site.btaBulgaria’s Banking System Is Ready to Join Euro Area - Banking Today Forum

Bulgaria’s banking system is ready for the country's entry into the euro area. Bankers rallied around the idea at the Banking Today conference, organized by Investor.bg in Sofia, which discusses the development of the financial and banking sector in Bulgaria.

The banking system is fully prepared for the adoption of the euro and entry into the euro area, said Zhivko Todorov, Deputy Chairman of the Management Board and CEO of Investbank. “We have been in a currency board since 1997 and we are tied to the euro, we only use levs for payments,” he added. Todorov noted that the stability of the banking system is high, it has record levels of capital adequacy - over 22%, liquidity coverage - over 240%, we have been part of the Single Supervisory Mechanism since 2020 and the five largest banks have been under the supervision of the European Central Bank (ECB) since then. As an example of the readiness of the banks, he also noted that the largest are also branch divisions of parent banks from countries in Europe, adding that they have actually been so in the euro area for quite a long time. The banks and BNB's policy, which is being pursued, is towards integrating the ECB's reporting requirements, so in every way the banking system is prepared, Todorov added. He also said that the public should accept that the banking system is transparent, regulated and there is not much room for wrong decisions and moves.

Tzvetanka Mintcheva, CEO and Chair of the Management Board of UniCredit Bulbank, said that Bulgaria’s banking system is practically already part of the European Banking Mechanism, adding that the banks know what it means to be part of the euro area and are fulfilling the criteria. 

“We have already paid the price for being part of the euro area from the banks' point of view a long time ago. We have to turn off the taps and start using some of the benefits we cannot use today,” Mintcheva said. Apart from the fact that all rules and regulations reach us much faster, being part of large international groups, it is extremely important that together with our colleagues we have been preparing for the active transition to the euro area for several years, Mintcheva noted. However, she pointed out that due to the uncertain date for joining the euro area, technical projects have had to be postponed many times.

Tzvetanka Mintcheva said that the very transition to the euro area is not to be underestimated. This is a very complex project, especially for the banks, because they have many products, systems, channels through which they communicate with their customers, she explained and pointed out that the whole banking system is making a serious investment in order to adopt the euro. According to preliminary figures that were made by the Association of Banks in Bulgaria last year, which Mintcheva quoted, between BGN 300 million and BGN 400 million is the cost of this, which is paid entirely by the banks. She also noted that there are several things that need to be ready - payment systems where many of the steps have been done, the actual conversion of each bank, the physical acceptance and exchange of cash that is to come. What I know and see is that all colleagues are preparing and we are ready to take this step, Mintcheva said.

Asen Yagodin, Deputy CEO of Postbank, said that Bulgaria’s banking system has been ready for the euro area since 1997. Since the currency board we are practically in this framework, which will now officially materialize with the adoption of the euro as a currency in Bulgaria, he said.

Ilian Georgiev, CEO of the Bulgarian-American Credit Bank, said that the regulation applied by the banks in Bulgaria is valid throughout Europe. “We have been working for this for a long time, we meet the criteria. The preparation started with a stress test that happened in 2014-2015 and then our banking system changed - the assessment of loan quality, the introduction of a standard, the unification of practices, the convergence to normal practices, happened then throughout the system,” Georgiev noted. Another highlight, which also shows the readiness for the euro area, are the interest rates on loans that we have in Bulgaria, for some of the products we have managed to keep lower levels than the European ones, he added.