spi albania financial sector modernization · pdf filefinancial sector modernization to: his...

Annex V-1

Draft Invitation letter to the Central Bank and to the Ministry of Finance/Ministry of Economy to enter into SPI Partnership for

financial sector modernization

To: His Excellency Central Bank Governor His Excellency Minister of Finance/Economy Dear Sir, The bilateral meetings with the public authorities and the seminar organized for the middle management staff of the public authorities revealed a genuine interest in establishing a SPI Platform in our country. Encouraged by the favorable results of these consultations and by the banking community’s support, the Banking Association is hereby addressing the invitation to establish the SPI partnership, by appointing a top level management representative in the SPI Committee, the supervising body of the partnership. The attached note is presenting details on how SPI platform acts, each of the partner’s responsibilities, costs and benefits under the partnership. The mandate of the SPI Committee at this stage is to organize the partnership by inviting other institutions to join it and to take the necessary steps in order to secure European Union funding for the partnership activities. Once the financial needs are covered, SPI Committee’s duties will be to approve the activities to be performed by SPI Platform, to endorse the regulatory/self-regulatory proposals formulated by the Project Working Groups and to act for their endorsement. We express our trust that establishing the SPI partnership will enhance and complement the fruitful cooperation between our institutions for the sustainable development of the financial sector. Sincerely, Chairman of the Banking Association

SPI Platform ToolkitEuropean Banking Federation World Bank's "Convergence" Programme

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Annex V-2

Note for authorities’ decision to enter in SPI partnership

The SPI (Special Projects Initiative) public – private partnership is a Platform for

institutional cooperation between the market players and relevant authorities for

addressing financial sector modernization opportunities of a country.

The SPI partners are professional associations of the private financial institutions,

regulating and supervising authorities of the financial market and of other closely

related fields, academic institutions, international donors, etc. In [country] the

potential partners could be, besides the Banking Association, the Central Bank and the

Ministry of Finance/Economy the following institutions: [according to the preliminary

discussions].

SPI Platform may be incorporated or not as a legal entity, the legal status will be

discussed and proposed further by the SPI Executive Committee.

SPI is handling financial modernization issues that refer to:

- reducing asymmetric information

- completing the market

- increasing opportunities of entering into financial transactions

- reducing transaction costs

- enhancing competition on the market.

This taxonomy is drawn from the European Central Bank taxonomy to measure

progress on financial integration.

Central Bank has a veto right on the SPI activity plan and while elaborated under the

partnership, the regulations are to be approved and enacted by the Central Bank

governing bodies or by the Ministry of Finance/Economy.

Experiences in Romania and Albania showed that the SPI Platform can handle, after

the initial running in period, a set of 10 financial modernization projects per year.

SPI Romania 2007 12-project activity program

Positive credit information reporting

Electronic processing of debit instruments

Improving AML reporting

Revamping rural lending based on deposit certificates

Consumer financial education

Banking Ombudsman

Credit rating agencies

Stress testing

Provisioning under IFRS

Mortgage loan and Loss Given Default databases

MiFID implementation

Optimizing banks’ security


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SPI Albania 2009 10-project activity program

Enhancing banks’ liquidity risk management

Revising regulatory act on Execution of Procedures on Bank accounts

Revising Public Procurement Law

Unique and rationalized reporting system

Revising Foreign Currency Open Position

Preparing a feasibility study for a central depositary

Loan loss provisioning under IFRS

Establishment of a national settlement scheme for payments in foreign

currency

Expansion of the credit bureau services - database for businesses

Expansion of the credit bureau services - scoring cards for individuals

Some of above mentioned projects referred to prudential issues, as central banks

appreciated that they can use information from banks or from consulting companies

on the readiness to implement regulatory provisions, on the impact on banks and on

setting the implementation period, on the clarity of the regulations.

SPI’s strength and solidity are given by its partners’ commitment to collaboration,

by its strong governance and by its work methodology.

The supervising body of the SPI Platform is the SPI Committee gathering top level

representatives of the partner institutions. SPI Committee has as main responsibilities

to decide on the activity program,

to monitor its execution, and

to endorse and promote the outputs of the program.

The SPI Committee’s mission at this stage is to establish the partnership by inviting

other institutions to join, to identify financing sources and to support the funding

application process.

The actual execution of the activity program is entrusted to Public-Private Working

Groups established by project gathering experts from all the stakeholders, with a

strong management team reflecting the main stakeholders of the issue to be solved.

The SPI Committee and the project working groups rely heavily on the expertise and

work of a small team – SPI Secretariat – that is permanently dedicated to the

partnership. SPI Secretariat has to cover a mix of secretarial, analytical and

communication responsibilities and project-related responsibilities. Running SPI

projects require strong organization capabilities as it supposes to handle the

relationship with about one hundred local and international experts. To make the most

of the experts’ time and knowledge, with as little interference as possible in their

official daily responsibilities, the SPI Secretariat prepares most of the analytical work.

SPI operating principles are:

a. local ownership – it is granted by the decision powers of and the support provided

by the local stakeholders. Local stakeholders i) decide on the SPI program, ii) con-

tribute to the activity through large mobilization of their experts and by covering a

share of its operating expenses and iii) identify solutions and choose the ones that

addresses best their concerns and accommodates their interests;


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http://spi-albania.eu/en/2009-program/enhancing-banks-liquidity-risk-management/

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b. programmatic focus - the issues to be tackled under SPI are proposed by its

partners, through extensive consultation. They are prioritized according to their

importance, to the strategic objectives or policy priorities decided by the industry or

authorities and are approved by SPI Committee as annual financial modernization

program. In Albania, for example, the annual program for 2009 was built up in the

context of the policy priorities of the Albanian Banking system, discussed in Bank of

Albania’s Banking Forum and other professional meetings;

c. mobilization of local expertise - the annual program is executed by public-private

working groups of local experts, led by a Project Management Group;

d. involvement of foreign experts to fill local knowledge gaps - the Project Working

Groups carry out analyses and prepare proposals for regulatory or self-regulatory

changes with the significant support of the SPI Secretariat. When necessary, Project

Working Groups invite international experts to provide complementary perspectives

to their expertise;

e. disciplined program management - in order to reach the objectives in an effective

way, Project Working Groups run the projects according to specific and very detailed

Terms of Reference prepared by the SPI Secretariat. The project steps are based on a

standard documentation, based on the EU Better Regulation methodology, to be

prepared and discussed in 4 Project Working Group meetings within about 3 months.

Project Working Groups’ recommendations are signed off by the Project Management

Group and eventually endorsed by the SPI Committee before being transmitted to

relevant authorities for their consideration;

f. evidence-based analytical methods to search for solutions – projects are executed

according to EU Better Regulations methodology whose main principles are the

consultations on policy options with stakeholders and use of Regulatory Impact

Assessment as a tool for providing supporting evidence for regulatory proposals;

g. full transparency of the work - the governance framework, activities, projects and

documents are made available to the public through SPI website and/or on the

websites of the SPI partners;

h. strong practical impact orientation – the outcomes of the SPI are not studies or

proposals, but enacted regulatory or self-regulatory changes.

The costs of an SPI Platform comprise salary costs for the SPI Secretariat, equipment

purchase and operating cost (office costs, event organizing costs, etc). The annual

budget of an SPI Platform with the above referred minimum SPI Secretariat formula

and with the punctual involvement of foreign consultants is estimated to about EUR

100,0001. For a 10 project annual program, this translates in about EUR

10,000/project. The costs are to be covered in major part out of EU funding.

1 To be revised according to each country’s context and conditions (salaries, SPI Secretariat formula,

involvement of foreign technical assistance, etc.).


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Annex V-3

Draft Joint Invitation Letter to other SPI Potential Partners To: Top level representatives of public authorities and private institutions Dear Sir, Central Bank, Ministry of Finance/Economy and the Banking Association have decided to enter into the SPI partnership. As you know, SPI Platform handles financial sector modernization projects under the coordination of the SPI Committee, gathering high level representatives of the partner institution. The SPI partners commit themselves to put together financial, human and in-kind resources to identify commonly agreed solution to problems in their common interest. Please find attached a note on SPI partnership, activities, results and costs. We are writing to invite you to join the SPI partnership by appointing a representative as [Permanent Observer/Member] in the SPI Committee that supervises the activities of SPI Platform. As a partner institution, you will be invited to propose projects, to participate with your experts in solution designing and to support the enactment of regulatory proposals. The SPI Committee’s main responsibilities at this stage consist of raising awareness on the partnership and on supporting the process of securing the financial sustainability of the SPI Platform. Once the financial needs are covered, SPI Committee’s duties will be to approve the activities to be performed by SPI Platform, to endorse the regulatory/self-regulatory proposals formulated by the Project Working Groups and to act for their endorsement. We trust that your involvement in the SPI Committee as a [Permanent Observer/Member] would add value to the quality of SPI Secretariat’s work and would strengthen the connection of the SPI Platform with the financial market’s actors. Thank you. Best regards,


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Annex V-4

SPI Committee Operating Guidelines in the initiation stage of the public – private

partnership

Context Enhancing the financial sector contribution to growth requires a large-scale fine-tuning of micro-regulations that affect the efficiency of financial sector intermediation. These actions have to take place in close cooperation between financial authorities, members of the banking and financial industry, and users of financial services. To accelerate this process, main financial sector stakeholders have agreed to launch the “SPI Financial Sector Modernization Platform” (“SPI Platform”) and, in order to support it, to establish a high-level public-private Steering Committee (the “SPI Committee”) that will initiate, oversee and act upon analytical projects that hold the greatest potential for their contribution to financial sector modernization. SPI is placed in the broader context of a regional financial sector modernization program that will promote the launch of similar activities in neighboring countries to ensure maximum regional cooperation and coordination. ARTICLE 1: SPI COMMITTEE PURPOSE IN THE INITIATION STAGE OF THE SPI PARTNERSHIP Section 1. Mission Statement and Authority The SPI Committee represents a high level commitment to public-private collaboration to implement financial sector modernization projects.

SPI Committee Five Core Principles in the initiation stage of the public – private partnership

The SPI Committee represents a high level commitment to public-private collaboration to promote financial sector modernization.

The SPI Committee acts for building awareness on SPI partnership.

The SPI Committee commits to support fund raising for the SPI Platform.

The SPI Committee decides on SPI Secretariat composition and activities.

The SPI Committee selects unanimously the Financial Sector

Modernization Program.


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Its founding members are the Central Bank, Ministry of Finance/Ministry of Economy and the Banking Association. The SPI Committee is responsible for building awareness on the SPI partnership, for supporting the fund raising for SPI Platform’s activities, for setting up the SPI Secretariat function and team and to select the analytical projects to be undertaken as part of the First SPI Modernization Program. The SPI Committee may decide to establish relationships with authorities and civil society institutions, domestic and international institutions with a key role in securing funding for the SPI Platform activities. The links may involve SPI Committee membership, formation of specific SPI Committee consultative panels or other ad hoc arrangements as necessary. ARTICLE 2: SPI COMMITTEE MEMBERSHIP Section 1. Members The SPI Committee is composed of three founding members (hereinafter, the “SPI Committee Members”) as follows:

1. Governor of Central Bank (Hosting Chairperson); 2. Minister/State Secretary of the Ministry of Finance/Economy; 3. Chairman of the Banking Association.

The SPI Committee Members operate in their personal capacity, their actions and decisions in the SPI Committee cannot be deemed having being taken pursuant to the general powers and authority that are vested with each of them by her or his institution. Each SPI Committee member may appoint an Alternate SPI Committee member. The SPI Committee may invite representatives of other institutions to attend its meetings as permanent observers in order to enhance relevance and effectiveness of SPI Committee-sponsored initiatives. Annex I contains the list of the SPI Committee members and permanent observers and of their alternates. Section 2. Term The SPI Committee shall be established at the launch of SPI Partnership that is, on [date]. ARTICLE 3: SPI COMMITTEE ACTIVITIES IN THE INITIATION STAGE General Remarks: SPI Committee Members or their Alternates shall attend regularly all the meetings to underline a high-level commitment to public-private dialogue. They must be able to actively participate in Committee meetings and projects.


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The specific role of SPI Committee is to:

1. Raise awareness on the SPI Partnership through joint or individual actions, through letters or statements, by taking care of posting on their institutions’ websites information on the partnership;

2. Support fund raising for the SPI Platform through various means, as deemed necessary over time, for applying with EU institutions and other international donors;

3. Decide on the design of the SPI Secretariat functions, participate in SPI Secretariat selection and support training activities of the SPI Secretariat members in their institutions;

4. Review the pipeline of micro-regulatory issues that require resolution and approve the proposals for individual analytical projects prepared by the SPI Secretariat consistently with the priorities for financial sector modernization.

ARTICLE 4: SPI COMMITTEE MEETINGS Section 1. Frequency, venue and chairmanship The SPI Committee will meet at least two times in this stage: for approving the funding application and to approve SPI Secretariat team and the first activity program. The SPI Committee Member hosting the meeting will also act as a chairperson of the respective meeting. Section 2. Notice of meeting, agenda and quorum Notice of the meeting will be provided in advance, with an agenda and respective meeting materials e-mailed/mailed to the SPI Committee Members seven days prior to the meeting. The SPI Committee meeting agenda shall be prepared by the Banking Association Secretariat, in consultation with SPI Committee Members. A draft will be distributed to SPI Committee Members prior to the meeting. Any SPI Committee Member may request inclusion of items in the agenda. S/he will do so by contacting in written form the Banking Association Secretariat before the meeting. A quorum shall be required to conduct the business of the SPI Committee. A quorum is defined as a simple majority of the members. Section 3. Meeting Records Minutes of these SPI Committee meetings will be kept and maintained by the Banking Association Secretariat. Approved minutes will be distributed to the SPI Committee Members no later than a week after their approval. Meeting decisions will be made publicly available in ways to be determined.


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Section 4. Decision Making and Method of Vote SPI Committee decisions shall be taken by consensus among the SPI Committee Members present in the meeting. Section 5. Compensation No SPI Committee Member will receive salary or any other honorarium for their services under these bylaws. ARTICLE 5: OPERATING GUIDELINES AMENDMENTS These guidelines shall govern the SPI Committee in the initiation stage of the public – private partnership and new guidelines shall be adopted when the partnership will be operating. The SPI Committee may adopt special rules of order if required. These rules can be amended at any regular meeting of the SPI Committee by consensus, provided that the amendment has been submitted in writing at a previous meeting. [place, date] Central Bank Governor Chairman of Banking Association

Minister/State Secretary of the Ministry of Finance/Economy


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List of SPI Committee members and permanent observers and of their alternates

SPI Stakeholder SPI Committee Members

SPI Committee alternate members

Central Bank

Ministry of Finance/Economy

Banking Association

SPI Committee Permanent Observers

[Financial Supervision Authority]

[Ministry of Economy and Finance]


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Annex V-5

Draft communication on SPI Partnership launching

Special Projects Initiative – SPI is a public – private partnership for the financial sector modernization by promoting regulatory and self regulatory measures. SPI undertakes projects that reduce asymmetric information, reduce costs of transactions, increase opportunities for transactions, contribute to complete the market and improve competition, in a structured and effective manner. The Central Bank, the Ministry of Finance/Economy, the Banking Association and [the other SPI partner institutions] have decided to enter into the SPI partnership. The SPI Committee members, gathering top level representatives of the partner institutions had their first meeting on […], marking the launch of the SPI Partnership. The SPI Committee represents a high level commitment to public-private collaboration to promote financial sector modernization. Its mandate in this initiation stage is to act for building awareness on SPI partnership, to support fund raising for the SPI Platform, to decide on SPI Secretariat composition and activities, and to select unanimously the first Financial Sector Modernization Program. We are kindly inviting all public and private institutions, civil society and academia actors, international donors and international financial institution to join us in this initiative to accelerate financial sector modernization and to grant us their valuable support. Central Bank Ministry of Finance Banking Association


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