Financial Sector in Bulgaria

1
Financial Sector in Bulgaria
2
Bulgaria - Currency Board Arrangement

• BGN1 DEM1 EUR0.5113
• Long-term goal for EU membership, the anchor
  currency being the Euro
• The share of the Euro in the external trade is
  constantly increasing
• The EU is by far the leading trade partner of
  Bulgaria
• The CBA helps curb inflation - a step towards
  meeting the Economic and Monetary Union criteria
• No indications that Bulgaria should exit the CBA

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Banking Sector Overview (1)

• Total banking sector assets account for 41 of
  GDP
• Over 80 of the assets in the banking sector are
  in private hands
• Over 80 foreign share of total bank assets
• Upon privatization of DSK (the State Savings
  Bank), the banking sector will be almost
  completely privately owned

4
Banking Sector Overview (2)

• 25.3 yoy increase in banking system assets in
  2001
• High levels of capital adequacy and liquidity
  (by end-2001)
• 31 total capital adequacy
• 13.5 primary liquidity
• 25.5 secondary liquidity

5
Commercial Banks Assets, Deposits and Loans (BGN
bn, 01/1998-11/2002)
Source Bulgarian National Bank
6
Commercial Banks Credits to Non-Government (BGN
bn, 01/1998-11/2002)
Source Bulgarian National Bank
7
Commercial Banks Deposits and Credits as of
Total Assets (01/1998-11/2002)
Source Bulgarian National Bank
8
Commercial Banks Non-performing Loansas of
Total Loans (01/1998-09/2002)
Source Bulgarian National Bank
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Commercial Banks Total Loans (BGN bn
01/1998-09/2002)
Source Bulgarian National Bank
10
Banking System Financial Result(BGN m,
01/1998-09/2002)
Source Bulgarian National Bank
11
Capital Adequacy ()
Source Bulgarian National Bank
12
Loan-Deposit Interest Rate Spread(,
01/1998-11/2002)
Source Bulgarian National Bank
13
Steady Growth of M2 and Quasi-Money(BGN bn,
01/1998-11/2002)
Source Bulgarian National Bank
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Capital Markets (1)

• Bulgarian Stock Exchange Sofia
• 20 growth in turnover in 2001 against the
  previous year
• January 27, 2003, the stock exchange index
  (SOFIX) reached 208.8, an increase of 196 since
  the June 2001 parliamentary elections
• Radical measures for the protection of minority
  shareholders rights
• A new Privatization Law which sets a new era in
  Bulgarian privatization by radically improving
  the transparency, speed and economic
  effectiveness of the deals concluded

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Capital Markets (2)

• International Accounting Standards (IAS)
• A new Law on Deals in Compensatory Instruments
• Major changes have been made to the Securities
  Law
• A list has been approved comprising c. 1,080
  companies with state participation in the capital
  ownership, for the privatisation of which payment
  through different kinds of vouchers (non-cash
  instruments) is allowed. The shares of 114 of
  these companies are to be traded on the stock
  exchange

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Bulgarian Stock Exchange Sofia (Sofix Index,
23/10/2000-27/01/2003)
Source Bulgarian Stock Exchange
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Brady Bonds
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Brady Bond Exchanges Parameters

• March 2002 Bulgaria exchanged USD1326m of Brady
  bonds into a new USD512m Eurobond with a coupon
  of 8.25 maturing in 2015 and a new EUR836m
  Eurobond with a coupon of 7.5 maturing in 2013
• September 2002 Bulgaria exchanged USD888m of
  Brady bonds for an increase of USD759m in the
  2015 Eurobond

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Brady Bond ExchangesEffects on External Public
Debt

• Decrease in debt face value by USD186m
• Release of USD340m of collateral
• Lengthening of the average maturity by 4 years
• Decrease of debt service payments over next 10
  years by around USD1.1bn
• NPV saving of USD126m

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Prudent Policies Put Bulgarias Spreads in
Investment Grade League
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Bulgarian Institutions on the Internet

• Bulgarian state institutions in the field of
  economics activity
• Bulgarian Chamber of Commerce and Industry
  www.bcci.bg
• BQPC and Bulgarian Industrial Association
  www.bia-bg.com
• Ministry of Economy www.mi.government.bg
• Ministry of Transport and Telecommunications
  www.mtc.government.bg
• Privatisation Agency www.priv.government.bg
• Bulgarian Trade Promotion Agency
  www.bepc.government.bg
• Bulgarian Export Insurance Agency
  www.baez-bg.com
• Bulgarian Foreign Investment Agency www.bfia.org