present eu countries. the banks being acquired are mostly full - service banks, which means that the parent bank gets a larger customer base for its financial services, one of which is mortgages. another structural trend is a greater concentration of financial activities to certain centres in order to profit from cluster benefits. companies that produce the same products and services discern benefits from being located close to each other for several reasons. these might, for example, be a skilled labour force, accessibility to the market, suppliers and customers, specialised service companies, market information, market knowledge or infrastructure. they are reinforced by economies of scale that benefit large financial companies gathered together in a few locations. one such example of a financial centre is london. mortgage institutions with standardised products independent of distance to customers and borrowing in an international capital market ought to be activities that can profit from these cluster benefits. the concentration trend that we have been able to perceive over the past 15 years among swedish mortgage institutions demonstrates that these are also following this structural trend. challenge 2 - international regulations one of the intentions behind the eu's internal market and the introduction of the euro is to create a more efficient market for products and services in which competition increases and customers obtain better products at lower prices. one aspect of this is the eu's financial services action plan that is to be realised by 2005. the plan contains 42 measures that aim to remove remaining obstacles to cross - border trade in financial services and to promote financial integration in the eu. at the same time, measures are been taken to support the supply of risk capital in the eu. these action plans will help realise the vision of making the eu the most competitive, knowledge - based economic area in the world by 2010. three - quarters of the measures in the financial services action plan have already been decided. this will also affect mortgage institutions, as they are major participants in the markets for both lending and borrowing. another factor of importance is the new capital adequacy rules that are planned for introduction in 2006. put simply, capital adequacy rules are rules governing how much capital a bank is required to hold for various borrower groups for each krona lent. in the new rules, it is intended that the risk weighting will better reflect the actual credit risk. this means that the banks will be more careful in assessing the relationship between the risk of a loan and its return. it will therefore be possible to observe increased risk in the banks'interest rates. the new capital ade

end of the year, which is significantly higher than the annual rates of the pervious years. the credit balance rose by l11. 9bn or 30. 9 %. the new credit increased by 50 % meanwhile 76 % is in foreign currency. the loans / gdp ratio is still low, at about 7 %. the banking system experienced important developments during 2003 and in the beginning of 2004. the entry of two new banks of albanian capital was soon followed by the successful privatisation of the savings bank from the raiffeisen zentralbank ( rzb ) austria. now, all in all there are 16 banks in the albanian banking system. the boa has progressed in reforming the banking system towards international standards, with the aim of the developing and refining the country ’ s banking infrastructure. aips, inaugurated in early march 2004, can be considered as the backbone of the whole banking system infrastructure. the boa wishes to bring its central bank closer to that of the european central bank. therefore, changes and amendments of the bank ’ s regulations are aimed towards achieving this goal.