The Bulgarian banking system is stable. This was the common stand of all Bulgarian financial experts and political parties after the ill-natured attack against the banking sector. According to experts, the system does not face any risks and the latest proof was the foreign debt of EUR 1. 5 billion issued by the state under very favorable conditions - only 3% interest rate. Financial experts and statesmen united in protection of the financial institutions and calmed the public down with the fact that the level of the national currency reserves is currently at its record highs of EUR 14 billion and the monetary market is of the so-called closed (conservative) type and can not be subjected to any speculative capital. Moreover, the banks possess huge amounts of own capital to the tune of EUR 6.6 billion and can deal with substantial financial turbulence. This view was shared by Executive Director of Credit Center economist Tihomir Toshev in an interview for Radio Bulgaria.

“The Bulgarian banking and financial system is extremely stable. It has been developing very intensively over the past 7-8 years. Its assets have been growing over the years and currently amount to nearly EUR 44 billion. The total capital adequacy ratio which is the basic indicator of the system’s condition is 20.42%, whereas the EU requirement is for a minimum of 8%. The liquidity level of the Bulgarian banking system is currently at 26.22% and the banks worldwide usually operate with a liquidity rate of nearly 10%. What we have witnessed over the past days was merely a result of a purposeful criminal attack over the banking sector and unfortunately the people were overwhelmed by panic. However, if they had a look at the real indicators of the financial system, they would realize that there was no reason for worries, but when it comes to money, people are often susceptible to panic.”

In Tihomir Toshev’s view, the volume of loans extended by banks and financial institutions has been on the rise which is another proof that the credit system has been recovering after the heavy financial crisis in the sector. Last year the sector marked a slight increase. It continued to grow in the beginning of 2014. Another good indicator that proves the stability of the financial system is the reduced level of bad loans which dwindled by EUR 70 million in the past one year. “We are working in a very good financial environment and the banking system has registered a profit growth over the past twelve months”,  Tihomir Toshev contends.

In his view, the Currency Board and the policies of the Bulgarian National Bank over the past years were directed towards stricter requirements in view of the financial sector, in order to reach a higher stability and a secure banking environment. “Before the world financial crisis the demand of loans was huge and the credit volumes were growing with an average of 50%-60% per year. Back then, the commercial banks were protesting against the stricter requirements of the Bulgarian National Bank, but we saw that its policies yielded good results in the long run”, says financial expert Toshev. "These financial buffers paid off during the world financial crisis in 2009 and 2010 when Bulgaria had a very stable and well-functioning banking system which proves the good policy of the BNB”

The official institutions claim that the Bulgarian banking system is among the most stable ones in the EU? Is that true?

“Yes, we can definitely say that our banking system is one of the best protected systems in the entire EU and the events that happened over the past days prove its stability. Although the European Commission approved EUR 3.3 billion on Monday in support of the liquidity of the Bulgarian banks, we all saw we did not need this money at all and the Bulgarian banking system managed on its own to deal with the ill-natured criminal attack. Let me say again: all financial indicators show that the system is well-functioning and has a very high liquidity level. The people and the business have to think from now on how to use the opportunities provided by the banking system, so that the business can develop, multiply its revenues and create new jobs, because a solid banking system in a given country is a prerequisite for a well-functioning business and strong economy. ”

Is Bulgaria ready to become part of the Eurozone and what are the advantages of the membership in this monetary union?

“The latest report of the EC showed that Bulgaria is still not entirely ready to join the Eurozone, but it is very close to fulfilling all necessary requirements and it will probably become part of the Eurozone in the next one to two years. The main advantages stemming from a membership in the Eurozone are linked with access to resources from the European Central Bank. Perhaps it will lead to lower interest rates on the bank loans, because the banks will have the opportunity to borrow cheaper financial resource and I hope that the risk premium of this country will also go down and we will head towards interest rates similar to the average levels in the EU and the Eurozone.”

English version: Kostadin Atanasov