Regulation of Acquisitions Activity in Banking Industry – Albanian Banking System

Abstract

Throughout the world, banking industries are undergoing a rapid and sometimes startling process of consolidation, spurred occasionally by hostile takeover bids, but, more often, by friendly mergers by institutions that were once fierce competitors. Many changes have happened also to the Albanian banking sector those last years. Well known European banks have been taking an increased interest in Albania which has been finalized with a growing number of takeovers of local banks/financial institutions by western banks. The primary objective of the Supervisory Authority – Bank of Albania, therefore, should be to ensure that a merger will not be detrimental to the public interest and also not contrary to the interests of the banks concerned, their depositors or their controlling companies. Also the government intervention is necessary to restrain the behavior of bank management and to ensure the soundness of the financial system because of the negative impact of bank failures on economic activity. This paper analyzes the Albanian regulatory framework regarding acquisition process, and the compliance with particular core principle for effective banking supervision. Also, it describes the main regulatory principles that the regulators should take into account when considering particular applications.

DOI: 10.5901/mjss.2015.v6n1p325