Bulgaria: Technical Assistance Report-Bank Supervision

May 21, 2019

Preview Citation

Format: Chicago

Bulgaria: Technical Assistance Report-Bank Supervision, (USA: International Monetary Fund, 2019) accessed November 23, 2024

Summary

This Technical Assistance report on Bulgaria reviews the formalization and implementation of a comprehensive Supervisory and Review and Evaluation Process (SREP) that includes an explicit and detailed supervisory Pillar 2 capital requirement. The paper highlights that unsound banking practices or regulatory breaches cannot be compensated by complementary capital charges. Loan loss provisions and capital charges for loans created as a result of such practices cannot be created and judged on the basis of the common standards. Banking Supervision Department has developed a methodology for the combined risk assessment and subsequent definition of an additional capital requirement for credit risk. Individual outcomes of the top-down stress tests carried out by the Macroprudential Supervision and Financial Stability Directorate can make a valuable contribution to the SREP. It allows the assessment of the quality of internal control in the institution and its capacity to timely produce complete and reliable data. While capital positions globally are adequate, and soundness indicators have improved, partly as a result of the 2016 Asset Quality Review, nonperforming loans remain high in Bulgaria, with notable differences between the banks.

Subject: Banking, Credit risk, External balance assessment (EBA), External position, Financial institutions, Financial regulation and supervision, Financial sector policy and analysis, Internal controls, Nonperforming loans, Revenue administration, Stress testing

Keywords: BNB regulation, Capital requirement, CR, Credit risk, Draft SREP manual, External balance assessment (EBA), Global, Internal controls, ISCR, Nonperforming loans, SREP approach, SREP assessment, SREP cycle, SREP element, SREP manual, SREP outcome, SREP process, Stress testing

Publication Details

Pages:

28
Volume:

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DOI:

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Issue:

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Series:

Country Report No. 2019/142
Stock No:

1BGREA2019003
ISBN:

9781498316439
ISSN:

1934-7685

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