Bulgaria sees July decision on entering euro "waiting room"

First Investment Bank AD

21/02/2020 14:31

SOFIA, Feb 21 (Reuters) - Bulgaria's bid to join the euro
zone's "waiting room" will be reviewed in July, Prime Minister
Boyko Borissov said on Friday, urging the local banks to closely
monitor their capital adequacy until then to avoid new obstacles
to euro adoption.
    Sofia, which has one of the lowest public debt levels in the
European Union, initially planned to join both the two-year
obligatory precursor to the euro zone, the ERM-2, and the bloc's
banking union at the end of April.
    Bulgaria is EU's poorest and most corrupt member state, but
has been taking steps to boost people's incomes, fight endemic
graft and streamline banking supervision. 
    It has met most of the requirements for entry to the two EU
structures except for the successful recapitalisation of two
locally owned banks at which the European Central Bank (ECB)
found capital shortfalls during a health-check last year.
    "The timing is not April, but July. This is when both
Bulgaria and Croatia will be reviewed," Borissov told reporters
after meeting European Commission Vice President Valdis
Dombrovskis in Brussels.
    "Until then the Bulgarian banks should monitor very
carefully their capital adequacy so that we do not face any
additional obstacles," he said.
    The ECB's comprehensive assessment in July found Bulgaria's
fifth largest lender, First Investment Bank (Fibank)  5F4.BB ,
had a capital shortfall of 263 million euros ($284 million),
while smaller Investbank came up short by 52 million euros.
    Both have to prop up their capital by the end of April, with
Fibank planning to raise up to 200 million levs on the local
bourse among other steps.  urn:newsml:reuters.com:*:nL8N28W08E
    But on Thursday, the country's financial regulator refused
to approve Fibank's prospectus, putting more pressure on the
lender to meet its recapitalisation plan's timeline. The bank
said it would amend its prospectus and resubmit it shortly. 
    In another bid to calm fears that ERM-2 entry may devalue
the lev currency, which is pegged to the euro, and hit people's
savings, Borissov reiterated the fixed exchange rate will be
kept until Sofia adopts the common currency.  urn:newsml:reuters.com:*:nL8N2AK73X
    Dombrovskis also said that changing the current exchange
rate made no economic sense and was highly unlikely. 
($1 = 0.9259 euros)

 (Reporting by Tsvetelia Tsolova; Editing by Toby Chopra)
 ((tsvetelia.tsolova@thomsonreuters.com; +359-2-93-99-731;))