To the attention of the ECB Press Center
Dear Madams and Sirs,
On August 22, 2018, the Bulgarian Ministry of Finance published on its official cite an "Action plan including measures responding to the intentions of Republic of Bulgaria for its entry in the exchange rate mechanism ERM II and in the Banking Union" till July 2019. It turns out from the document that in accordance with the implementation of the mechanism for tight cooperation it will be again make a review of the banking assets quality in Bulgaria.
We asked the Bulgarian National Bank to provide more information on the scope, procedures and methodology which the upcoming review will be carried on. BNB however replied that this time it will be managed by ECB.
That’s the reason why we would like to ask Mrs. Lautenschläger –Vice-Chair of the ECB Supervisory Board, to answer the following couple of questions. We intend to publish them along with the answers in form of interview in the Banker weekly newspaper.
1. What will be the scope of the review of the assets quality? Which Bulgarian banks will participate in this review? What criteria are they chosen by?
2. Who will make the review – ECB and teams of its representatives or a particularly chosen by ECB provider of services which will in its turn approve particular providers of services to carry out reviews of the assets quality of the different banks (the same way as the review in 2016, done by BNB)?
3. How will be divided the costs for the forthcoming review? Will they be undertaken in full by the Bulgarian banks; or part of them will be paid by ECB; or they will be at the expense of the ECB?
4. From the beginning of 2018 the assessment of the risk from insolvency on credits and, accordingly, the quantification of each of those assets depreciation, is carrying out in accordance with the IFRS9. Is this the only accounting standard which will be used for the assets quality review and what way it differs from the former methods of approach when measuring the insolvency risk?
5. What risk will be treated on the Bulgarian government bonds denominated in EURO, issued and afterwards bought by the Bulgarian banks until the beginning of 2018 during the upcoming review of the Bulgarian banks assets quality?
6. Will the Bulgarian banks be urged to depreciate the acquired assets which previously have been collaterals on credits granted by them during the forthcoming review of the assets quality?
7. Will be made a differentiated assessment of the capital and economic connectedness of the borrowers when implementing the requirement for “the big credits” during the upcoming review of the assets quality?
8. Will the ECB impose, if needed, supervisory measures on the banks reviewed in the process of assets quality assessment or it will leave this responsibility to BNB as a supervision institution?
9. Is ECB intending to make and to announce publicly detailed report on the results of the review both for the system as a whole and bank by bank, as well as for the supervisory measures, which would possibly be laid on? How long after the finalization of the review it will be made public and how detailed will be the report?
We are hoping to receive your answers on the questions asked.
Thank you in advance for your kind attention and cooperation
Sincerely yours:
