WB Concerned over Greece Impact on Bulgaria

People pass by a branch of the National Bank of Greece in central Athens, Greece, on 10 February 2010. Greece has vowed to tackle the debt crisis that has shaken the entire European Union and put the euro currency under pressure. Photo by EPA/BGNES

The World Bank is closely following developments in Greece because of possible implications in neighboring countries, including Bulgaria, a senior World Bank official has said.

"We are monitoring the situation in Greece very closely because it has important links with a number of countries in the region in the Balkans through different channels," Philippe le Houerou, World Bank Vice-President for Europe and Central Asia, told a news conference.

He pointed out that Greek banks were active not only in the Balkans but also in Bulgaria.

"We do hope the situation will improve rapidly ... seen from the side of our partner countries where we have programs," le Houerou said.

Greek banks hold nearly a 30% of the Bulgarian banking market, a 20% share of the bank loans and one-third of all deposits and called on the Bulgarian central bank to use the available tools to keep the deposits in Bulgaria.

Some of the biggest lenders in Bulgaria are managed by Italy's UniCredit, Greece's National Bank of Greece, Hungary's OTP and Austria's Raiffeisen.

Other Greek banks present in Bulgaria include EFG Eurobank, Piraeus, Emporiki and Alpha Bank.

Experts have warned that Bulgaria, the European Union member boasting one of the the bloc’s smallest budget deficit, risks seeing its banks sucked under by the fiscal sins of neighboring Greece,

Last month Bulgaria's central bank assuaged fears over funds outflow from Greek bank subsidiaries in the country to headquarters in Greece, saying this is part of the free movement of capital.

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