The Bulgarian National Bank has adopted new capital adequacy requirements aligned with the EU Capital Requirements Regulation III (CRR III), effective from January 2027. These changes significantly impact the regulatory landscape for banks and financial institutions operating in Bulgaria.
Key Changes
- Output floor implementation: A 72.5% output floor will be phased in, requiring banks to hold capital based on at least 72.5% of risk-weighted assets calculated using standardized approaches
- Credit risk standardized approach: More granular risk weights for real estate exposures, specialized lending, and equity exposures
- Operational risk: New standardized approach replacing the basic indicator and advanced measurement approaches
- ESG risk integration: Banks must incorporate environmental, social, and governance factors into their risk management frameworks
Impact on Lending
The new requirements may affect lending practices, particularly in real estate and SME financing. Banks may need to adjust their capital planning and lending criteria to maintain compliance while remaining competitive.
Transition Timeline
The phased implementation begins in January 2027 with full compliance required by 2030. Banks should begin preparing now by assessing the impact on their capital ratios and business models.
For detailed guidance on how these changes may affect your institution, please contact our Banking & Finance practice.