Bulgaria Takes Steps to Improve Banking Supervision Compliance

Sofia, Bulgaria - The Bulgarian National Bank (BNB) has announced a series of initiatives aimed at improving compliance with the Basel Core Principles for Effective Banking Supervision.

Background

According to a recent report, Bulgaria’s banking sector is largely compliant with several principles, but still faces some significant challenges. The country’s supervisory authority, the BNB, has introduced new measures to strengthen prudential requirements and improve compliance.

New Initiatives

The BNB has:

• Introduced stricter rules for collateral valuation and market risk management
• Concluded agreements with foreign supervisors
• Implemented policies for country risk management

Challenges Remain

Despite these efforts, Bulgaria remains non-compliant with Principle 1 of the Basel Core Principles, which deals with the objectives, autonomy, powers, and resources of banking supervision. The country’s supervisory authority still lacks a clear framework for setting priorities and allocating resources.

The report also highlighted several areas where Bulgaria is materially non-compliant with Basel Core Principles, including:

• Lack of adequate systems in place for collecting past due loans
• No clear guidelines for write-offs

Progress Made

Bulgaria has made significant progress in recent years by implementing:

• Consolidated supervision
• Strengthened on-site and off-site supervision capabilities
• Improved internal control mechanisms

Conclusion

The report concludes that with a few remaining minor adjustments, Bulgaria can achieve full compliance with the Basel Core Principles. However, the country’s banking sector still faces some significant risks, and it is essential that supervisory authorities continue to work towards strengthening prudential requirements and improving compliance.

Table: Bulgaria’s Compliance with Basel Core Principles

Note: The table reflects Bulgaria’s compliance with each of the Basel Core Principles, as assessed by the BNB.