Bulgarian National Bank (BNB) governor Ivan Iskrov said on March 5 that the institution saw no need for additional measure to re-capitalise lenders.

Bulgarian banks had healthy capital adequacy ratios, averaging at above 14 per cent, which would be boosted to 18 per cent when the lenders incorporate 2008 profits, as required by the central bank, Iskrov said.

"There is no financial crisis in Bulgaria, only an economic crisis that spread from our main trading partner, the European Union," Iskrov told the Bulgaria Business and Investment Summit held in Sofia's Sheraton hotel on March 5-6 2009.

BNB has already relaxed mandatory reserve requirements on banks in December 2008, which it followed up by saying in February that lenders would be required to set aside provisions for loans that had not been serviced for 180 days, up from 90 days now.

Asked to comment on recent warnings from World Bank president Robert Zoellick that Western lenders were draining the capital of their Eastern European subsidiaries, Iskrov said that BNB did not see any indication of that happening in Bulgaria.

Unlike some of its neighbours, Bulgaria's banks were not exposed to currency risks because of the currency board. Foreign currency loans were almost exclusively denominated in euro, to which the Bulgarian lev is pegged, Iskrov said, thus Bulgarians did not have the same difficulties servicing loans like residents of other countries did with loans denominated in Swiss francs.

"Effectively, Bulgaria is an informal member of the eurozone," Iskrov said, but declined to forecast when the country could submit a formal application to join the ERM2 mechanism, the waiting room for the eurozone.

High inflation remains the main obstacle in Bulgaria's way to join the euro area, but Iskrov said he was optimistic that inflation would "settle down" this year.