Bulgaria: Authorities to strengthen banking surveillance by mid-2019

The Bulgarian authorities have committed to intensifying their efforts for the strengthening of the surveillance in both the banking and non-banking financial sector by mid-2019, Finance Minister Vladislav Goranov said at a meeting with ambassadors from eurozone countries and Denmark. Goranov presented Bulgaria’s progress under the action plan for Bulgaria’s integration in the ERM-II and the EU’s Banking Union at the meeting. Goranov said that the Bulgarian government will focus on completing its commitments to show its European partners that purposeful and persistent efforts stand behind Bulgaria’s next stages of deepening its EU integration.

The government will try to improve the macroprudential framework, as well as the insolvency framework by that time, the minister said. Fight against money laundering and modernisation of the state-owned enterprises’ management were also mentioned as the government’s top priorities in the next few months. We think that the commitment to improving measures against money laundering might be related to the recent international scandal regarding transactions between Venezuela’s state-owned oil company Petroleos de Venezuela, and an account in Bulgarian Investbank. Although we do not expect that the issue will result in destabilisation of the local banking system, it might have a negative reflection on Bulgaria’s aspirations to join the EU Banking Union. As we have reported, Investbank, alongside five other Bulgarian banks, is currently subject to a comprehensive assessment by the ECB. The results from the assessment, including asset quality review and stress tests, will determine whether Bulgaria will be invited to join the EU’s Banking Union and ERM-II in Jul 2019.

Goranov also reiterated the cabinet’s adherence to maintaining financial and macroeconomic stability in the country, including sustainable and transparent public finances, in order to create conditions for economic expansion.

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