Tsvetan Manchev

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Bulgarian Banking Towards EU
by Tsvetan Manchev Deputy Governor Bulgarian
National Bank
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SUMMARY

• Sustainable economic development - key factor for
  the sound banking system
• The Bulgarian Banking Sector on the eve of the EU
  membership the role of structural reforms
• Major challenges for Bulgarian Banking System on
  its way to membership in the Eurozone

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CURRENT ECONOMIC DEVELOPMENT
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GDP REAL GROWTH
Source NSI, IMF
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CPI(annual average)
25.1
Source NSI, IMF
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INTEREST RATES CONVERGENCE(annual average
values)
Source BNB, Eurostat
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UEMPLOYMENT RATE
Source National Employment Agency, BNB
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GENERAL GOVERNMENT BUDGET BALANCE( GDP)
() surplus (-) deficit
Source MoF, IMF
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GOVERNMENT DEBT ( GDP)
Source MoF, IMF
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MAASTRICHT CRITERIA FOR NOMINAL CONVERGENCE
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BANKING SECTOR REFORM
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PREDOMINANT FOREIGN CONTROL ON BANK ASSETS AND
CAPITAL(as of 30 September 2005)
Source BNB
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BANKS DOMINATE FINANCIAL MARKETS
Source BNB, FSC, BSE
Preliminary data
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INCREASING COMPETITION(THE SHARE OF THE FIRST
FOUR BANKS IN TOTAL BANK ASSETS AS OF THE END OF
THE YEAR)
Source BNB
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HIGH GROWTH AND SOUND QUALITY

• Bank assets are growing very rapidly
• Strongly capitalized
• High liquidity is maintained
• Asset quality remains very good

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EFFICIENCY AND HIGH PROFITABILITY
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INCREASING ROLE OF THE BANKING FOR THE REAL
SECTOR FINANCING

• Bank credit growth is returning to sustainable
  level
• Banks are predominantly externally funded
• Business sector credit demand is investment
  driven
• Long term loans to business sector grow faster
  than short term
• Business sector has a good access to lending from
  abroad
• Residential loans to households are growing very
  rapidly

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CHALLENGES FOR BANKING SECTOR

• Smooth adoption of the EU directives
• Basle II implementation
• Sustainability of the credit growth
• Interest rates convergence
• Mergers and acquisitions
• Better corporate governance and transparency

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CHALLENGES FOR BNB

• Short-term challenges
• Fine-tuning of the process of bank lending
• Enforcement of the new legislation related to the
  EU membership
• Law on Credit Institutions transposing Re-casting
  Directive 2000/12/EC relating to the taking up
  and pursuit of the business of credit
  institutions, Directive 2001/24/EC on credit
  institution reorganisation and Directive
  2000/46/EC on the taking up, pursuit of and
  prudential supervision of the business of
  electronic money institutions
• Consumer Credit Law
• Full transposition of Directive 2002/47/EC on
  financial collateral and Directive 2002/87/EC on
  financial conglomerates
• Medium-term challenges are linked with the
  full-fledged EMU membership

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Thank you for your attention!