Bulgaria’s c-bank adopts plan to reform its banking supervision
The governing board of central Bulgarian National Bank (BNB) has adopted a plan to reform and develop its banking supervision, and to create a new body, a bank restructuring directorate.
The plan takes in account recommendations by the International Monetary Fund, the World Ba nk and the National Audit Office, BNB said.
BNB had a change of leadership earlier in 2015 after then-governor Ivan Iskrov stepped down after Parliament decided on a new chief for the central bank, Dimitar Radev. Iskrov had been criticised by the majority of political parties in Parliament over BNB’s handling of the Corporate Commercial Bank saga.
The governing board’s announcement of the adoption of the reform plan came a few days after BNB confirmed that the chief director of banking supervision, Neli Kordovska, had resigned with effect from October 1.
The restructuring plan will see new departments opened and a redistribution of supervisory functions. It sets priorities and deadlines for actions in accordance with the plan in 2015 and 2016.
The reform plan is intended to make Bulgaria’s banking supervision practices comply as closely as possible with the current international standard, namely the Basel Core Principles for Effective Banking Supervision from 2012, according to BNB.
The plan was drafted in summer 2014. It identifies problematic practices and structural deficiencies in BNB’s banking supervision function that need to be addressed in 2015 and 2016 to make supervision more efficient.
The plan is the result of nearly a year process that involved mainly two stages: internal analysis and evaluation of procedures and practices of BNB’s banking supervision, and the independent external evaluation of the effectiveness of banking supervision in Bulgaria, prepared by a team from the IMF and World Bank.
To avoid exposing the supervisory function to risks associated with vesting the majority of the powers of supervision in the BNB Deputy Governor in charge of banking supervision, the plan envisages that the the BNB Governing Council will approve the internal rules and manuals regulating supervisory activities.
Another change, which aims to make the Banking Supervision Department more accountable, provides for issuing quarterly reports to the Governing Council about problems that have been detected and the steps taken to resolve them, as well as the changes in the shareholding structure of commercial banks.
The banking supervision department will also have to produce annual audits of compliance of its activities with the regulations.
The plan also envisages a new body, a bank restructuring directorate, outside the banking supervision department.
The development of the plan, its adoption and disclosure are consistent with the commitments made by the Governor of BNB to the National Assembly regarding the management of the central bank, the BNB statement on October 5 said.
(Photo: Clive Leviev-Sawyer)