Bulgaria’s Finance Minister Simeon Dyankov has requested "additional technical assistance from the European financial institutions on whether there is liquidity drain to Greece from Greek banks operating on the Bulgarian banking market," he was quoted by Bulgarian news agency BTA as saying.

"I will either get such a reassurance in three weeks, or start worrying more," Dyankov was quoted as saying on March 1 2010.

Prime Minister Boiko Borissov told news agency Reuters that Bulgarian banks has taken steps to prevent Greek banks from withdrawing liquidity from their Bulgarian subsidiaries.

"We’ve taken measures, we’ve informed the European Central Bank (ECB) and all other entities concerned by the matter. The intervention of France and Germany (to help Greece) for me is enough of a guarantee that a crash in the banking system would not be allowed," Borissov was quoted as saying by local news agency Focus.

Officials from Greek banks operating in Bulgaria told Dnevnik there is no liquidity outflow.

"There’s no such outflow of deposits from Postbank to our main shareholder EFG Eurobank," Postbank executive director Assen Yagodin told Dnevnik.

His statement was echoed by an official from another Greek bank, who spoke on condition of anonymity and said he does not believe other banks are taking such action either.

Bulgarian National Bank (BNB) last year requested shareholders to confirm their commitments to their Bulgarian subsidiaries and pledge not to withdraw funds.

BNB urged banks to put their profits in their capital and scrap dividend payout from their 2008 profits, a recommendation it is expected to repeat this year despite the poorer performance.

As at end-2009, the Greek-owned Bulgarian lenders - United Bulgarian Bank (UBB, Postbank, Piraeus Bank Bulgaria, Emporiki Bank Bulgaria and Alpha Bank Sofia Branch - ran assets to the tune of 20.5 billion leva, which represents 29 per cent of the sector’s total.

Their household and business loan portfolio was 16.4 billion leva, amounting for 32 per cent of the total, and deposits, at 10.9 billion leva, made 25 per cent of all.

Meanwhile, the European Investment Bank (EIB) has extended a 40 million euro line of credit to Piraeus Bank Bulgaria, a unit of Greece’s Piraeus Bank, to lend on to small and medium-sized enterprises.

The Bulgarian lender said it will provide financing at "competitive interest rates," but did not specify.

The loans are capped at 12.5 million euro each, with grace periods available depending on projects. The bottom repayment period is fixed at two years, extending to up to ten years,

The bank will bankroll projects in the industrial sector, tourism, agriculture, healthcare, education and green initiatives. The financing could be used for equipment purchases, new product development, distribution network expansion, patent acquisition as well as for medium- and long-term working capital.

The credit line comes under a 120 million euro credit agreement between the EIB and Piraeus Bank, which will be split between the Greek bank’s operations in Albania, Romania, Bulgaria and Serbia.

In other news, Postbank has become official agent of Clearstream Banking Luxembourg, a subsidiary of post-trading services supplier Clearstream, the bank said.

The partnership will enable the Bulgarian lender to offer access to the local market to foreign investors.

Under the terms of the agreement, which came into force on March 1, Clearstream customers investing in Bulgaria will be able to use a range of services such as transfer, storage and administration of financial instruments.

Source: Dnevnik.bg