THE EUROPEAN DEBT CRISIS AND THE CHALLENGES TO THE BANKING SECTOR IN BULGARIA

Iskra Balkanska

Journal of Financial and Monetary Economics, 2015, vol. 2, issue 1, 15-22

Abstract: European Sovereign crisis fostered the consolidation and the supervision on European banks financial institutions. Practical steps have been undertaken towards strong regulation at EU and at national level. In some way, Bulgarian banks did not fell the European sovereign debt crisis. The banks had a comfortable liquidity buffer, and did not experience liquidity shortages in the last years. The banks succeeded in clearing loans portfolio and to monitor the rising of risks costs. Despite the difficult economic and financial environment, Bulgarian banks remained stable, liquid and well capitalized, well above the regulated minimum of capital buffers of 13.5%. The banking sector (with the exception of CCB) announced the net profit of 373 million euro in 2014, with 80.5 million euro more than in 2013. Even the collapse of CCB did not significantly change the stability of the banking system. However challenges for Bulgarian banking sector remained as economic growth continued to be slow, which in turn limited the growth of loans and non performing level. After CCB collapse, concerns have rising regarding the asset quality in the banking sector and the reliability of the financial sector. Collapse of CCB increased doubts about banking and reporting practices and the adequacy of the Supervision of BNB over banks, since it became evident that the proper valuation of bank assets needed to be revised.

Keywords: economic growth; economic convergence; catching up process; EU structural Funds (search for similar items in EconPapers)
JEL-codes: F15 F21 F63 (search for similar items in EconPapers)
Date: 2015
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