Governor Ismaili: the CBK is working on advancing the regulatory framework related to the appraisal of immovable properties by the financial sector

27/10/2023

The Central Bank of the Republic of Kosovo attaches special importance to the appraisal of immovable properties by the financial sector, Governor Ahmet Ismaili said at the forum on "Approximate market value as well as and sale and purchase prices of immovable properties".

In the opening remarks of this forum organized by USAID and the Supervisory Council for Licensing Appraisers of Immovable Properties within the Ministry of Finance, Labour and Transfers, Governor Ismaili emphasized that the CBK is committed to advancing even further the regulatory framework in the Republic of Kosovo.

"The Central Bank of the Republic of Kosovo attaches special importance to the appraisal of immovable properties by the financial sector, also through a comprehensive regulatory framework that is related to several aspects of this sector. Therefore, the CBK has regulated the appraisal of immovable properties through the specific regulation that applies to banks, other lending institutions and insurers that rely on immovable properties as collateral for any purpose", Governor Ismaili said in the opening remarks of this forum.

"CBK is committed to further advance the regulatory and supervisory framework related to immovable property appraisal. We expect that, through this project supported by USAID, we will be able to advance the existing legal and regulatory framework of immovable property appraisal, including the establishment of the necessary mechanisms to control the quality of appraisals and adequate monitoring of appraisers", Governor Ismaili added.

According to Governor Ismaili, the appraisal of immovable properties has a significant impact on the presentation of the real state of financial statements, indicators of the health of financial institutions, the value of exposures, the proper presentation of issues related to the field of formalization of the economy and prevention of money laundering and the correct presentation of tax liabilities.

Governor Ismaili also emphasized that the possibility of Commercial Immovable Property collateral being weighted less in Risk Weighted Assets will be considered.

"Property appraisal potentially affects the allocation of capital through Risk Weighted Assets, for loans that are collateralized with real estate. Once we have managed to have this process finalized, we will look at the possibility of also considering Commercial Immovable Property collateral being weighted less in Risk Weighted Assets", Governor Ismaili emphasized.

The head of the CBK said that the highest financial institution in the Republic of Kosovo cooperates closely with the Supervisory Council for Licensing Appraisers of Immovable Properties.

"In addition to the licensing by this Council of a number of immovable property appraisers who perform appraisals for the needs of the financial sector, the CBK has also licensed a number of its personnel engaged in the examination of financial institutions, who valuate the reports prepared by the appraisers engaged for the financial institutions", the head of the CBK said.

In this forum, Governor Ismaili said that CBK is supporting the International Monetary Fund Program for the preparation of the Residential Property Price Index.

"The Central Bank of the Republic of Kosovo, through its involvement in the Inter-institutional Working Group, under the International Monetary Fund program, is involved in the preparation of the Residential Property Price Index, a project which is being led by the Kosovo Agency of Statistics", Governor Ismaili said.

At the end of his speech, Governor Ismaili said that CBK expects that the appraisal of immovable properties will be carried out according to the regulations in force and international best practices.

"We expect that these changes will directly affect banks and other financial institutions to correctly implement the applicable regulatory requirements, as well as to advance their policies and procedures related to the appraisal of immovable properties, in accordance with the best international practices and European Union standards, known as TEGOVA Standards", Governor Ismaili concluded.