SOFIA Aug 8 Bulgaria's central bank has asked
the International Monetary Fund to carry out an in-depth review
of the Balkan country's financial sector following its worst
banking crisis since the 1990s, it said on Friday.
Bank Governor Ivan Iskrov requested that the IMF conduct the
assessment as part of its regular staff visit later this year or
before it, in an effort to boost confidence in the banking
system, the central bank said in a statement.
The central bank seized control of Bulgaria's fourth-largest
lender Corporate Commercial Bank in June after a run on
deposits, and shut down its operations. As panic spread and a
run started on another lender, the authorities freed up an
emergency credit line to support the financial system.
In a letter to the IMF, Iskrov said his institute had taken
the necessary steps to deal with the situation at Corpbank and
limit its impact on Bulgaria's other banks, saying that the
banking system was in good health and was functioning properly.
"Despite that, a timely mission of the IMF ... will help
recover the trust in the banking system and maintain fiscal
stability," the central bank said.
An interim government, which took office earlier this week,
had said that seeking an IMF assessment would help restore
confidence in the country, which has delayed a final decision on
Corpbank until mid-October pending an audit.
The banking crisis hit at a time of heightened political
instability, with an election planned for Oct. 5, and has put
renewed scrutiny on the investment climate in the poorest and
one of the most corrupt economies in the European Union.
The IMF carried out a similar review in Bulgaria in 2008.
Under it, the Fund examines the soundness of the financial
sector, conducts stress tests and rates the quality of bank,
insurance, and financial market supervision against accepted
The programme is designed to evaluate the ability of
supervisors, policymakers and financial safety nets to respond
effectively in case of systemic stress and identify the main
vulnerabilities that could trigger a financial crisis.
(Reporting by Tsvetelia Tsolova; Editing by Crispian Balmer)