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Bulgaria Takes Significant Steps towards Compliance with Basel Core Principles

The Bulgarian National Bank (BNB) has made significant progress in implementing measures aimed at enhancing the country’s compliance with the Basel Core Principles for Effective Banking Supervision.

Assessment Results

According to a recent assessment, Bulgaria is fully compliant with principles 1, 2, 4-5 and 24, while largely compliant with principle 14. Material non-compliance was noted in principle 1, and non-compliance in principle 6.

Key Initiatives

The BNB has introduced several initiatives aimed at improving compliance, including:

  • Introduction of consolidated reporting of certain prudential ratios
  • Stricter rules for collateral valuation
  • Capital charges for market risks
  • Agreements with foreign supervisors
  • Policies for country risk management

Areas of Improvement

While some areas still require attention, the majority of the measures necessary to achieve full compliance have been taken. Only a few relatively minor changes in practices remain before Bulgaria can be considered fully compliant with the Core Principles.

Key Focus Areas

The BNB’s efforts have focused on several key areas, including:

  • Consolidated supervision and risk management
  • Strengthening capital adequacy requirements
  • Improving loan evaluation and credit policies
  • Enhancing internal control and audit processes

Next Steps

While progress has been made, there is still work to be done. The BNB will need to focus on implementing a few remaining measures aimed at achieving full compliance with the Core Principles, including:

  • Simplifying changes in practices related to corporate governance and risk management
  • Strengthening guidelines for write-offs and loan valuations

Conclusion

Bulgaria’s progress towards compliance with the Basel Core Principles is a significant achievement. The BNB’s efforts have demonstrated a strong commitment to enhancing the stability and resilience of the country’s banking system. While there are still some areas that require attention, Bulgaria is well on track to achieve full compliance in the near future.