Crisis May Lead to Capital Transfers from Greece to Bulgaria

BNB Deputy Governor Dimitar Kostov thinks Bulgaria has not suffered from the financial crisis in Greece. Photo by BGNES

It is absolutely certain that Greek-owned banks are not draining liquidity from Bulgaria, according to Dimitar Kostov, Deputy Governor of the Bulgarian National Bank.

This concern was raised by Finance Minister Simeon Djankov last week but was subsequently repudiated officially by the Bulgarian National Bank, including by its Governor Ivan Iskrov, who even criticized the Djankov for his statement.

During a round table in Sofia dedicated to the capital marker in Bulgaria, Kostov declared that the raging financial crisis in Greece has had hardly any negative effect on Bulgaria.

The BNB Deputy Governor said that there were actually signals about companies transferring capital in the other direction – from Greece to Bulgaria – because foreign investors currently consider Bulgaria a low-risk destination.

Kostov has pointed out that the Bulgarian National Bank was monitoring constantly all banks in Bulgaria and had no grounds to believe that there was anything wrong with any of them.

“The subsidiaries of the Greek banks in Bulgaria are doing no worse than the other crediting institutions; to the contrary, their indicators place them in the top of the table,” he stated.

The deputy head of the Bulgarian central bank further stressed the fact that the Greek-owned banks in Bulgaria generated presently much higher returns that their parent institutions, and it was illogical to destroy something which is profitable by draining liquidity.

Kostov answered a question about what would happen with a Bulgarian subsidiary in case a parent bank in Greece went bankrupt by saying that such scenarios were highly hypothetical and that the Greek banking system was very well-integrated into the EU.

His comments come a day after Bloomberg published a warnings by the credit rating agency Fitch and Capital Economics saying that the financial crisis in Greece might affect Bulgaria and other countries where the Greek banks are major actors on the local market.

Four Greek banks are active in Bulgaria – Alpha, Emporiki, Piraeus, and PostBank (part of Eurobank EFG). They hold about 30% of the Bulgarian market.

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