Bulgarian Banks Meet Leverage Ratio Requirements with Ease
Sofia, Bulgaria - The Bulgarian National Bank (BNB) has announced that local banks have successfully met the leverage ratio requirements set by Regulation (EU) No 648/2012 and Commission Implementing Regulation (EU) No 2021/451.
Meeting the Minimum Requirement
As of June 30, 2021, the leverage ratio for Bulgarian banks stood at an impressive 10.90%, significantly exceeding the minimum requirement of 3% set by Basel III regulatory framework. This high level of capital adequacy is a result of the BNB’s conservative supervisory policy aimed at maintaining additional buffers.
Calculation of Leverage Ratio
The leverage ratio is calculated based on a fully phased-in definition and takes into account:
- Tier 1 capital: BGN 14.6 billion
- Total exposure: BGN 134.2 billion
- Off-balance-sheet items
Liquidity Coverage Ratio (LCR)
The BNB also reported that the liquidity coverage ratio (LCR) for the banking system remained above the minimum required level of 100%, amounting to 272.5% as of June 30, 2021. The LCR is a key metric used to assess a bank’s ability to meet its short-term obligations during times of stress.
Liquidity Position
The review of liquidity data by bank shows that credit institutions have been maintaining a strong liquidity position, with a buffer that has decreased slightly over the second quarter of 2021 due to a fall in cash balances with central banks. However, assets in the central government and coins and banknotes increased, indicating a stable liquidity position.
Loans-to-Deposits Ratio
The banking system’s loans-to-deposits ratio remained close to the previous period’s values, amounting to 68.3% as of June 30, 2021. Credit portfolio growth was recorded at 1.4% over the second quarter of 2021.
Regulatory Requirements
Regulation (EU) No 648/2012 and Commission Implementing Regulation (EU) No 2021/451 set out the reporting and disclosure requirements for large exposures, which are defined as transactions that exceed certain thresholds. The regulations aim to promote transparency and stability in the financial system by ensuring that banks maintain a sufficient level of capital and liquidity.
Conclusion
The BNB’s latest data demonstrates the Bulgarian banking system’s ability to meet these requirements with ease, reflecting the bank’s conservative approach to risk management and supervision.