Bulgaria Policy Note : Financial Sector

This report describes developments in the banking sector. The banking sector has remained stable throughout the ongoing financial crisis, although profitability is declining. Indicators suggest that banks are generally sound. It next describes the state of funding of bank operations, including wholesale bank funding. In response to financial stress, The Bulgarian National Bank's (BNB) actions have helped to ensure financial stability in the banking sector. In order to boost confidence, deposit insurance has increased. External funding dynamics are generally good. Foreign currency mismatches are substantial, and the corporate sector has high direct foreign currency exposure, mostly in euros. Short-term external debt (deposits and borrowings) of banks almost doubled within a year in 2008, and account for close to 80 percent of banks' external debt. Regarding recent trends in credit to the enterprise sector, going forward, demand for banking credit, and especially investment finance, will fall, in line with the economic downturn. In equity market developments, Bulgaria's stock market plunged, with adverse consequences for pension funds. Global deleveraging by foreign institutional investors led to a withdrawal of their holdings from the Sofia stock exchange, leading to a collapse of stock market prices. The report concludes with several policy recommendations.

Bibliographic Details

Main Author:	World Bank
Language:	English en_US
Published:	Washington, DC 2009-07
Subjects:	ACCOUNTING, BALANCE SHEET, BANK CREDIT, BANK DEPOSITS, BANK OPERATIONS, BANKING SECTOR, BANKING SYSTEM, BANKRUPTCIES, BANKRUPTCY, BANKRUPTCY PROCEDURES, BANKRUPTCY RESOLUTION, BENEFICIARIES, BOND, BOND MARKET, BUSINESS INVESTMENT, CAPITAL MARKETS, CAPITAL NEEDS, CAPITAL RATIO, CAPITAL REQUIREMENT, CDS, CENTRAL BANK, CONSUMER LOANS, CONTAGION, CONTINGENCY PLANS, CORPORATE BORROWING, CORPORATE LAW, CORPORATE RESTRUCTURING, CORPORATE SUSTAINABILITY, COURT SYSTEM, CREDIT AVAILABILITY, CREDIT DEFAULT, CREDIT DEFAULT SWAPS, CREDIT GROWTH, CREDIT LINES, CREDIT QUALITY, CREDIT RISK, CREDIT RISKS, CREDIT SOURCE, CREDITOR, CREDITOR RIGHTS, CREDITORS, CURRENCY BOARD, CURRENCY BOARD ARRANGEMENT, CURRENCY MISMATCHES, CURRENCY RISKS, CURRENT ACCOUNT DEFICIT, DEBT LEVEL, DEBTS, DEMAND FOR CREDIT, DEPOSIT, DEPOSIT INSURANCE, DEPOSITOR, DEPOSITORS, DEVELOPMENT BANK, DOMESTIC BANKING, DOMESTIC INVESTORS, ECONOMIC DOWNTURN, EMPLOYMENT, ENTERPRISE CREDIT, EQUITY INVESTMENTS, EQUITY MARKET, EQUITY MARKET DEVELOPMENTS, EXISTING DEBTS, EXPOSURES, EXTERNAL DEBT, EXTERNAL FUNDING, FINANCIAL AUTHORITIES, FINANCIAL CRISIS, FINANCIAL INSTITUTIONS, FINANCIAL SECTOR, FINANCIAL STABILITY, FINANCIAL STRESSES, FINANCIAL SYSTEM, FISCAL POLICIES, FIXED INVESTMENT, FLOW OF CREDIT, FOREIGN BANK, FOREIGN BANKS, FOREIGN CURRENCY, FOREIGN CURRENCY EXPOSURE, FOREIGN INSTITUTIONAL INVESTORS, FOREIGN INVESTORS, FORMAL BANKRUPTCY, FORMAL BANKRUPTCY PROCEDURES, GOVERNMENT BUDGETS, GOVERNMENT POLICIES, HOLDINGS, HOME COUNTRY, INSOLVENCY, INSTITUTIONAL INVESTORS, INSURANCE INDUSTRIES, INTEREST RATES, INVESTMENT FINANCE, INVESTMENT OPPORTUNITIES, INVESTMENT REGULATIONS, INVESTMENTS IN EQUITY, JUDICIARY, JUDICIARY SYSTEM, LIQUIDITY, LIQUIDITY RISK, LOAN, LOAN ORIGINATIONS, LOCAL CURRENCY, LOCAL GOVERNMENT, MANUFACTURING INDUSTRIES, MARKET BORROWING, MARKET RISK, MARKET RISKS, MATURITIES, MATURITY, MORTGAGES, NATIONAL BANK, NET ASSETS, NON-PERFORMING LOANS, OUTPUT, PENSION, PENSION FUND, PENSION FUNDS, PENSIONS, PORTFOLIO, PORTFOLIO QUALITY, PRIVATE PENSION, PRIVATE SECTOR CREDIT, PROFITABILITY, RAPID GROWTH, RATE OF RETURN, REAL ESTATE, REALLOCATION OF RESOURCES, REGULATORY AUTHORITIES, REGULATORY FRAMEWORK, RESERVE, RESERVE REQUIREMENTS, RESERVES, RETIREMENT, RETURN ON ASSETS, RETURNS, RISK MANAGEMENT, SECURITIES, SECURITIES MARKETS, SHAREHOLDERS, SHORT-TERM DEBT, SHORT-TERM EXTERNAL DEBT, SOLVENCY, STOCK EXCHANGE, STOCK MARKET, STOCK MARKET PRICES, STOCKS, SUBSIDIARIES, TOTAL DEBT, TRANSPARENCY, WHOLESALE BANK, WITHDRAWAL, WORKING CAPITAL, WORKOUTS,
Online Access:	http://documents.worldbank.org/curated/en/2009/07/16797519/bulgaria-policy-note-financial-sector https://hdl.handle.net/10986/18894
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