/ world today news/ Three geopolitical events and their derivatives, namely: the Ukrainian crisis, the confrontation between the USA and Russia and Europe’s concerns about its energy security, played out in the outgoing year of 2014. the role of peculiar stress tests. For our country, which is definitely the poorest in the EU, they highlighted the vicious model and the lack of maturity in political and financial management.
Especially in financial, where the conditionalities of the publicly articulated positions exceeded all reasonably permissible levels.
Of course, not only Bulgaria was subjected to these tests. The logical question is why did other countries do better? Very simply, I will repeat – because we are the poorest and worst organized country in the EU. And the more poorly organized we are, the poorer we will become. Our legal, public and financial organization is weak. On the other hand, we are strong in the methodically adopted lobbying legislation, which revealed its absurd dimensions in the last year. Its burden can no longer be controlled by the empowered, nor is the population able to cover the bills that are served to it. The foolish legal framework, corrupt environment and vicious practices in the state predetermined the political and financial upheavals we witnessed in 2014.
For a long time, the rulers pretended to be blind and deaf to the obvious discrepancy between the financial legislation in the EU and Bulgaria, to the lack of adequate supervision, to the poorly concealed violations of even the effective lobbying laws.
To suppress the growing tension, the rulers once again reacted with palliative solutions and throwing dust in the eyes of the public. The process gained momentum from the fall of 2013. with discussions, interviews and meetings, where great promises for legal changes in the banking sphere were made by MPs Tsonev, Gechev, and Manolova, who obligingly forgot that they were apologists for the same legal framework that they had allegedly tried to reform. In the spring of 2014 the masks finally fell and their true intentions were seen.
During these months of approaching political, financial and banking turbulence, the regulatory bodies BNB and FSC were undetectable, blissfully blinded by their own well-being. Behind their “professional silence” there was obviously a lack of vision for development, which logically led to a collapse with tragicomic consequences.
Let’s briefly recall what ideas were publicly demonstrated a year ago. The end of 2013 was marked by the financial boom with fanfare: Tsvetan Vasilev was once again named Banker of the Year, Oresharski excitedly proclaimed “Bulgaria is one of the few countries with the most serious banking system”, Governor Iskrov arrogantly commented on the warnings coming from high-ranking external sources. In his episodic public appearances, he and his deputies shower their work with superlatives such as: “Our banking system is the best regulated and the best managed”, “BNB thinks about everyone, about customers and depositors”, “We don’t need membership in the European Banking Supervision”. Specific ideas for synchronizing the legal framework with that of the EU, the head of ABB Hampartzumyan commented as follows: “If they are accepted, there will be a serious imbalance in the work of the banks”.
However, the BNB is clearly aware of the prepared scenarios and at the end of May, only a month after the adoption of Ordinance 8, the Administrative Board changed the required collateral percentage on the amount of bank exposures from 1 to 3. The wording is interesting: “in order to meet the treasuries the effect of non-cyclical, systemic and macroprudential risks”. The manager has doubts about whether this change will prevent looming “systemic risks” and shrewdly withdraws his savings.
In the middle of the year, you can already feel the smoldering tension in the basket of what have become known as “rotten apples”. In “elephant in a glass shop” style, the General Prosecutor’s Office begins inspections in KTB and its related companies. Formally, the “Protest Network” report against Vasilev, Peevski and Barekov from March 2014 was used for this purpose. There is no information on what the prosecution did with the report in its part about the last two. Helpful media formulate the horizon of expectation. KTB realizes that the same media are not repaying their loans and send them notarized invitations. State-owned companies and large private companies withdraw their money from the bank. The “random” distribution of cases sends three legal disputes between yesterday’s partners Peevski and Vassilev to the media star judge Chenalova in one week in June. By sheer chance, she decides all three in favor of the first. It becomes clear that the script is in progress. The central bank continues to sleep with its eyes open. Prime Minister, Deputy Prime Minister, deputies do not take a position on the matter. They live in some other reality. At one point, they replace silence with contradictory statements. On June 17, ten days after the start of the study, the governor of the BNB showed signs of life. From that moment on, with inadequate actions and statements, he regularly “pours fuel on the fire” and methodically undermines the authority and trust in our oldest institution, and indirectly undermines the already unfavorable investment climate in the country. With the exception of the firefighting actions to save the FIB with state aid (obviously not foreseen in the consequence scenario), the BNB totally abdicates its obligations, and periodically tries to transfer its responsibilities to the National Assembly, the IMF, the World Bank, and whoever else comes to mind. And there is nothing accidental about that. For years, the SC has made sense of its existence solely by extending an administrative umbrella over the actions of commercial banks.
Along with the tension with FIB, DANS is also coming out of lethargy. The agency scares those who “undermine the banking system” with SMS. He even makes operetta arrests. Fears that the new favorite bank will be slipped once again show the lack of an adequate model and reasonable management of the system.
Early parliamentary elections and the long formation of the new government shift the focus of attention away from fundamental financial problems. Declarative promises to seek responsibility from the guilty are quickly replaced by explanations of procedural impossibility. Conditionalities and behind-the-scenes commitments speak for themselves. It will be a real miracle if the prosecutor’s investigation against the governor of the BNB, initiated by the godfather’s shame, is not stopped. At most, his deputy, who has been in office for less than a year, should burn like a fuse. He doesn’t seem to know the Law on the BNB and doesn’t want to think about what happened there. The head of DANS also does not accept that he is at fault. Gordo states that for 20 years he has learned to be silent. In short: it advises us to forget what happened during the year. New surprises will soon be served to distract the audience. And they are not late. The pension system is about to fail. And this is a bomb with a high TNT equivalent. Enough to shake the newly elected ruling coalition and silence the echo of the bank robbery.
Let’s try to imagine how the financial soap opera of 2014 would have gone if Bulgaria was not a member of the EU and there was no Currency Board in the country? Certainly the guaranteed deposit threshold would not have been €100,000. Depositors in KTB would not have been able to access their guaranteed deposits until now. The BNB most likely “performed” hyperinflation to clean up the accumulated problems. The “random” distribution of cases in the court system would not be discussed. The SJC would not have needed to act against its will. The attorney general would not have to support reform of the judicial system.
How do we send the year?
Even the officially reported over 23% bad loans, the lack of foreign investment, shrunk lending, increased fees, lower deposit rates and a more modest reduction in loan rates are not able to shake the financial sector managers out of lethargy. The increase in the deposit base, instead of turning on a signal lamp for a lack of confidence in the investment climate, is interpreted as confidence in the banking system!?
I will not dwell on the imitation of the legislative and administrative activities of the BNB, lobbyist MPs and the three governments. The immature ideas about: merger of the CPC with the CPC, changes in the NC, Law on CTB, bank holiday, the “insights” about the lack of synchronization in the legal framework with that of the EU and the like, about the series of insane, mutually exclusive explanations, outright lies , pathetic excuses and “rescue” ideas launched into the public space. However, it is good to remember their authors, because a short memory is a guarantee that these follies will be repeated. A colleague of mine successfully collected the main financial comedians in a collage under the title “Band of the Year”. No, it’s not far-fetched at all. Because they themselves have recently demonstrated well-deserved pride in what they have achieved. Perhaps rightly so.
The history of the country does not know a bigger robbery than the one with KTB. Its reflections in 2015 and the following years will cause processes and events in the country’s finances that will affect the personal condition of all households. These effects will not be positive, but will be loaded with fateful significance for more than one generation.
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Georgi Atanasov, analyst from the Bulgarian Financial Forum.
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