site.btaBNB Launches Stress Test of Banks

BNB Launches Stress Test of  National Banks

Sofia, April 29 (BTA) - The Bulgarian National Bank (BNB) begins implementing the stress test of the banks in the country, the BNB press centre said on Friday.

The purpose is to establish their capability of withstanding unexpected losses of capital resulting from continuous negative shocks. The results of the asset quality review (AQR) will be аn integral part of the stress test simulation.

The stress test is carried out on the basis of an overall basic tough scenario, applicable to all banks. The scenario is complied with the latest data for the development of the Bulgarian economy and the assumptions for the development of the global economy of the European Central Bank, the International Monetary Fund and the European Commission.

The basic macroeconomic scenario of the BNB for the 2016-2018 period envisages a GDP growth of 2.2 per cent in 2016, 2.5 per cent in 2017 and 3.1 per cent in 2018.

According to the tough macroeconomic scenario, in 2016 the country's economy will shrink by 2.2 per cent, the GDP will drop by 3.2 per cent in 2017 and will increase by 1.8 per cent in 2018.

The stress test will include two stages. In the first stage the banks will implement a scenario using the data about their standing by the end of 2015. The second stage will include the results of the AQR. The banks should send the results of the first stage of the stress test by May 31, 2016 and of the second stage by July 29, 2016. Interim results of the stress test will not be publicized, BNB said.