ECB to test Bulgaria’s systemic lenders prior to Eurozone membership

EPA-EFE/VASSIL DONEV

UniCredit Bulbank in Sofia, Bulgaria.

ECB to test Bulgaria’s systemic lenders prior to Eurozone membership


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The European Central Bank will carry out a comprehensive review of six systemic Bulgarian banks by July 2019 as part of the Balkan country’s bid to officially enter the Eurozone, more than a decade after becoming a member of the European Union.

The ECB will look into the inner working of UniCredit Bulbank, DSK Bank, United Bulgarian Bank, First Investment Bank, Central Cooperative Ban, and Investbank by carrying out a review of the lender’s assets review and a stress test.

The announcement comes a week after the Bulgarian National Bank completed its own review of the country’s 10 systemic banks.

Bulgaria’s Capital Requirements Directives reflect the Basel III rules on capital measurement and capital standards. Capital standards include five different buffers, including a capital conservation buffer, a bank-specific countercyclical capital buffer, a systemic risk buffer, a buffer for global systemically important institutions, and a buffer for other systemically important institutions, the latter of which was introduced in Bulgaria in January.

The Bulgarian banking sector is under consolidation after Sofia’s CIBANK was recently absorbed into United Bulgarian Bank, which is, itself, a subsidiary of Belgium’s KBC Group. DSK Bank is owned by the Hungarian banking group OTP and is now ready to acquire the Albanian and Bulgarian units of French banking group Societe Generale.

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