Bulgaria is a country in southeastern Europe, a member of the European Union since 2007.
Agriculture and tourism have been important components of Bulgarian economy. In recent years low salaries and low corporate income tax rates, attracted foreign companies into technological and research sector. However, factors like corruption, a weak judiciary, and organized crime impede the country's investment climate and economic growth.
Bulgarian banking system is characterized by relatively high concentration: competition between the major banks is making it difficult for other banks to compete. Another feature of the Bulgarian banking system is a prominent share of foreign capital.
|Population (2016)||7 153 784 (-0.01%)|
|EU Status||member since 2007|
|National Currency||BGN (Bulgarian lev)|
|Exchange Rate (2017-01-19)||1 EUR = 1.9558 BGN|
|Nominal GDP (2015)||44.2 bln EUR (+0.03%)|
|Nominal GDP per Capita (2015)||6 100 EUR (+0.05%)|
|Real GDP Growth (2015)||3.0 % (2014: 1.5 %)|
|CPI, MoM (Sep 2016)||-0.7 % (Aug 2016: 0.0 %)|
|CPI, YoY (Sep 2016)||-1.1 % (unchanged)|
|CPI, Year Average (2015)||-1.1 % (2014: -1.6 %)|
|Unemployment Rate (2015)||9.2 % (2014: 11.6 %)|
|Government Bond Yield (Sep 2016)||2.15 % (Aug 2016: 2.28 %)|
|Credit Ratings (as of Sep 2016)|
|Fitch||BBB-||good credit quality, outlook stable|
|Moody's||Baa2||lower medium grade, outlook stable|
|S&P||BB+||non-investment grade speculative|
|Double Taxation Agreements||52 signed agreements|
|Automatic Exchange||starts in September 2017|
|FATCA||IGA in effect since 05 December 2014, Model 1|
|Financial Market Development||4.1 (max 7.0)||rank: 59th out of 138 countries|
|Banks' Soundness||4.2 (max 7.0)||rank: 107th out of 138 countries|
|Banking Industry Country Risk||7||(1 - lowest risk, 10 - highest risk)|
|Deposit Guarantee Scheme|
|Maximum Protected Amount||100 000 EUR|
|Country Ceiling for Deposits|
|Local Currency (Bulgarian lev)||A3||upper medium grade|
|Foreign Currency||Baa2||lower medium grade|
|Deposit Rates (Aug 2016, BGN)||0.55 % (unchanged)|
|Banking Sector Structure|
|Number of Banks||29|
|Recent Changes (2015)||new banks: 0, closed banks: 0|
|Consolidated Assets (2015)||45 489.62 mln EUR (+3.53%)|
|UniCredit Bulbank||First Investment Bank|
|DSK Bank (OTP)||Eurobank EFG|
|United Bulgarian Bank (NBG)||Corporate Commercial Bank|
|List of Banks in Bulgaria|
During the last 11 years EURBGN exchange rate was within the range 1.9558 - 1.9558, reaching its maximum in Jul 2016 and falling to its minimum in Jul 2016.
According to Eurostat, nominal GDP of Bulgaria in 2015 was 44.2 bln EUR.
Bulgaria outperforms the European Union in terms of real GDP growth with the average annual differential coming to 0.6% over the past 10 years (2005 - 2015). In 2015 real GDP growth was 3.0% which was above the Euro Area average (1.6%) and above the European Union average (1.9%). Real GDP growth in 2016 - 2021 are IMF's estimates.
In 2015, nominal GDP per capita in Bulgaria was 6 100 EUR.
Bulgaria has a below-average level of wealth in terms of per-capita GDP at purchasing power parity (PPP); this economic welfare indicator has, on average, fell behind that of the European Union by -45.2% over the past 10 years (2005 - 2015). GDP per capita at PPP in 2016 - 2021 are IMF's estimates.
According to Eurostat, inflation rate in Bulgaria in 2015 expressed as annual percentages of average consumer prices was -1.1% which was below the Euro Area average (0.0%) and below the European Union average (0.0%). Inflation rates in 2016 - 2021 are IMF's estimates.
Double Taxation Agreement (DTA) is an agreement between two or more countries for the avoidance of double taxation.
Bulgaria signed DTAs which already came info force with the following jurisdictions (for agreements which came into force after 01 January 2013 the date of coming into force is given in brackets):
There are 3 ways for jusrisdictions to exchange information on tax matters:
Spontaneous exchange of information is provision of information that is forseeably relevant to another party without a request being previously sent.
Tax Information Exchange Agreements (TIEAs) enable exchange of information on request relating to a specific tax investigation, either criminal or civil.
Automatic information exchange allows jurisdictions to exchange information automatically, without having a specific tax investigation.
Bulgaria signed the automatic information exchange agreement on 29 October 2015 and committed to start the automatic information exchange in September 2017.
Foreign Account Tax Compliance Act (FATCA) which became law in the United States in March 2010, focuses on reporting made by foreign financial institutions about financial accounts held by US taxpayers or foreign entities in which US taxpayers hold a substantial ownership interest. The FATCA-reporting is facilitated by Intergovernmental Agreements (IGAs).
Bulgaria has FATCA agreement with the U.S. in effect since 05 December 2014 (Intergovernmental Agreement Model 1). Financial institutions operating in Bulgaria are required to identify U.S. taxpayers by January 1, 2017 and to report the information for 2017 and the subsequent years. The agreement is non-reciprocal: Bulgarian financial accounts hold in U.S. financial institutions will not be reported to Bulgarian authorities.
FATCA and European countries
According to World Economic Forum's Global Competitiveness Report 2016-2017, financial market development in Bulgaria is scored 4.1 out of maximum 7.0 and ranked 59th out of 138 analysed economies. Soundness of banks is scored 4.2 bringing Bulgaria into the 107th place, trustworthiness and confidence of financial market is scored 4.5 (49th place).
Banking Industry Country Risk Assessment (BICRA) is a methodology designed by Standard&Poor's "to evaluate and compare global banking systems". A BICRA is scored on a scale from 1 to 10, ranging from the lowest-risk banking systems (group 1) to the highest-risk (group 10). The BICRA methodology has two main analytical components: "economic risk" and "industry risk". Each of the components is then further divided into 3 "factors" that result in an economic and industry risk score for each country.
Bulgaria is included into group '7' with economic risk scored '7' and industry risk scored '6'.
|Credit risk in economy||very high|
|Government support assessment||supportive|
Deposit Guarantee Schemes compensate certain deposits held by depositors of a bank that becomes unable to meet its obligations.
From a depositor's point of view it is important to know:
All these details about deposit guarantee scheme in Bulgaria are summarised in Table 2.
|Scheme Participants||all credit institutions operating in Bulgaria, branches of non-EU banks, branches of Bulgarian banks abroad|
|Scheme Exemptions||branches of EU-banks (covered by their home countries)|
|Eligible Depositors||natural persons, legal entities|
|Covered Accounts||all funds on a bank account (term deposit, demand deposit, savings or current account, etc)|
|Maximum Protected Amount||100 000 EUR|
|Paid In Currency||BGN|
Table 2. Deposit guarantee scheme in Bulgaria.
Deposit Guarantee Schemes in Europe
Moody's country ceilings for deposits specify the highest rating that can be assigned to local- or foreign- currency denominated deposit obligations of a bank or other deposit taking institution domiciled within that country.
Local currency (Bulgarian lev) deposit ceiling for Bulgaria is set to A3 (upper medium grade), foreign currency deposit ceiling is Baa2 (lower medium grade).
Compare Bank Deposits in Bulgaria
Currently there are 29 credit institutions operating in Bulgaria.
Recent structural changes (2013 - 2015) of the banking sector of Bulgaria are summarised in Table 3.
|Number of Opened Banks||0||0||0|
|Number of Closed Banks||0||2||0|
Table 3. Recent structural changes in the banking sector of Bulgaria.
All the credit institutions operating in Bulgaria can be classified into several categories. Table 4 summarises the number of banks in each category.
|Category||Number of Banks|
|Branches of foreign banks||6|
There are 6 branches of foreign banks from 6 different countries in Bulgaria. Table 5 shows the number of branches grouped by the country of origin.
|Country of Origin||Number of Branches|