Page 81 - SE Outlook Regions 2023

3.1.2 Banks
According to the IMF, Albania’s banking system has “weathered the
consecutive shocks relatively well”, with help from the central bank’s
efforts to strengthen regulation and supervision. However, the IMF
warns that "the full impact of the shocks may only become visible on
bank balance sheets over time, and banks are susceptible to credit,
interest rate, and exchange rate risks”.

The IMF advised in October that improving supervision and aligning
regulation with EU standards would “provide the authorities with tools to
better manage financial stability risks”. It also noted that the presence of
banks with significant shareholding by individuals and non-financial
groups “raises the risk of capital shortfalls, related-party transactions,
and large exposures”.

A significant development for Albania’s banking sector in 2022 was
OTP Bank’s acquisition of Alpha Bank Albania that was completed in
July. OTP Bank signed the deal to acquire the Albanian unit of Greece's
Alpha Bank in December for a price of €55mn. The integration with
OTP Bank Albania is expected to be completed in 2023. With a market
share of 5%, based on total assets, Alpha Bank Albania is the country's
eighth largest bank, active in both the retail and corporate segments.

3.1.3 Industry

Albania’s manufacturing and mining sector is relatively small, though
the country is a producer of iron, steel and chrome. Within light industry,
Albania has a large clothing and footwear sector, mainly serving the
garment industry in nearby Italy. Production in the textiles sector
slumped in 2020 when clothes shops around the world were shut
during the first wave of the coronavirus pandemic, but demand has
since recovered.

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