March 1 (SeeNews) - The Bulgarian National Bank (BNB) said on Friday that its deputy governor in charge of banking supervision, Dimitar Kostov, intends to submit his resignation to parliament.
"The great amount of work in the Banking Supervision Department throughout the past few years and the completion of the major part of the planned reforms gave me reason in the middle of my mandate in 2018 to ask for its termination. At the request of the governor, I delayed the execution of my intention, due to the new commitments of the Banking Supervision Department, which arose after the plans for joining the Single Supervisory Mechanism (SSM) were submitted in June and July last year," Dimitar Kostov was quoted as saying in a press release issued by the central bank.
In June, finance minister Vladislav Goranov announced Bulgaria will seek to simultaneously enter into close cooperation with the European Central Bank (ECB) and into the Exchange Rate Mechanism ERM II - the preparatory phase for adopting the euro.
Subsequently, in November and December, the ECB conducted a comprehensive assessment of six banks in Bulgaria, including an asset quality review and a stress test, as part of Bulgaria's efforts to join the SSM. ECB tested the four largest lenders in Bulgaria in terms of assets - UniCredit Bulbank, DSK Bank, United Bulgarian Bank (UBB) and First Investment Bank (Fibank) [BUL:5F4], as well as lower-ranked Central Cooperative Bank (CCB) [BUL:4CF] and Investbank. Results are due to be published in July.
"Today, having in mind the established excellent working communication with the ECB and the SSM in this process and its advanced stage, there is an opportunity for me to step down from heading the Banking Supervision Department," Kostov said.
The moment is also right in terms of the time frame for joining the SSM, as the asset quality review and stress tests are only the first steps in a more complex process. In order to govern the process effectively and to demonstrate continuity, the central bank should look for a new head of banking supervision with a six-year mandate, Kostov added.
Earlier this week, the European Commission said in its report on Bulgaria, part of the European Semester Winter Package, that some vulnerabilities in Bulgaria's banking sector still remain, although the sector has strengthened overall as banks addressed the recommendations arising from the 2016 asset quality review conducted by the BNB, with one exception.