Banking Entities

Not so long ago, in jurisprudence and, of course, in practice, there was confusion as to the meaning or inclusion of the term “banking entities.” However, today, we can say that there are no more doubts that can be taken into account regarding banking entities, among which the most important are banks. There is also a financial activity performed by commercial entities, an event related to the banking activity; this is the activity of non-banking institutions, based on the legal space given to you by Article 26 of the Law “On the Bank of Albania.”

Banks

The law defines them as legal entities, companies (anonymous) that perform commercial banking activities, i.e., accept and collect deposits, provide loans, advances, loans, etc. Banks can be categorized as follows:

a. Central banks, or as they are called “issue banks,” are the central banks in a country that play the role of authority in the banking system. These banks are first-tier banks, and there can be only one in one country. Thus, the law excludes the possibility that banks are individuals or natural persons.

b. Commercial banks: Banks in Albania are universal banks. Such are those banks whose scope of activity is vast, in contrast to specialized banks, which offer one or several services related to a particular purpose (e.g., investment banks), which buy and sell securities in the name and on behalf of third parties or clients.

c. Deposit banks, which have as their primary activity the acceptance of deposits by the population. These banks can simultaneously provide loans, but with some exceptions (total last, the credit they can give cannot be more than 10% of the capital). These banks have their main concern to take care of the storage and rational use of deposits. Deposit banks have a peculiarity because, in some cases, the state becomes the guarantor of savings deposits. For example, Law no. 7505, dated 31.7.1991 “On the Savings Bank” (repealed) in its article 12 stipulated that “The state guarantees the savings deposits of the population deposited in the Savings Bank.”

d. Commercial banks – the main activities are lending, preferential lending in industrial and market action, and accepting deposits. These banks, as well as others, are required minimum capital. As a rule, these types of banks do not deal with securities credit operations but perform banking activities of any kind on behalf of third parties, foreign exchange transactions, etc. Unlike deposit banks, the law gives them more freedom to engage in industrial and commercial activities.

e. Medium-term credit banks mainly provide 2-year loans, but can not accept deposits for less than two years. These types of banks have different names, such as “anonymous credit companies for the industry” or “mortgage banks” or “real estate financing banks.”

f. Big agricultural credit banks, which side set up to favor and help the farm economy. Their lending scope is financing investments for land protection and its improvement, financing of seeds, seedlings, fertilizers, loans for agricultural mechanics, loans for the use of crops, etc.

g. The cooperative bank has legal personality for signing contracts, issuing bonds, issuing bylaws, acquisition, possession, and disposal of movable and immovable property for its commercial activity. The members of such a bank are individuals who pay a membership fee, have bank deposits and have some profession, and residents within a certain distance from the bank (as determined by the central bank, or are artisans and small traders with local commercial activities, etc.).

h. Municipal Credit (or otherwise called Municipal Credit Boxes) are legally recognized as public social assistance bodies with civil and financial personalities. They have their budget and are dependent on the Prefecture and Finance. As sources of funding, they have subsidies from the state budget, depositors’ accounts, and the local tax coffers.

i. Foreign Trade Credit Institutions (or banks), regardless of their name, have banking characteristics but are specialized in foreign trade, especially exports other.

In the field of monetary circulation operate different financial bodies, which, according to the object of activity, can be divided into:

a. Real estate financing bodies, which mainly finance the improvement of housing conditions, lands, and buildings.

b. Credit sales bodies, vehicles, electronic devices, etc.

c. Insurance companies receive funds from money holders, create any obligation, and lend the funds to the borrowers. This is where life insurance companies come into play, which differs from other insurance types, such as property or resource insurance. The distinguishing feature of life insurance companies from other insurance forms is that those for premature deaths can offer more than other guarantees.

d. Pension Institutes (or Plans). Their role is to accumulate funds for employees to have the funds to live on after retirement. The funds are poured into the pension plan by the money holder, and the money deposited is used to purchase an income-generating tool, mainly for investment. Not all pension plans are financial intermediaries.

e. Savings and loan associations, which are known as voluntary associations of natural and legal persons. The object of their activity is to deposit the savings of the company members and provide loans to its members.