NY Times: Bulgaria Fears Spillover of Greece Baking Trouble

Bulgaria's central bank BNB is unwilling to comment on potential repercussions of the situation in Greece on the Bulgarian banking system, in view of last year's developments at Corporate Commercial Bank. File photo

Bulgaria "has found itself under unwelcome scrutiny from financial experts and Western banks worried that Greece’s troubles could spread havoc farther afield," the New York Times writes in an article on Bulgaria.

Ahead of the June 30 deadline for Greece to either reach a deal with lenders or default and potentially leave the single-currency area, it points to the tact that Alpha Bank and three other of the country's top 10 banks are owned by Greek lenders.

Though Serbia, Macedonia and Romania are also exposed to a certain extent, "it is Bulgaria... that "stands out as the one that has the most to lose from a potential further collapse of the Greek Economy"," the NY Times writes citing a Morgan Stanley research note released in May.

The reason is that Greek-owned lenders hold around 20% of deposits of Bulgarians. and exporters depend on Greece "for about 7 percent of their business."

Greek banks are financially sound and have a better reputation than Bulgarian-owned banks, but "nobody knows what irrational and destructive forces could be unleashed if Greece fails to reach a deal with its creditors and stumbles toward a default" or even Grexit, the prominent daily notes.

Slovak Deputy PM and Foreign Minister Miroslav Lajcak is quotes as saying that despite Greece's tiny share in EU economy, a default "would send shock waves across the whole of Europe.”

Bulgarian President Rosen Plevneliev downplays any potential risk.

Some customers of Greek-owned banks in Bulgaria's capital Sofia also show little sign of concern, according to the New York Tomes, while others have already withdrawn money from their accounts with Greek subsidiaries.

The Bulgarian National Bank (BNB) on the other hand has preferred not to comment on the issue, a "wise strategy" in view of the developments at Corporate Commercial Bank (KTB) of last summer, the article reads.

You can read the full text here.

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