“The crisis in Greece cannot affect our country and Greek banks in this country do not transfer any funds towards their mother-banks” – this was the firm statement of
Deputy Governor of the Central Bank of Bulgaria /BNB/ Dimitar Kostov.
His comment was provoked by the warnings published these days of experts from the Fitch rating agency and the Capital Economics consulting company, who said that the crisis in Greece could affect Bulgaria too, since the Greek banks appear to be a major player on the local banking market. “The crisis in Greece can affect the bank systems and the economies of South Eastern European countries” was the comment of representatives of the European Bank for Reconstruction and Development /EBRD/. The fears of these institutions are provoked by the fact that many Greek banks and companies have their representations in many countries in the region. 12% of Romanian banks are Greek property, while 15% of the Serbian bank market is under the control of Greek bankers. What is the share of Greek banks in Bulgaria?
“The Greek banks represent around 30% of our bank system, as far as crediting is concerned, while the deposits take around a quarter of the bank market. This however gives us a reason to worry a bit – Bulgarian financial minister Simeon Dyankov commented for Radio Bulgaria. – The BNB regulates the financial market and it is its job to make sure that the deposits, gathered in Bulgaria remain within the country. I demanded a confirmation from both the Central bank and the IMF that this wouldn’t create difficulties for the development of the Bulgarian economy and business. If I don’t get that confirmation till a couple of weeks, I will start to worry a bit more.”
The credits, given to companies and households from the Greek banks in Bulgaria are 32% of the credit wallet of the bank system, while the deposits, coming from private persons are a 25% share. “Those people, who keep their deposits in Greek banks in Bulgaria, shouldn’t worry at all”
Mr Ivan Iskrov, Governor of BNB said, countering the worries of the finance minister that the branches of the Greek banks here direct money towards their headquarters because of the financial crisis.
The media have published a report of the International agency for credit rating Moody’s, which says that Bulgaria's banking system is in danger and the credit options are negative with a possible lowering of the rating. The main reason appears to be the fact that most of the banks in the country are foreign ones. Due to problems within their own states, the crediting in Bulgaria will shrink and its price will remain high because of the higher risk on the Bulgarian market. However, the analysis says that the Bulgarian bank system remains stable enough. “The Greek problems will most likely be transferred to South Eastern Europe through the foreign branches of the Greek banks” – this was the comment of the Fitch agency. They also added that “the banks in Bulgaria, the state with lowest budget deficit in the EU may sink due to the fiscal sins of their neighbor Greece.”
On February 1st Bulgaria interrupted its cooperation with the Fitch agency and therefore shouldn’t be evaluated by their experts. Bulgarian Deputy Finance Minister Ana Mihailova comments:
“About a month ago we sent a letter to the Fitch agency, declaring the interruption of our cooperation due mainly to financial reasons – Mrs Mihailova said. – It is not right a small country, such as Bulgaria to pay EUR 150 000 per year for the services of another rating agency. The Financial Minister will discuss the issue of the speculations of the rating agencies during the next meeting of the Economic and Financial Affairs Council /EFAC/, since in our opinion no agency can afford such behavior, leading to speculations and influence on the international financial markets. We also read carefully the analysis of the Moody’s. It says nothing of a lower rating, but more of the possible difficulties for the Greek bank branches in Bulgaria, similar to those of their mother-banks. Our own analyses say that the financial stability and observation in Bulgaria are at a very high level, so we could spot any potential bank difficulties on time. There are no reasons for the Bulgarian customers of the Greek banks to be worried. The mission of the IMF was asked to observe the bank situation in the country just a few days ago. The conclusion was clear – the Bulgarian bank system remains stable. The macro economic stability of Bulgaria at the moment is far away in front of the Greek one.”
English Version: Zhivko Stanchev
