Bank System Stabilization

Despite the serious attempts for the destabilization of Bulgaria’s bank system the latter seems more stable than ever – all bank operations are being executed smoothly and the pay-out of nearly a billion leva only for one day by one of the local banks was an indisputable proof of the system’s practical stability.

Several months after the first disturbing signals the picture is now much clearer and much more optimistic. The problems were localized in one bank only that turned out to have been not that involved in typical economic activities and its overall contribution to business development – not that deep. Practically, the period of depositors’ accounts blockage will soon expire and the Bulgarian National Bank will announce their official decision on the future of the bank.

What conclusions can be drawn from the recent events in Bulgaria’s bank sector?

Undoubtedly, one of the most important things that came up was the fact that banks need proper, timely and objective regulation – by the National Bank as well as independent financial auditors. Of course, this control is executed by law and it should not to be reduced or disregarded.

Another important point is the already clear and undisputed fact that the essence of the bank activity are the inherent functions of the financial institution (credit and debit operations) rather than the orientation to fee activities of intermediary type.

Last but not least, we should point out the positive impact of this turmoil – not surprisingly did many specialists emphasize that Bulgaria’s bank system passed successfully a difficult test coming out of it far more confident and stable. It is important to stress that most Bulgarian banks are owned by international bank corporations with serious traditions and enormous practical capacity to realize business policies including bail-out transfers to their subsidiaries abroad.

In conclusion, the signals to local and foreign businesses are eloquent – Bulgaria’s bank system’s stability is at a very high level in spite of the problems and Bulgaria still represents an attractive business and investment destination with potential for further economic development.

September 30th, 2014 Posted by RPNAdmin Filed in: Other