Bulgaria: Financial Sector Assessment Program: Technical Note-Risk Assessment and Stress Test of the Banking System

July 11, 2017

Preview Citation

Format: Chicago

Bulgaria: Financial Sector Assessment Program: Technical Note-Risk Assessment and Stress Test of the Banking System, (USA: International Monetary Fund, 2017) accessed September 18, 2024

Summary

This Technical Note discusses results of risk assessment and stress tests (ST) of the banking system in Bulgaria. ST results reveal that the Bulgarian banking system is vulnerable to the extreme realization of internal and external risks coupled with the need to clean the balance sheets from nonperforming loans (NPLs). In the baseline scenario, characterized by a modest economic growth and decline in unemployment, as well as stable and low interest rates, two banks—including a systemic one—exhibit weakness in terms of capital buffers to cope with accumulated losses in the past. These banks also experience substantial increase in their NPLs as a result of the asset quality review adjustment.

Subject: Banking, Commercial banks, Financial institutions, Financial regulation and supervision, Financial sector policy and analysis, Liquidity requirements, Loans, Nonperforming loans, Stress testing

Keywords: AQR finding, Bank, Bank capital, Banks experiences shortfall, Capital, Cash flow, Commercial banks, CR, Domestics bank, Europe, Funding shock, Global, Ing bank N.V., Interest rate, ISCR, Liquidity requirements, Loan, Loans, Nonperforming loans, Performing loan portfolio, Quality data, Stress testing

Publication Details

Pages:

50
Volume:

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DOI:

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Issue:

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Series:

Country Report No. 2017/200
Stock No:

1BGREA2017003
ISBN:

9781484308448
ISSN:

1934-7685

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