![Albanian Banks Tightened Lending Requirements and Loan Applications Dropped in Q1 and Q2 Albanian Banks Tightened Lending Requirements and Loan Applications Dropped in Q1 and Q2](https://exit.al/en/wp-content/uploads/sites/3/2020/03/Banka-e-Shqiperise.jpg)
Albanian banks have tightened lending requirements for both businesses and individuals since the beginning of 2020.
As per the Lending Activity Survey 2020, the Bank of Albania said that as a result of the pandemic and the uncertainty it has caused, banks applied stricter standards on personal and business loans.
This is also due to the “perception of an increased risk related to the borrower’s solvency, economic situation, and prospects for it, as well as collateral.” Banks have also reported a reduction in loan applications across all types of loans.
The report said this will continue into the third quarter, especially for businesses and loans for investment financing. In terms of demand, it is expected to increase for all loan types by the end of the year.
The Bank of Albania conducts a lending survey each quarter and aims to capture the activity of commercial banks in terms of credit supply and demand.
Also announced yesterday was the fact that the Bank of Albania will receive short-term loans of up to EUR 400 million from the European Central Bank. The Bank signed an agreement to borrow the sum for a term of one year to provide liquidity in Euros for Albanian financial institutions and to address the potential need for Euro liquidity in case of market dysfunction due to COVID-19.
“The Bank of Albania will be able to borrow up to 400 million euros from the ECB. The maximum maturity of each withdrawal will be three months. The line of repurchase agreements (Repo) will be in force until the end of June 2021, as long as an extension of the term will not be decided “, explains the Bank of Albania.