Within the next two years, Bulgarian banks will have to design internal guidelines for the assessment of the credit risk exposure to small- and medium-sized enterprises (SMEs).
The new internal set of rules will align the operation of the local banks to the capital standards established under the Basel II standard. The challenges facing the Bulgarian banks were discussed on January 18 in Sofia at a conference on access to SME loan financing after 2007 when Basel II will take effect here.
EU data show that the banks in the member states do not request additional information from 30 per cent of SME borrowers. Basel II will discontinue this loose approach to lending and will require banks to prepare comprehensive profiles of the borrowers, said Christian Marlier of the European Savings Bank Group. The accord establishes more rigorous risk measurement requirements entailing that each bank assess and provision the credits on strictly case-by-case basis.
