Bulgarian central bank to appoint new deputy governors

Bulgaria’s new central bank governor Dimitar Radev to appoint three new deputy governors after its fourth big lender collapsed last year

Photo by: Reuters
Photo by: Reuters

The Bulgarian parliament is due to hold a vote regarding the selection of three new deputy central bank governors after the closure of the Corporate Commercial Bank (CCB), the country’s fourth biggest lender, last year.

The newly appointed central bank governor, Dimitar Radev, seeks to gain confidence in the banking system after the collapse of CCB.

Radev was elected from among a number of candidates early in July to take over from his predecessor Ivan Iskrov, who submitted his resignation on June 23.

After his success, Radev said he would make sure to take over the necessary tasks.

“My plan includes three sets of policy measures consisting of bank supervision reform, bank-crisis management mechanism and asset quality assessment,” Radev told lawmakers.

The resignation of Radev’s predecessor came after the main shareholder of CCB was reported to have stolen money, creating trust issues within the entire banking system.

With the bank’s chairman fleeing the country, people withdrew their money in panic as bank authorities worked to repay the damages to recipient’s deposits.

The governor also expressed his concerns about the Greek economic crisis regarding its possible effects on Bulgaria’s economy.

“One of my tasks tomorrow is to inspect the existing organization for monitoring and reaction to the situation in Greece,” he said.

What is next?

According to the central bank, citizens who own deposits in Greek bank branches in Bulgaria will not be affected by Greece's economic crisis.

The central bank statement said that, “The Bulgarian banking system, including the banks with Greek stock ownership, has no claims to Greek credit institutions and no investments in Greek government securities.”

“Any action on behalf of the Greek government and central bank to impose measures in the Greek financial system has no legal force in Bulgaria and can in no way affect the normal functioning and the stability of the banking system” the statement included.

Georgi Angelov, a chief economist at the Open Society Foundation in Sofia, Georgi Angelov, stated that Greece was an important export market for Bulgaria, but Bulgaria has now lost this option.

At the same time, Bulgaria is willing not to rush into the membership of  the eurozone by adopting the euro currency, as such a choice could drag them into a similar crisis.

"While the euro zone countries do not discipline themselves, I see no reason to rush with the membership," said Bulgaria's Prime Minister Boyko Borisov on Reuters.

"If we were in the eurozone, we would also have to give money to Greece - the poorer would give to the richer, I do not see a logic in that," he added.

Meanwhile, Greece has accepted its creditors austerity measures despite the referendum held on July, 5 where Greek citizens voted against the measures.

Following the economic crisis in Greece, other European countries, especially in eastern Europe, have taken either a harsh or sympathetic stance towards Greece and the effects of the crisis in each country.

Countries like Estonia, Latvia, Lithuania, Slovakia and Poland think that Greece should not have said no to austerity measures as the poorer countries cannot loan money to the wealthier ones since most of them have their own austerity measures as well.

On the other hand, Poland seems more reluctant as they state Athens is not the only one to blame for the current situation.

TRTWorld and agencies