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SOFIA, July 25 (Reuters) - Bulgaria’s central bank will take action to boost banks’ capital position after a health check on six lenders by the European Central Bank (ECB), it said on Thursday.
The Bulgarian National Bank (BNB) said its estimate from the health checks and developments after their cut-off date showed that all six banks met the EU’s prudential requirements. It said the assessment showed the resilience of the Bulgarian banking sector overall.
“Follow-up actions related to further strengthening of the capital position will be conducted in strict compliance with the BNB mandate and the relevant regulatory framework,” it said.
The ECB’s asset quality review (AQR) and stress tests on the Balkan country’s three biggest lenders and three locally-owned banks are part of Sofia’s efforts to join the banking union and the “waiting room” for euro zone membership this year.
The ECB will publish detailed results from its comprehensive assessment on the lenders on Friday.
It has assessed UniCredit Bulbank, DSK Bank, controlled by Hungary’s OTP and UBB, part of KBC Group as well as three locally held banks: First Investment Bank, Central Cooperative Bank and Investbank.
Under EU rules, banks are required to hold total capital equal to 8% of their risk-weighted assets, while the CET 1 capital ratio should be at least 4.5%.
Bulgaria’s central bank has also activated several capital buffers that bring the requirements for overall capital adequacy to 14% and the CET 1 ratio to 10.5%.
Some analysts said some of the lenders might have met the minimum requirements but still need to raise capital to fulfil the buffer requirements.
Others believe some of the lenders might have fallen below the requirements during the AQR, whose reference date was the end of 2018, but have taken steps since then to boost their capital positions. (Reporting by Tsvetelia Tsolova; Editing by Kevin Liffey)