site.btaBulgarian Analysts: Bulgarian Financial Sector In Better Position Now to Absorb Possible Shocks from Greek Crisis

Bulgarian Analysts: Bulgarian Financial Sector In Better Position Now to Absorb Possible Shocks from Greek Crisis

Sofia, May 12 (BTA) - Bulgarian analysts believe that the
financial crisis in Greece should not affect the Bulgarian
financial system despite the strong presence here of Greek
banks. "The situation in Greece remains unclear and my guess is
that it will stay like this for years to come, at least until
the indebtedness of the public sector is not brought down to
manageable levels," UniCredit Bulbank chief economist Kristofor
Pavlov told BTA.

What matters more, however, is that the Bulgarian economy and
financial sector right now are in a much better shape than
Greece compared to how things were in 2012, he added.

The Bulgarian financial sector is now a net creditor - unlike
2012 when it still had external liabilities larger than the
internal assets. "The sector has already absorbed most of the
losses caused by the bursting of the property bubble in 2009 and
 the subsequent downturn in the real economy, and is in a much
better position to be faced with possible bad news from Greece,"
 said Pavlov.

He believes that the chances for a new agreement on the Greek
debts are bigger than those for a grexit. "Even with a bad
scenario, the impact on the Bulgarian economy will likely be
limited to foreign trade."

Greece has lost its importance for Bulgaria as a source of
investment but Bulgaria still has strong foreign trade relations
 with Greece which is understandable considering that it is a
neighbouring country, said Pavlov. He added that Greece remains
the Balkan country with the largest per-capita GDP.

He sees no reason for the depositors in the Greek banks in
Bulgaria to worry about their money. "Bad turns are always
possible and, as a rule, the banking systems are vulnerale to
panic but in this case I see nothing that can potentially unlock
 panic."

The analyst believes that the Bulgarian banking sector and the
public sector have enough cushions. "The public sector provides
its needs of financing for the whole year as early as March and
it is therefore in a much better position now for a possible
negative scenario for Greece than it was in 2012."

Postbank Executive Director Assen Yagodin says that the
connectivity of the Bulgarian and the Greek economy is below 10
per cent. "There is a significant presence of Greek banks in
Bulgaria but these are mostly daughter companies which have an
above-average banking liquidity and capital adequacy. "The
conclusion is that, yes, there is connectivity with Greek banks
but the situation is under control thanks to the liquidity and
capital buffers, and thanks to the central bank monitoring,"
Yagodin said. He added that after the 2014 failure of Corporate
Commercial Bank, this monitoring is exercised on a daily basis.