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Katainen: Bulgaria needs external assessment of banks to spur investment

Central Europe

Katainen: Bulgaria needs external assessment of banks to spur investment

Bulgarian National Bank. Sofia, 1995.

[Sludge G/Flickr]

Bulgaria requires an external assessment of its banking system and stable financial markets, to attract much-needed investment to spur economic growth, European Commission Vice-President Jyrki Katainen said on Thursday.

Katainen, who is in charge of the EU’s three-year investment scheme, told reporters that the Balkan country could benefit from the programme if it provides a secure environment for investors.

Bulgaria’s fourth-largest lender Corporate Commercial Bank (Corpbank) collapsed last year, prompting the country’s biggest banking crisis since the 1990s, and raising questions over the quality of banking supervision and levels of corruption.

“We are very satisfied that government seems to take seriously the rooting out of corruption, and the judicial system reform is also high on the agenda,” Katainen said.

>>Read: Bulgaria says it will start talks to join the euro

“As important as good governance is the financial stability … So it would be very important to have external transparent assessment of balances of the banks in Bulgaria in order to create clarity and security.”

Tackling corruption and judicial reform are among the reformist measures laid out by Prime Minister Boiko Borisov, who returned to power after a snap election in October.

>>Read: Bulgaria feels the heat for failure to respect guaranteed deposits

The central bank has said it plans to perform checks on the health of the country’s 28 banks and hire external consultants for an asset quality review to be initiated by the end of the year, or in early 2016.

The International Monetary Fund has urged Bulgaria to set up a clear timeline and a transparent process for the review of Bulgarian banks, and steps to improve banking supervision to strengthen confidence in the system.