Bulgarian National Bank doesn’t put ceilings on loans, but will escalate its monitoring

The Bulgarian National Bank is not limiting the provision of mortgage loans by banks and is only escalating its monitoring. This was explained by BNB Governor Dimitar Radev in an interview with BTA. His remarks come two days after the central bank announced it was introducing a requirement for banks in Bulgaria to provide reports on certain details of their mortgage loan portfolios.

However, many understood that the last step as the introduction of new measures and the actual introduction of ceilings in the provision of credit.

With his interview, Dimitar Radev has thus made clarifications by explaining that he is not imposing mandatory levels of the indicators, but

Is creating the necessary formal framework and mechanisms to do so if necessary."

Radev explained that with his actions, the central bank is moving from a mode of statistical monitoring to a mode of supervisory monitoring and accountability with requirements for banks regarding the calculation of indicators.

We do not see an immediate problem, but we do see a potential risk related to mortgage lending. The purpose of the exercise is to formalize the assessment of this risk and to prepare the banking sector for an adequate response if this risk starts to materialize," Radev pointed out.

He explained that this approach prepares the sector "to work in the face of unfavorable developments in the credit market, even if the probability of such developments seems minimal at the moment."

Translated by Tzvetozar Vincent Iolov