The Albanian banking sector dominates the financial sector and consists of 17 banks (2 Albanian and 15 foreign-owned/or joint ventures). In April 2004, the government sold its stake in the largest (savings) bank to Austrian-based Raiffeisen, resulting in about 50 percent of the banking system assets moving from public to private hands, leaving a large dominant bank, 5 to 6 medium-sized banks, and a remaining set of small, niche banks. The banking system is highly liquid owing largely to a lack of lending opportunities and relatively high and safe returns on government securities.
The Albanian banking system has much of its assets and loans denominated in foreign currency, principally the euro and U.S. dollar. Other assets are mostly euro market placements and euro market securities from well-rated sovereigns and international financial institutions thus balancing their foreign currency deposits. There is generally a high demand for foreign currency loans, though this varies across banks. Some banks report that borrowers simply note that interest rates applied to foreign currency denominated loans are lower than in lek and ignore the foreign exchange risk they are assuming despite information about risks provided by the banks