Bulgarian Banker: FinMin Attacks Cover-up for Own Blunders

Levon Hampartsumyan, CEO of UniCredit BulBank and Chair of the Managing Board of the Association of Banks in Bulgaria. Photo by BGNES

Bank interest rates in Bulgaria in 2012 will keep close to their current level, according to Levon Hampartsumyan, CEO of UniCredit BulBank and Chair of the Managing Board of the Association of Banks in Bulgaria.

Hampartsumyan spoke in response to the appeal of Deputy Prime Minister and Finance Minister, Simeon Djankvov, to drastically lower interest rates, saying the latter are determined not by the Central Bank, but by the market.

Several days earlier, Djankov stated that one of his first tasks in 2012 would be to discuss with bankers and the Central Bank the level of interest rates in the country. The discussions would be held during a meeting of the Three-Way Council between the cabinet, the labor unions, and the business, he explained.

"At the beginning of the government's term, bankers asked for favorable fiscal environment and increased credit rating and they got them – the cabinet did its job. This led to lower price of the credit resource which our banks receive from abroad," Djankov said in the interview.

Hampartsumyan announced bankers would talk with the cabinet, but would not take part in the Three-Way Council.

"I think that everyone who has some common sense realizes that Djankov did not come here from North Korea, but from the US. For this reason, he is fully aware he cannot manage interest rates administratively nor can the Three-Way Council make a decision on any issues related to rates and banks," the banker said Thursday.

According to him, by attacking the banks, Djankov is trying to divert attention from his own blunders.

"The State, including the Minister, has a bank – he is a principal in the Bank for Development and can start lowering interest rates there. However, they have not done it and would not do it, because the market does not allow it," Hampartsumyan told the Bulgarian National Radio, BNR.

According to data of the Association of Banks, interest rates on loans are at the 2008 level all while studies show that common Bulgarians prefer to have saving accounts and limit consumption and the business is limiting investments.

Djankov says the country's credit rating is good enough to be the ground to cut interest rates, but bankers point out this credit rating is among the low ones in Europe.

As far as mortgages, the rates in Bulgaria are lower than those in Russia and Romania, however, there is significant difference with the Czech Republic, Germany, Slovenia, and Slovakia, where the rates are almost twice lower. For consumer loans, Bulgarian rates are similar to those in Poland and Romania.

Regarding savings accounts, the country almost tops the list of high interest rates, being second, only behind Romania.

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