Bulgaria Banking System Is Stable - Report (Novinite.com)

"The Bulgarian banking system is stable, liquid and profitable, and banks have enough provisions against defaulting loans.
This statement was made by Violina Marinova, the chairperson of the managing board of the Association of Banks in Bulgaria and CEO of DSK Bank, in an interview for the Bulgarian Information Agency (BTA).
Marinova commented on the announcement made by the rating agency Moody's that there was a possibility for downgrade in the ratings of the Bulgarian banks, DSK and First Investment Bank.
"At the moment the Bulgarian banks in general and DSK Bank in particular are stable and we have nothing to worry about," Marinova told BTA.
In her words, Moody's review of the two banks' ratings will last three months and a rating action is not expected before that.
Defaulting loans make up 8,2% for the whole banking system, which is a reasonable level, Marinova commented.
She added that there was no data to show that Bulgaria is in recession".

Then why to worry? The customers we have that have seen their sales drop by 80% to 90% are probably some unlucky exception. We have been in discussion with some large international banks during the past weeks to help them sort out their credit problems. They have a very different view of the situation in South-Eastern Europe. But these again "unlucky" banks will probably have collected all the bad credits in the region, which of course the local banks would not have done as they are "well" managed.

I can tell you the story of at least one large bank that looks like a Ponzi Scheme.

It reminds me of the story of Werner K. Rey in Switzerland during the last real estate crisis (see Wikipedia: His career took a turn during the 1990/91 recession, and, while no allegations of wrongdoings were raised against Werner Rey in connection with the collapse of his multi-billion Omni Group, he was charged in 2001 with a controversial judgment for attempted fraud in relation to the public offering of Inspectorate in 1986 at which both the underwriting bank (witness of the prosecution) and the shareholders incurred spectacular gains of up to triple of the stock’s nominal value. After fleeing Switzerland for a four year stay in the Bahamas, Rey was arrested and deported to Switzerland where he spent the next four years in gail).

At the time I was working for the restructuring department at UBS and we were very happy, that for some strange reasons, nobody had financed him (lucky we).

I would suggest to the Eastern European banks to have a look at their credit portfolio and think again about risk valuation. Start to organise your workout department before it is too late. We can help, we have been through 3 capitalists crises during the past 10 years, which very few people have done in Eastern Europe.