Bulgaria: Financial Sector Assessment Program: Technical Note - Non-Performing Loans Reduction Strategy

International Monetary Fund

No 2017/201, IMF Staff Country Reports from International Monetary Fund

Abstract: This Technical Note examines the current state of nonperforming loans (NPLs) in Bulgaria and makes recommendations for a strategy to substantially reduce NPLs. The Bulgarian National Bank should adopt a comprehensive strategy in the near term to achieve a substantive reduction in NPL levels over a three- to five-year time horizon. The strategy should focus on more intensive measures to enhance bank practices in three main areas: (1) loan loss provisioning; (2) loan write-downs of NPLs, in whole or in part, where collection is unlikely; and (3) collateral valuation. This effort would be supported further by enhanced supervisory guidance, supervisory reporting, and risk disclosure.

Keywords: ISCR; CR; loss allowance; credit risk; balance sheet; retained earnings; write-off policy; interest income; accounting practice; Bulgarian bank; collateral valuation; NPL market; bank financing; bank management; bank capital; debt forgiveness; loan loss allowance; Nonperforming loans; Loans; Collateral; Loan loss provisions; International Financial Reporting Standards; Global (search for similar items in EconPapers)
Pages: 58
Date: 2017-07-11
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