Bulgaria raises risk buffers for 10 banks as seeks euro entry

First Investment Bank AD

05/11/2018 11:46

SOFIA, Nov 5 (Reuters) - Bulgaria's central bank said on
Monday that 10 of the Black Sea state's 22 commercial banks
would have to adopt extra protective capital buffers as Sofia
seeks to join the euro bloc.
    The European Central Bank (ECB) has resisted granting
Bulgaria a fast track to euro membership, saying its banks
require tougher supervision before it can join the European
Union's single currency bloc. 
    In a compromise move, Sofia agreed to join the banking union
first, giving the ECB supervision over its biggest lenders and
adding about a year to the accession process. urn:newsml:reuters.com:*:nL8N1U869H
    Bulgarian banks, 70 percent of which are owned by European
Union lenders, would require additional buffers of between 0.25
percent and 0.7 percent of total risk exposure as of January
next year, the country's central bank said.
    In December the central bank set buffers of between 0.125
percent and 0.5 percent of total risk exposure for 11 lenders as
of the beginning of this year.
    Four of the country's largest lenders, UniCredit Bulbank
 CRDI.MI , DSK Bank, controlled by Hungary's OTP  OTPB.BU ,
locally-owned First Investment Bank  5F4.BB  and the unit of KBC
 KBC.BR  will now have to adopt additional buffers of 0.75
percent, it said on Monday.
    Another four will need to have additional capital buffers of
0.5 percent as of next year, while two banks will have to add
capital buffers of 0.25 percent.
    The buffers for systemically important institutions will
have to be gradually increased to 0.5 percent and 1.0 percent by
2020, the central bank added.
    Sofia has made a number of commitments, including
cooperating with the ECB, so that next July it can join both the
banking union and ERM-2, the two-year obligatory precursor
mechanism to joining the euro.
    The ECB is expected to carry out an asset quality review and
stress tests on the Balkan country's banks before it gives its
nod for entry. This process may take a year, but possibly
longer, depending on Bulgaria's progress. 

 (Reporting by Angel Krasimirov; additional reporting by Balazs
Koranyi; editing by Alexander Smith)
 ((angel.krasimirov@thomsonreuters.com; +359 888 695 510))