Bank of Albania’s decision on the approval of the regulation on consolidated supervision

Official Bulletin no.34, dated 1 March 2017

On 1.2.2017, the Supervisory Council of the Bank of Albania approved Regulation no.4 “On consolidated supervision”, which aims to determine the conditions, rules and regulatory requirements for the accomplishment of the consolidated supervision, for risk management purposes derived from the banking group and financial group.

Subject to this regulation are all entities licensed by the Bank of Albania, which in accordance with the law “On banks in the Republic of Albania”, are the dominant institutions of a banking group or a financial group, according to the provisions of this regulation.

First, the regulation stipulates that the dominant institution, for the consolidation of financial statements, uses consolidation methods defined in the “Reporting Methodology and content of financial reports” approved by the decision of the Supervisory Council of the Bank of Albania No. 95, dated 24.12. 2008. The regulation contains provisions on the consolidated qualitative and quantitative supervision by explaining them accordingly.

In addition, the regulation contains provisions on regulatory capital, great exposure, open currency position and investment in the capital of non-financial institutions by banking groups. According to this regulation, the dominant institution presents to the Bank of Albania, within 60 days after the closing of the reporting period, consolidated financial statements and records in compliance with annexes and integral parts of this regulation.

Finally, the regulation contains provisions regarding the monitoring and supervisory process and in particular sets requirements on the internal control system, the basic principles and evaluation criteria, supervisory measures, as well as the manner of treatment of important transactions within the group.