Bulgaria takes steps to prevent liquidity drain-PM

SOFIA, March 1 (Reuters) - Bulgaria has taken measures to prevent funds outflow from Greek bank subsidiaries in the Balkan country to headquarters in Greece, Prime Minister Boiko Borisov said on Monday.

He did not elaborate, but said that the European Union country, where 30 percent of the banks are owned by Greek lenders, had informed the European Central Bank and all other parties concerned about the issue.

"We have taken measures," Borisov told a news conference. "The intervention of France and Germany (to help Greece) for me is enough of a guarantee that a crash in the banking system would not be allowed."

The Bulgarian central bank declined any comment.

Economists have voiced concerns that Greece's fiscal problems could lead to a liquidity squeeze prompting its banks to withdraw liquidity from subsidiaries in southeast Europe. So far there have been no signs of problems.

Greek banks account for 20 percent of credits and about 30 percent of deposits in the Bulgarian banking system, which is generally well-regulated and capitalised.

With public finances amongst the best in the region -- public sector debt to GDP of just 15 percent and a fiscal reserve of 13 percent -- Sofia is well placed to bear any costs associated with problems in the banking sector, analysts say.

Finance Minister Simeon Djankov told the same news conference he had asked the International Monetary Fund, as well as the Bulgarian central bank to inform him whether the Greek mother-banks were draining funds from their Bulgarian units.

"I want to be reassured by the Bulgarian National Bank and the Fund that it will not harm the development of the Bulgarian economy and business," Djankov said. "I will either get such a reassurance in three weeks, or start worrying more."

He said the central bank had various ways to stop any outflow and keep the deposits of the Bulgarians in the country.

Some 29 commercial banks and bank branches operate in Bulgaria and the biggest lenders are run by Italy's UniCredit (CRDI.MI), Hungary's OTP OTPB.BU, Greece's National Bank of Greece (NBGr.AT) and Austria's Raiffeisen RIBH.VI.

Other Greek lenders present in Bulgaria include EFG Eurobank (EFGr.AT), Piraeus (BOPr.AT), Emporiki CBGr.AT and Alpha Bank (ACBr.AT).

Last month, rating agency Fitch downgraded Greece's four largest commercial banks -- all present in Bulgaria -- to BBB with negative outlook due to the country's fiscal and debt woes. (Reporting by Tsvetelia Tsolova, editing by Dave Zimmerman)