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Bad debts in Bulgaria tripled in a year – central bank

Thu, Mar 25 2010 11:06 CET

byThe Sofia Echo Staff

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Bad debts in Bulgaria tripled in a year – central bank

Photo: Julia Lazarova

Bad loans to companies and households added up to 14 per cent of the volume of regular loans, according to Bulgarian National Bank (BNB) data released on March 24 2010, and the amount of bad loans in February 2010 was triple the figure for the same month a year earlier.
 
In February 2010, non-performing loans totalled 4.7 billion leva. This was about 259 million leva lower than in January 2010. The sum was 1.6 billion leva in February 2009.
 
February 2010 saw a decrease in business loans, the second consecutive decrease in the past six months, Dnevnik reported BNB as saying.
 
The combined business loans portfolio was 30.7 billion leva after a drop of 181.7 million leva, about 0.6 per cent.
 
For the past 14 months, credit growth has been close to zero.
 
Businesses’ weakening debt appetite is coupled with postponed investment projects and banks’ reluctance to lend.
 
Bankers say companies are staying away from taking new loans, while lending requirements have become stricter.
 
Manyu Moravenov, executive director of real estate investment trust (REIT) FairPlay Properties, said: "We won’t take new loans. Exactly the opposite: we’ll try to renegotiate the principals on our existing banking loans and refinance our debt".
 
Valya Raleva, executive director of Gorna Oryahovitsa-based confectionery maker Zaharni Zavodi said that "[banks] have just raised the bar too high, asking for good results in the tough economic situation. Companies turned in nice profits one or two years ago but now it’s an entirely different picture. It’s not true that there’s no interest in loans, it’s just that banks have doubled the collateral."
 
Bulgaria’s business loan segment is in the midst of a second wave of renegotiations and restructuring. Firms sought new loan terms and conditions in the first half of 2010, when the financial and economic crisis deepened.
 
Household loans have decreased in the past three months, adding up to just more than 19 billion leva at the end of February 2010, down 23.3 million leva from January.
 
Mortgage loans increased by 42.3 million leva month-on-month to 8.5 billion leva in February 2010, according to the BNB figures.

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