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Photo: Alex Kraus / Bloomberg |
The European Central Bank (ECB) has announced that it will begin direct supervision of five banks in Bulgaria and eight in Croatia, according to a post on its website: Unicredit Bulbank, DSK Bank, UBB, Postbank and Raiffeisenbank.
The move is the result of close cooperation with the National Bank of Bulgaria (BNB) and the Croatian National Bank.
We remind you that, together with the entry into the euro area “waiting room” (ERM II) in early July, Bulgaria and Croatia joined the Single Supervisory Mechanism, which is also under the leadership of the ECB. As a result, the Frankfurt-based institution should take over direct supervision of Bulgaria’s major banks from October 1, but it was unclear which ones it would judge as such.
First Investment Bank (FIB), whose capital liquidity was the last problem on Bulgaria’s path to the eurozone “waiting room”, is not on the list of five banks over which the ECB will exercise direct supervision. The bank’s capital shortfall was discovered through a stress test by the European Central Bank (ECB) in relation to Bulgaria’s application for membership in the eurozone. In June, the government announced that the Bulgarian Development Bank (BDB) would participate with up to 70 percent in Fibank’s capital increase.
Today’s announcement by the ECB makes it clear that the bank will be responsible for the direct supervision of four Bulgarian and seven Croatian subsidiaries of major existing banking groups based in Belgium, Greece, Italy and Austria. “The ECB thus ensures that regulatory requirements are met through direct supervision, individually, of all banks that are part of major groups and at least the three largest banks in each country,” the statement read.
The ECB will also directly supervise two new institutions: DSK Bank in Bulgaria from 1 October and Addiko Bank AG Group in Austria from 7 October. The supervision of the Addiko Bank AG Group will include the supervision of its subsidiaries Addiko Bank dd in Slovenia and Addiko Bank dd in Croatia.
The ECB will also be responsible for supervising the less important institutions and common procedures for all supervisors in both countries.
The BNB clarified in a post on its website that as of October 1, Radoslav Milenkov, deputy governor in charge of banking supervision, will be the representative of the Bulgarian National Bank on the Supervisory Board of the ECB with the same rights and obligations than all other members, including voting rights. He was elected by decision of the BNB Board.
For the purpose of direct supervision of systemic banks, the BNB appoints deputy coordinators and their representatives on the joint supervisory teams of the main institutions.
The ECB’s monitoring of the less important banks will include monitoring the application of the common supervisory rules of the Single Supervisory Mechanism. The ECB will have certain direct powers over less important institutions related to the licensing and approval process, issuing general recommendations, guidelines and instructions, planning and conducting inspections, including direct supervision of a few more important institutions.
For the purposes of the supervision of the ECB’s Single Supervisory Mechanism, a structure has been established in which the National Bank of Bulgaria will participate.
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