SOFIA (Reuters) - European Central Bank (ECB) will conduct a comprehensive assessment of six Bulgarian banks as part of the Balkan country’s bid to join the European Union’s banking union, Bulgaria’s central bank said on Monday.
In July Bulgaria, who joined the EU in 2007, applied to join the banking union, a step toward the Black Sea state’s aim to enter the “waiting room” for euro zone membership.
The ECB, however, has resisted granting Bulgaria a fast track to euro membership, saying its banks require tougher supervision.
“The comprehensive assessment is required as part of the process of establishing close cooperation between the ECB and the national competent authority of an EU Member State whose currency is not the euro,” the ECB said in a statement.
The assessment of the three largest banks in terms of assets, UniCredit Bulbank (CRDI.MI), DSK Bank, controlled by Hungary’s OTP OTPP.BU and United Bulgarian Bank, as well as the largest three locally-owned First Investment Bank 5F4.BB, Central Cooperative Bank 4CF.BB and Investbank will start in November 2018 and results are expected in July 2019.
The cut-off date for the exercise, comprising an asset quality review and a stress test, will be Dec. 31 2018, the ECB said.
The ECB said the assessment will be based on the methodologies applied by its banking supervision in its regular comprehensive assessments of banks.
Bulgaria had hoped to join the ERM-2 much earlier but under pressure from its European Union peers accepted a series of wide-ranging commitments that may prolong its waiting period.
These include strengthening its banking sector and its anti-money laundering systems.
Reporting by Angel Krasimirov; editing by David Evans