Банкеръ Weekly



Statistics show that despite the low living standard in Bulgaria part of the population manages to save money. The amounts kept in safety boxes and in bank accounts abroad are not known. A steady growth in the balances of forex deposits of citizens and households can be noticed. The Bank Deposit Insurance Fund has contributed considerably to the increase of depositors' trust in commercial banks. Since the fund's establishment till end-2002 the amount of guaranteed deposits had been rising continuously and already reached BGN15,000 (full payment of one person's deposits in a bank, independent of their number and size). It is projected to gradually raise this threshhold to EUR20,000 in order to reach European standards.The inclination for saving money is an important indicator of the livings standards of each nation. Therefore, the fact that within about three years Bulgarians have almost doubled their savings in foreign currencies is quite curious. In February 2002 the Bulgarian equivalent of forex deposits was BGN2.8BN, while in december 2002 it already totalled BGN4.9BN. Do citizens and firms really get richer? Or is this increase a result of the foreign exchange rates? The other reasonable question is if the trust in banks is increasing? The answer can be found in the official interest statistics, published by the BNB.What is the structure of the depositsAbout two thirds of the forex deposits of enterprises and households are in US dollars. However, as a result of the global economic changes the preferences of Bulgarian firms and citizens for the US currency has begun to decrease. While in February 2002 75% of all forex deposits were in US dollars, in December 2002 this percentage dropped to 63. And as the trust in the US currency declines, savings in euro are rising (from 23% in February 2000 to 35% in end-2002.Deposits in the so-called mixed currencies are less than 2% and do not practically influence the structure of the deposits. In the varied basket of foreign exchange the most preferred currencies in Bulgaria are: the Swiss franc, the Britsh pound, the Japanese yen, and the Turkish lira. Deposits in US dollars In end-February 2000 the deposits in US currency amounted to USD1,041MN, and in end-December 2002 they totalled USD1,638MN, increasing by almost USD600MN within 34 months. The growth was almost entirely due to the citizens and households. Current accounts and savings deposits of the population within the same period went up by USD142MN, and fixed-term deposits increased by USD488MN.Enterprises maintained a comparatively constant monthly balance of both their current accounts (USD206MN on average) and fixed-term accounts (USD125Mn on average). The population preferred to keep its money in one-month deposits. 56% of the fixed-term deposits in February 2000 were for a period of one month, and the percentage in December 2002 ws 51. More than one third of the growth of deposits in US dollars (USD225MN) was due to the increase of one-month deposits of the population. This is almost half of the increase of fixed-term deposits of the population.Interest rates on deposits in US dollarsHow have the recession in the USA and the terrorist attacks of September 11, 2001 affected the interest rates on US deposits in Bulgaria?As all over the world! Tracing the dynamics of the interest rates offered by commercial banks until now, a persistent downward trend can be observed. The average weighted annual interest rates on enterprises' and households' current accounts in US dollars dropped from 1.67% in February 2000 to 0.91% in September 2001, and 0.69% in December 2002. The interest rates on fixed-term deposits declined from 4.30% in the beginning of the period to 2.31% in September 2001, and 1.57% in the end of last year.On the other side, the price of deposits goes down due to the incerase of their volume.Deposits in euroSince end-February 2000 till the end of 2002 the deposits in euro increased from EUR325MN to EUR883 (by EUR558MN). More than half of the growth (EUR359MN) was due to the increase of fixed-term deposits.The balances of enterprises' current accounts marked a growth of EUR117MN, and households' deposits (including savings accounts) rose by EUR82MN. Within the same period the population deposited in banks another EUR264MN in fixed-term accounts, and firms - EUR96MN. Thus, within less than two years the bank sector attracted EUR346MN from households and EUR213MN from the enterprises.The introduction of the common European currency as of the beginning of 2002 brought to light in Bulgaria the biggest fresh resource. The banks converted their clients' accounts without charging additional fees, and in December 2001 alone the deposits in euro jumped record high - by EUR140MN. Then the relative share of deposits in US dollars dropped steeply (to 66% of the aggregate forex accounts) and the deposits in euro increased to 32 per cent. Savings in US dollars increased by USD3.4MN only.The interest rates on enterprises' and households' current accounts in euro dropped from 0.75% in February 2000 to 0.52% in September 2001, and remained at the level of 0.55% in December 2002. The interest rates on fixed-term deposits for the above-mentioned period changed from 2.42% to 2.59% and declined to 2.21% in the end of last year.

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