Bulgarian Banks Make Progress in Compliance with Basel Core Principles
Significant Progress Made by Bulgarian Banking Sector
Sofia, Bulgaria - The Bulgarian banking sector has achieved significant progress in implementing the Basel Core Principles on Effective Banking Supervision. According to a recent report, the majority of banks have achieved full compliance with key principles related to objectives, autonomy, powers, and resources, permissible activities, licensing criteria, ownership transfer, investment criteria, and more.
Areas for Improvement
However, there are still areas where improvements are needed. The report highlights several “related” improvements that Bulgarian banks must make to achieve full compliance, including:
- Introducing comprehensive and integrated policies and practices for corporate governance
- Risk management
- Loan granting and evaluation
- Market risk management
- And other risks
Compliance Assessment
The report assesses the level of compliance with each Core Principle using a grading system of 1-4, where 1 indicates full compliance and 4 indicates non-compliance. According to the findings:
- Bulgarian banks are largely compliant with principles related to capital adequacy, credit policies, loan evaluation, connected lending, and money laundering
- However, there are still some areas that require attention
Recommendations for Improvement
The report recommends that banks:
- Improve their risk management practices, particularly in terms of country risk, market risks, and other risks
- Introduce more explicit rules on the roles and responsibilities of different management bodies
- Establish stronger audit committees
Response from the Bulgarian Central Bank
The Bulgarian central bank has welcomed the progress made by local banks but emphasized the need for continued efforts to achieve full compliance with the Basel Core Principles. The regulator has committed to working closely with banks to address any remaining issues and ensure that the sector is well-equipped to withstand future challenges.
New Legislation Proposed
In related news, the Bulgarian government has announced plans to introduce new legislation aimed at strengthening banking supervision and regulation. The proposed measures include:
- Increased powers for regulators to monitor and enforce compliance with prudential requirements
- Enhanced reporting obligations for banks
Full Report Available
The full report on Bulgaria’s compliance with the Basel Core Principles can be found on the website of the Bulgarian central bank.