Greek Banks to Sell Bulgarian Subsidiaries

Georgi Angelov, senior economist with the Open Society Institute Sofia believes that Greek banks will do everything they can to shun the sale of their subsidiaries in Bulgaria

Angelov was approached to comment on the euro zone debt crisis and fears that the new rules on bank recapitalisation will allow regional subsidiaries to be drained of money and put its economy at risk.

He conceded that it is possible that Greek banks are forced to shed their assets here, but even in that case there will be other investors happy to buy them.

“Most Western banks are happy to have offices in Eastern Europe because of the region’s economic potential, its stable and even profitable banking systems. Nobody wants to be deprived of this potential and will do so only in extreme cases.”

According to Angelov it is important that the Bulgarian banks do not need support from abroad and are doing fairly well on their own.

“With high capital and profit levels in the banking system, there is little risk of a systemic problem,” he said.

The Bulgarian banking system is concentrated, with most of the assets owned by large financial institutions from the Eurozone.

The five biggest banks in Bulgaria are UniCredit Bulbank; DSK Bank, a unit of OTP Bank Nyrt., Hungary’s largest bank; United Bulgarian Bank, owned by the National Bank of Greece SA; Raiffeisenbank Bulgaria and Eurobank EFG Bulgaria.

Greek banks control about 28% of banks’ total assets in Bulgaria.