2002年-世界发展银行全球_Financial_Sector_Assessment___Bulgaria_12页_2mb

Financial Sector Assessment of Bulgaria (December 2002)

A. Introduction

• Overview: This Financial Sector Assessment (FSA) summarizes the findings of the FSAP mission for Bulgaria, which took place from October 29 to November 14, 2001.
• Context: The assessment was conducted after five years of financial reforms following the 1996-97 crisis, during which the banking system collapsed and the Currency Board Arrangement (CBA) was established.
• Key Objectives: The mission aimed to evaluate the constraints on lending and to advise the Bulgarian National Bank (BNB) on ensuring that increased lending does not undermine financial stability.
• Input to Policy: The findings were critical inputs to the medium-term program supported by Programmatic Adjustment Loans (PALs).

B. The Macroeconomic Environment

• Economic Transition: Bulgaria started its transition to a market economy late but has made significant progress through sound macroeconomic policies and structural reforms.
• Stabilization Achievements:
  • Output growth has improved from negative levels.
  • Inflation has dropped from hyperinflation to single digits.
  • External debt-to-GDP ratio fell from 100% in 1997 to 69% by end-2002.
• External Position:
  • The external current account deficit improved from 6.1% of GDP in 2001 to 4% in 2002.
  • FDI inflows and Eurobond issuance helped finance the deficit.
• External Risks:
  • Risks include failure to complete privatization, insufficient FDI, and sensitivity to oil price increases and EU economic slowdown.
  • The government has contingency measures in place (about 75% of GDP) to address potential worsening of the external account.

C. The Banking System

Structure and Performance

• Banking Dominance: The banking system dominates the financial sector, which is small relative to the economy.
• Ownership and Privatization:
  • State-owned banks account for ~15% of assets and 20% of deposits.
  • Foreign branches and subsidiaries hold ~75% of assets and deposits.
  • The sale of the State Savings Bank (DSK) in mid-2003 will make the banking system 98% privately owned.
• Lending and Intermediation:
  • Bank intermediation remains low, with 40% of assets in foreign exchange deposits and only 37% in private sector loans.
  • The shift to private sector lending is due to increased liquidity, lower foreign interest rates, and more competition.
• Capital Adequacy:
  • The banking system is highly capitalized, with an average CAR of 29% in June 2002.
  • CARs of foreign subsidiaries have declined to ~32%, while domestic banks hover around 23-25%.
  • High capital ratios are justified for post-crisis restructuring but may be too high for long-term profitability.

Liquidity Arrangements

• BNB Policies:
  • Minimum reserve requirements were reduced from 11% to 8% in 2000 to stimulate private sector lending.
  • Liquidity ratios are generally high, with a primary ratio of ~10%.
  • The BNB introduced a "marketable assets ratio" in Q3 2001, which reached 48% in March 2002.
• Liquidity Challenges:
  • Tax and social security payments are concentrated mid-month, causing liquidity shortages and interest rate spikes.
  • The BNB provides same-day leva against euro to mitigate these pressures.
  • The RTGS system is expected to become operational in Q1 2003, which will improve real-time liquidity monitoring.

Deposit Insurance

• Deposit Insurance Fund (DIF):
  • Guarantees up to BGN 10,000 per depositor per bank, covering both domestic and foreign currency accounts.
  • High coverage is required to meet EU standards, despite commercial banks' concerns about the premium level (0.5% of average deposit base).
  • The DIF is expected to play a more active role in overseeing the resolution of closed banks.

D. Capital Market and Non-Bank Financial Institutions

Capital Market

• Development Status: The capital market is in an early stage of development, with low stock market capitalization and turnover relative to GDP.
• Regulatory Framework:
  • The legal and regulatory framework is largely aligned with EU and IOSCO standards.
  • Amendments to the Commercial Code and Law on Public Offering of Securities (LPOS) are being considered to enhance investor confidence and corporate governance.
• Potential Growth: The introduction of a multi-pillar pension reform and the development of the insurance industry may boost capital market activity.

Insurance Sector

• Market Overview: The insurance industry is small and fragmented, with 32 licensed companies in mid-2002.
• Penetration and Performance:
  • Insurance penetration increased from 1.1% to 1.6% of GDP.
  • Return on investments for life insurance barely covers inflation, while non-life returns are insufficient.
• Supervision:
  • The Insurance Supervision Agency (ISA) has undergone restructuring and is now more aligned with EU directives.
  • The agency is now led by a new head who has implemented an institutional development plan and improved staffing with 13 professionals.

Pension Funds

• Governance Issues: Current legislation lacks adequate fit and proper tests for pension fund managers and insufficient protections for minority shareholders.
• Supervision: The State Insurance Supervision Agency (SISA) needs to be strengthened, particularly in regulating private pension funds.
• Reforms: Draft amendments to pension legislation are being prepared to address these issues, with the Council of Ministers reviewing the proposals.

Leasing and Agricultural Credit

• Leasing Market: Small but growing, with total assets of ~US$150 million in mid-2002.
• Agricultural Credit: Provided by banks and agricultural credit unions, with total assets of ~BGN 25 million.
• Supervision: Credit unions are not supervised by the BNB and fall under the Cooperative Law.

E. Payments, Clearing and Settlement

• Currency Board Arrangement (CBA):
  • The BNB cannot provide intra-day or overnight liquidity to commercial banks.
  • Banks are allowed to draw on their monthly average reserve balances but face penalties if they fall below 50%.
• Inter-Bank Market:
  • The leva inter-bank market is reasonably deep for same-day to 7-day deposits but has monthly liquidity shortages due to tax-related flows.
• RTGS Implementation:
  • The RTGS system was planned for September 16, 2002, but was delayed to Q1 2003.
  • The mission recommended a delay to ensure all banks are adequately prepared, as the implementation is deemed too ambitious and risky.

F. Legal Framework and Infrastructure

Creditor Rights

• Enforcement Weaknesses: Bulgarian law lacks effective mechanisms for enforcing creditor claims.
• Secured Pledges: The 1996 Law on Secured Pledges provides a modern framework, but the Civil Procedure Code delays enforcement.
• Reforms: Amendments to the Civil Procedure Code have been passed, and a proposal to establish specialized commercial courts is under development.

Insolvency

• Corporate Insolvency: The Commercial Code's insolvency provisions are inefficient and prejudice creditor rights.
• Challenges: Courts lack predictability and efficiency, and trustees are often inexperienced and poorly monitored.
• Reforms: Draft amendments to the Commercial Code are under consideration, with a two-year program funded by Phare to improve the insolvency regime.

Corporate Governance

• Commercial Code Weaknesses: The code enables asset stripping and share dilution due to provisions like disproportionate voting rights and lack of shareholder protection.
• LPOS Provisions: These provisions prohibit such practices, but many companies, including banks, are not fully compliant.
• Need for Reform: Strengthening corporate governance is critical to ensuring transparency and accountability in the financial sector.