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  1. 1. ASSOCIATION OF BANKS IN BULGARIA /ABB/ Eleonora Hristoforova Legal adviser ABB Sofia, May 4, 2007
  2. 2. Overview of Bulgarian banking system <ul><li>Structure </li></ul><ul><ul><li>27 banks and 5 foreign branches; </li></ul></ul><ul><li>Penetration </li></ul><ul><ul><li>Assets to GDP – 89 % </li></ul></ul><ul><ul><li>Population per branch – 7050 </li></ul></ul><ul><ul><li>Population per employee – 320; </li></ul></ul><ul><li>Performance </li></ul><ul><ul><li>RoA – 2. 2 % </li></ul></ul><ul><ul><li>C/I - 55.6% </li></ul></ul><ul><ul><li>RoE – 2 4 %; </li></ul></ul><ul><li>Openness </li></ul><ul><ul><li>foreign ownership – 83 % market share </li></ul></ul><ul><ul><li>subsidiaries and branches of large European banking and financial groups – 77 % market share </li></ul></ul>Association of Banks in Bulgaria Presentation to IBFBA
  3. 3. General information about ABB <ul><li>Founded – May 9, 1992; </li></ul><ul><li>Membership – all banks and branches of foreign banks </li></ul><ul><ul><li>27 banks – full members </li></ul></ul><ul><ul><li>5 bank branches – associate members </li></ul></ul><ul><li>Governance </li></ul><ul><ul><li>The General assembly elects the Executive Board /EB/ consisting of 7 members – bank executive directors </li></ul></ul><ul><ul><li>The EB elects a Chairman and a Vice-chairman </li></ul></ul><ul><ul><li>The EB appoints the Secretary General to run day-to-day operations. The term of the Board members is 3 years, limited to two successive terms </li></ul></ul>Association of Banks in Bulgaria Presentation to IFBA
  4. 4. General information (cont.) <ul><li>Mission of the ABB </li></ul><ul><ul><li>Establishes links, co-operation and mutual aid among commercial banks </li></ul></ul><ul><ul><li>Coordinates the interests of its members in the realization of their activit y </li></ul></ul><ul><ul><li>Protects the rights and interests of its members before state institutions, public organizations and other bodies </li></ul></ul><ul><ul><li>Promotes ethical business behavior among its members </li></ul></ul><ul><ul><li>Assists commercial banks staff in upgrading their professional qualification by organizing professional meetings, symposia, conferences </li></ul></ul><ul><ul><li>Establishes contacts, and acts as representative with foreign and international organizations </li></ul></ul><ul><ul><li>Aids the implementation of new banking techniques and technologies </li></ul></ul><ul><ul><li>others </li></ul></ul>Association of Banks in Bulgaria Presentation to IFBA
  5. 5. Working structure <ul><li>Committees - according to the Statute of the ABB </li></ul><ul><ul><li>Payment systems committee </li></ul></ul><ul><ul><li>Capital markets committee </li></ul></ul><ul><ul><li>Legal committee </li></ul></ul><ul><ul><li>Economic policy committee </li></ul></ul><ul><ul><li>Information technology committee </li></ul></ul><ul><ul><li>Security committee </li></ul></ul><ul><ul><li>National commission on banking techniques and practices </li></ul></ul>Association of Banks in Bulgaria Presentation to IFBA
  6. 6. Working structure (cont.) <ul><li>Working groups - established by the EB of the ABB </li></ul><ul><ul><li>on the implementation of Basel II </li></ul></ul><ul><ul><li>on the activity of custodian banks according to the Social insurance code </li></ul></ul><ul><ul><li>on the development of cash circulation </li></ul></ul><ul><ul><li>on anti-fraud measures concerning banking cards </li></ul></ul><ul><ul><li>on preventing money laundering </li></ul></ul><ul><ul><li>S.W.I.F.T. Users </li></ul></ul>Association of Banks in Bulgaria Presentation to IFBA
  7. 7. Important internal documents <ul><li>Statute of the Association </li></ul><ul><ul><li>Last changed in April 2007 </li></ul></ul><ul><li>Ethical code of the members </li></ul><ul><ul><li>New code approved in 2004 by the General Meeting replacing the existing one from 1995 </li></ul></ul><ul><li>Some key agreements of the ABB </li></ul><ul><ul><li>Cooperation agreement with the Bulgarian Dealers’ Association and BNB on the calculation and publication of interbank interest rate indexes SOFIBOR, SOFIBID and LEONIA, first signed in 2003 </li></ul></ul><ul><ul><li>Inter-bank agreement for transparent disclosure of Annual Percentage Rate /APR/ to bank clients, applied before the adoption of the Law on Consumer Credit in 2006 </li></ul></ul>Association of Banks in Bulgaria Presentation to IFBA
  8. 8. Relations with authorities and other organizations <ul><li>Central bank – the BNB, major regulatory and supervisory authority of banks </li></ul><ul><ul><li>long years of affirmed good cooperation with the ABB and support before other institutions </li></ul></ul><ul><li>National Assembly </li></ul><ul><ul><li>Legal Commission, Commission on Economic Policy, Commission on the Budget and Finance </li></ul></ul><ul><li>Financial Supervision Commission – regulation and supervision of banks as investment intermediaries, custodian banks of pension funds, major shareholders of the Bulgarian Stock Exchange and the Central Depositary </li></ul><ul><ul><li>enhanced commitment of banks with the business of investment funds, managing companies and other non-banking financial intermediaries </li></ul></ul><ul><li>Ministry of Finance </li></ul><ul><ul><li>draft laws of the BNB and the FSC, collaboration on tax laws and regulations, </li></ul></ul><ul><li>Other non-governmental organisations in the financial sector – A ssociation of insurers, Association of pension companies, Association of non-bank investment intermediaries, etc. </li></ul>Association of Banks in Bulgaria Presentation to IFBA
  9. 9. Relations and cooperation with member banks <ul><li>Transparency and timely dissemination of information to the members </li></ul><ul><li>Expert discussions of all important issues, statements and opinions of the ABB at the meetings of Committees and Working Groups at the Association </li></ul><ul><li>Monthly electronic information bulletin for members reviewing all the activity of the ABB in the previous month </li></ul><ul><li>Quarterly publication of a Press bulletin for members and partners with short articles and brief notes </li></ul><ul><li>Publication of a booklet – Official presentation of the ABB – annually after the General Meeting </li></ul>Association of Banks in Bulgaria Presentation to IFBA
  10. 10. International cooperation <ul><li>Full member of the European Banking Federation, seated in Brussels – 2007, previous associated member – since 1995 </li></ul><ul><li>Member of the Inter Balkan Banking Forum - regional cooperation of the banking associations in the Balkan countries – 2004 </li></ul><ul><li>Application for membership in the European Payment Council, seated in Brussels - 2007 </li></ul><ul><li>Bilateral cooperation with foreign banking associations and other organisations, exp. ATTF – Luxemburg for training and education of Bulgarian bankers </li></ul>Association of Banks in Bulgaria Presentation to IFBA
  11. 11. Participations in local institutions and organisations <ul><li>The ABB appoints representatives in the governing bodies of: </li></ul><ul><ul><li>Bank Deposits Insurance Fund </li></ul></ul><ul><ul><li>Securities Investors Compensation Fund </li></ul></ul><ul><ul><li>Emergency liquidity fund of the RTGS system </li></ul></ul><ul><ul><li>Conciliation Commission for out-of-court settlement of payment disputes </li></ul></ul><ul><li>The ABB, together with the BNB, is core shareholder in the International Banking Institute Ltd, involved in bank training and education </li></ul>Association of Banks in Bulgaria Presentation to IFBA
  12. 12. Joint stock companies of banks and the BNB for payment infrastructure and other <ul><li>Bankservice – payment system for payments up to BGN 100,000, not in real time </li></ul><ul><li>Borika – national card operator </li></ul><ul><li>Joint stock company of major banks and the BNB for provision of cash services </li></ul><ul><ul><li>in the course of establishment </li></ul></ul>Association of Banks in Bulgaria Presentation to IFBA
  13. 13. ABB and the recent developments of the payment system in Bulgaria <ul><li>National RTGS system for large value payments – since 2003 </li></ul><ul><li>Introduction of the Law on payments as a legal framework – 2004 – 2005 </li></ul><ul><li>Creation of a National Council on Payment Systems with the participation of the BNB, ABB as a representative of the banking community and the payment system operators - 2005 </li></ul><ul><li>IBAN standard for all bank accounts – since 2006 </li></ul><ul><li>SWIFT standards for messages within the national retail payment system – BISERA – since 2006 </li></ul><ul><li>Continuing work and consultations on further elaboration of a national SEPA plan </li></ul>Association of Banks in Bulgaria Presentation to IFBA
  14. 14. Meeting challenges of EU membership <ul><li>Upward trends of development of the national economy </li></ul><ul><ul><li>GDP growth rate above 6 per cent for the last 3 years </li></ul></ul><ul><ul><li>Inflation rate between 4 and 6.5 per cent in the period 2004-2006 </li></ul></ul><ul><ul><li>Constantly diminishing rate of unemployment since 2002, at the end of 2006 - 9.1 % </li></ul></ul><ul><ul><li>Substantial budget surplus for the last 3 years </li></ul></ul><ul><ul><li>Continuing stability and growth of the banking sector and deepening of the financial intermediation </li></ul></ul><ul><li>Large scale preparation carried out for the harmonization of the domestic legal and economic environment with the EU requirements </li></ul><ul><li>Successful and modern development of the Bulgarian banking sector in the course of accession, introduction of EU and international good banking practices and standards </li></ul>Association of Banks in Bulgaria Presentation to IFBA
  15. 15. <ul><li>THANK YOU FOR YOUR ATTENTION! </li></ul><ul><li>****** </li></ul><ul><li>Eleonora Hristoforova </li></ul><ul><li>Legal adviser, ABB </li></ul>Association of Banks in Bulgaria Presentation to IFBA