On September 5, shareholders of the Greek-owned Piraeus Bank Bulgaria voted to accept a capital increase of 90 per cent to 316 million leva. As The Sofia Echo reported in July, the bank will issue 148 643 080 shares with a face value of one lev; all of which will be paid by the major shareholder Piraeus Bank Athens by October 3. This will move Piraeus Bank to the top place in terms of capital in Bulgaria.

At the beginning of this year, Piraeus Bank Bulgaria acquired the retail banking unit of ING Bank, which allowed the former to sell the pension and life insurance products offered by ING in Bulgaria. Recently, it also purchased the leasing company Dirent Bulgaria, part of the Greek Dirent Group. The country’s seventh largest in terms of assets, Piraeus Bank tripled its net profit to 9.8 million euro last year and is rapidly expanding in the retail lending sector by opening new branches. The bank entered the Bulgarian market in 1994 and currently has 71 branches throughout the country.

While Piraeus Bank Bulgaria was busy with its capital increase, the competition concentrated on increasing their interest rates on loans.

By September 10, most Bulgarian banks had increased their loan rates, but some of them were starting to increase the interest rates on deposits as well. The French-owned Societe Generale Expressbank said that it would increase the interest rates on deposits. The interest rate would now be six per cent with a fixed period of two years, which was a one per cent increase. UniCredit Bulbank had already decided to increase its interest rates on deposits, and it reached five per cent for deposits with period of more than a year.

DSK Bank also raised its base interest rate on consumer loans by 0.5 per cent. From September 10, the interest on loans for individuals stood at 5.19 per cent, up from 4.69 per cent before. The interest on housing loans and mortgages was been increased from 3.69 per cent to 4.19 per cent. No changes would be made to the base interest rate on existing and new overdraft credits.

As The Sofia Echo reported on August 31, the increase was prompted by the higher minimum reserves each bank was required hold with the Bulgarian National Bank (BNB). From September 1, BNB raised the reserves from eight per cent to 12 per cent as a measure against the rapid growth in loans. First Investment Bank was the first to update its interest rates to reflect the higher price of the credit resource.