Bulgaria c-banker warns against ‘race to the bottom’ on loan interest rates

The governor of the Bulgarian National Bank, Ivan Iskrov, said on July 2 that Bulgarian banks should be cautious with their lending activities and avoid offering interest rates that were too low.

Speaking at a banking seminar in Sofia, Iskrov said that the drive of Bulgarian banks to use their excess liquidity to spur lending was understandable, but retail lenders should not forget about the interests of depositors.

The global trend now is for central banks to tighten their monetary policies, particularly in the larger economies in the world, which will have an impact on Bulgarian banks as well, he said.

At the same time, Iskrov said that Bulgaria’s financial system was not under threat, given the high capital adequacy ratios of Bulgarian banks and the fact that local lenders focused on a traditional business model rather than high-risk investment lending.

(Bulgarian central bank governor Ivan Iskrov. Photo: BBCC)



The Sofia Globe staff

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