Bulgaria's Greek Banks Profitable, No Liquidity Drain - FinMin

Bulgaria's Finance Minister Simeon Djankov has assuaged fears Greek banks might be draining liquidity from their Bulgarian branches. Photo by BGNES

Bulgaria's Greek-owned banks are not draining liquidity, and are actually doing very well, Bulgarian Finance Minister Simeon Djankov has declared in Parliament.

"The Greek banks in Bulgaria are well-capitalized, and have good liquidity. They are profitable for 2010 and the first half of 2011 and are apparently capable of reacting to changes in the environment," Djankov stated answering a question by MPs Pavel Shopov and Lyubomir Vladimirov about Western media reports for the effect of Greece's sovereign debt crisis on Bulgaria's banking system and the wider region.

"The reports of these banks indicated that there hasn't been any export of profits since 2008, and that there is strengthening of their capital position in Bulgaria. The Bulgarian banking system has additional capital buffers amounting to about 4% of the GDP," Bulgaria's Finance Minister elaborated.

He stressed that the capital adequacy ratio of the Greek-owned Bulgarian banks is over 17% as of mid 2011, which is considerably more than the 8% requirement set by the EU stress tests.

Five fully or partly Greek owned banks - Alpha Bank, Emporiki Bank, Eurobank EFG, the National Bank of Greece, and Piraeus Bank - have a combined share of 28% in the Bulgarian banking system, and smaller shares in neighboring Romania and Serbia.

Djankov further emphasized that the liquidity ratio of the Bulgarian banking system is over 23%, which is the highest in the EU.

He pointed out that the banks in Bulgaria continue to manage to cushion the effects of non-performing loans, and stay profitable in 2011 H1.

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