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Financial Sector in Bulgaria PowerPoint Presentation
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Financial Sector in Bulgaria

Financial Sector in Bulgaria

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Financial Sector in Bulgaria

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  1. Financial Sector in Bulgaria

  2. Bulgaria - Currency Board Arrangement • BGN1 = DEM1 = EUR0.5113 • Long-term goal for EU membership, the anchor currency being the Euro • The share of the Euro in the external trade is constantly increasing • The EU is by far the leading trade partner of Bulgaria • The CBA helps curb inflation - a step towards meeting the Economic and Monetary Union criteria • No indications that Bulgaria should exit the CBA

  3. Banking Sector Overview (1) • Total banking sector assets account for 41% of GDP • Over 80% of the assets in the banking sector are in private hands • Over 80% foreign share of total bank assets • Upon privatization of DSK (the State Savings Bank), the banking sector will be almost completely privately owned

  4. Banking Sector Overview (2) • 25.3% yoy increase in banking system assets in 2001 • High levels of capital adequacy and liquidity (by end-2001) • 31% total capital adequacy • 13.5% primary liquidity • 25.5% secondary liquidity

  5. Commercial Banks Assets, Deposits and Loans (BGN bn, 01/1998-11/2002) Source: Bulgarian National Bank

  6. 5.977 Commercial Banks Credits to Non-Government (BGN bn, 01/1998-11/2002) Source: Bulgarian National Bank

  7. Commercial Banks Deposits and Credits as % of Total Assets (01/1998-11/2002) Source: Bulgarian National Bank

  8. 3.34 Commercial Banks Non-performing Loansas % of Total Loans (01/1998-09/2002) Source: Bulgarian National Bank

  9. 9.512 Commercial Banks Total Loans (BGN bn 01/1998-09/2002) Source: Bulgarian National Bank

  10. 354 Banking System Financial Result(BGN m, 01/1998-09/2002) Source: Bulgarian National Bank

  11. 26.84 Capital Adequacy (%) Source: Bulgarian National Bank

  12. 5.91 Loan-Deposit Interest Rate Spread(%, 01/1998-11/2002) Source: Bulgarian National Bank

  13. Steady Growth of M2 and Quasi-Money(BGN bn, 01/1998-11/2002) Source: Bulgarian National Bank

  14. Capital Markets (1) • Bulgarian Stock Exchange – Sofia • 20% growth in turnover in 2001 against the previous year • January 27, 2003, the stock exchange index (SOFIX) reached 208.8, an increase of 196% since the June 2001 parliamentary elections • Radical measures for the protection of minority shareholders’ rights • A new Privatization Law which sets a new era in Bulgarian privatization by radically improving the transparency, speed and economic effectiveness of the deals concluded

  15. Capital Markets (2) • International Accounting Standards (IAS) • A new Law on Deals in Compensatory Instruments • Major changes have been made to the Securities Law • A list has been approved comprising c. 1,080 companies with state participation in the capital ownership, for the privatisation of which payment through different kinds of vouchers (non-cash instruments) is allowed. The shares of 114 of these companies are to be traded on the stock exchange

  16. +196% 208.8 - 29% Bulgarian Stock Exchange – Sofia (Sofix Index, 23/10/2000-27/01/2003) Source: Bulgarian Stock Exchange

  17. Brady Bonds

  18. Brady Bond Exchanges: Parameters • March 2002: Bulgaria exchanged USD1326m of Brady bonds into a new USD512m Eurobond with a coupon of 8.25% maturing in 2015 and a new EUR836m Eurobond with a coupon of 7.5% maturing in 2013 • September 2002: Bulgaria exchanged USD888m of Brady bonds for an increase of USD759m in the 2015 Eurobond

  19. Brady Bond Exchanges:Effects on External Public Debt • Decrease in debt face value by USD186m • Release of USD340m of collateral • Lengthening of the average maturity by 4 years • Decrease of debt service payments over next 10 years by around USD1.1bn • NPV saving of USD126m

  20. Eurobond spreads Investment grade countries orcountries with split ratings Prudent Policies Put Bulgaria’s Spreads in Investment Grade League

  21. Bulgarian Institutions on the Internet • Bulgarian state institutions in the field of economics activity: • Bulgarian Chamber of Commerce and Industry: www.bcci.bg • BQPC and Bulgarian Industrial Association: www.bia-bg.com • Ministry of Economy: www.mi.government.bg • Ministry of Transport and Telecommunications: www.mtc.government.bg • Privatisation Agency: www.priv.government.bg • Bulgarian Trade Promotion Agency: www.bepc.government.bg • Bulgarian Export Insurance Agency: www.baez-bg.com • Bulgarian Foreign Investment Agency: www.bfia.org