, the Albanian Development Bank needs a special governance model, where the Supervisory Board is independent from the shareholder (i.e. the state), the Bank's decisions are based on a long-term development plan, not on rapid political changes, as happened in the case of the Bank of Serbia, which went towards bankruptcy.
In this context, although the Development Bank has the legal form of a joint stock company, its financial activity and its operational model differ from ordinary joint stock companies. Given that the Albanian Development Bank plays a strategic role in financing economic development, a stricter regulatory approach is required than an ordinary joint stock company.
The Development Bank will be able to issue financial instruments, such as development bonds or state guarantees, to provide additional sources of financing for strategic projects. It does not intend to issue debt securities through a public offering. Likewise, deposits will not be subject to the requirements of the capital markets law.
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