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by Tsvetan Manchev Deputy Governor Bulgarian National Bank

Bulgarian Banking Towards EU. by Tsvetan Manchev Deputy Governor Bulgarian National Bank. SUMMARY. Sustainable economic development - key factor for the sound banking system; The Bulgarian Banking Sector on the eve of the EU membership – the role of structural reforms;

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by Tsvetan Manchev Deputy Governor Bulgarian National Bank

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  1. Bulgarian Banking Towards EU by Tsvetan Manchev Deputy Governor Bulgarian National Bank

  2. SUMMARY • Sustainable economic development - key factor for the sound banking system; • The Bulgarian Banking Sector on the eve of the EU membership – the role of structural reforms; • Major challenges for Bulgarian Banking System on its way to membership in the Eurozone;

  3. CURRENT ECONOMIC DEVELOPMENT

  4. GDP REAL GROWTH Source: NSI, IMF

  5. CPI(annual average) 25.1 Source: NSI, IMF

  6. INTEREST RATES CONVERGENCE(annual average values) Source: BNB, Eurostat

  7. UEMPLOYMENT RATE Source: National Employment Agency, BNB

  8. GENERAL GOVERNMENT BUDGET BALANCE(% GDP) (+) surplus (-) deficit Source: MoF, IMF

  9. GOVERNMENT DEBT (% GDP) Source: MoF, IMF

  10. MAASTRICHT CRITERIA FOR NOMINAL CONVERGENCE

  11. BANKING SECTOR REFORM

  12. PREDOMINANT FOREIGN CONTROL ON BANK ASSETS AND CAPITAL(as of 30 September 2005) Source: BNB

  13. BANKS DOMINATE FINANCIAL MARKETS *Preliminary data Source: BNB, FSC, BSE

  14. INCREASING COMPETITION(THE SHARE OF THE FIRST FOUR BANKS IN TOTAL BANK ASSETS AS OF THE END OF THE YEAR) Source: BNB

  15. HIGH GROWTH AND SOUND QUALITY • Bank assets are growing very rapidly • Strongly capitalized • High liquidity is maintained • Asset quality remains very good

  16. EFFICIENCY AND HIGH PROFITABILITY

  17. INCREASING ROLE OF THE BANKING FOR THE REAL SECTOR FINANCING • Bank credit growth is returning to sustainable level • Banks are predominantly externally funded • Business sector credit demand is investment driven • Long term loans to business sector grow faster than short term • Business sector has a good access to lending from abroad • Residential loans to households are growing very rapidly

  18. CHALLENGES FOR BANKING SECTOR • Smooth adoption of the EU directives • Basle II implementation • Sustainability of the credit growth • Interest rates convergence • Mergers and acquisitions • Better corporate governance and transparency

  19. CHALLENGES FOR BNB Short-term challenges • Fine-tuning of the process of bank lending • Enforcement of the new legislation related to the EU membership • Law on Credit Institutions transposing Re-casting Directive 2000/12/EC relating to the taking up and pursuit of the business of credit institutions, Directive 2001/24/EC on credit institution reorganisation and Directive 2000/46/EC on the taking up, pursuit of and prudential supervision of the business of electronic money institutions; • Consumer Credit Law • Full transposition of Directive 2002/47/EC on financial collateral and Directive 2002/87/EC on financial conglomerates; Medium-term challenges are linked with the full-fledged EMU membership

  20. Thank you for your attention!

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