The Deposit Insurance Agency (ASD) has drafted a new law "On Deposit Insurance." The draft law introduces significant changes, beginning with a gradual alignment - ultimately reaching full compliance - with the deposit coverage levels established within the European Union.

Upon the adoption of the new law, the insured amount for bank deposits will rise to Lek 6 million. At the time of accession to the European Union, this insured amount will increase to the equivalent of Euro 100,000.

The new law will also introduce a major change in how insurance premiums are calculated for banks participating in the scheme. The insurance premium will no longer be uniform and equal for all banks; instead, it will be determined based on a risk-assessment methodology.

This means that financial institutions posing a higher risk will pay a higher insurance premium, while those with a lower risk will pay a lower premium.

Under current law, the Deposit Insurance Agency (ASD) insures bank deposits up to Lek 2.5 million, and deposits in savings and credit unions up to Lek 2 million.

The draft law prepared by the ASD stipulates that, in the event of an insured incident, the coverage level will be up to Lek 6 million for the aggregate deposits of each depositor at a credit institution participating in the scheme.

In a second phase - upon Albania’s accession to the European Union - the coverage level will increase to an amount in Lek equivalent to Euro 100,000 for the aggregate deposits of each depositor at a participating institution.

European Union Directive 2014/49/EU requires that the coverage for bank deposits in member states be at least Euro 100,000; the draft law proposed by the ASD is intended to fully align national legislation with this requirement. The draft law retains most of the exclusions from the deposit insurance scheme that are already provided for in the existing law.

These exclusions relate to deposits held by banks themselves; deposits of other financial institutions - such as insurance companies, investment funds, or pension funds; deposits of state institutions (excluding those of entities directly providing public services); and deposits originating from activities for which a final court judgment has been issued regarding the criminal offense of money laundering (laundering the proceeds of crime or criminal activity) or the financing of terrorism.

Under the new draft law, the list of excluded deposits also includes those that qualify as instruments meeting the minimum requirement for regulatory capital and eligible liabilities - pursuant to legislation on extraordinary intervention - including cases where such deposits have a residual maturity of less than one year.

However, unlike the existing law, the draft law no longer excludes from insurance coverage the deposits of a bank’s directors or administrators (and their family members), nor the deposits of any person who holds 5% or more of the capital or voting shares of a member institution. Under the new law, deposits held by administrators and shareholders with an influential stake in banks will be insured to the same extent as the deposits of other entities covered by the law.