"I do not believe the Bulgarian bank system will crash soon," Levon Hampartzoumian, Chief Executive Officer of Unicredit Bulbank and Chairman of the Executive Board of the Association of Banks in Bulgaria, told a conference in Sofia entitled Second Decade of Growth: Risks and Opportunities.

Even though the banking system would not crash soon, it had no experience in working under slow economic growth that was normal in a mature market, Hampartzoumian said. Adapting to this would be a challenge.

To ensure the stability of the banking sector, banks should be more cautious when extending loans as rapid credit growth could lead to discontent with all parties involved. If continued, in several years the practice would lead to an increase in bad loans.

While the economy is growing, there would be no problem, but in bad years many borrowers would default, he said.

The Bulgarian banking system needed a credit agency, according to Hampartzoumian. The task of the agency would be to record all loans. Currently, loans given by leasing companies and consumer credits were not recorded and the portfolios were not stable, he said.

These loans should be recorded and monitored by a credit agency.

In addition a system of risk management should be set up as part of a mini reform in insurance deposit, Hampartzoumian said.