Successfully completed twinning project MN 08 IB FI 01 with the participation of the Bulgarian Financial Supervision Commission

Today, the Bulgarian Financial Supervision Commission (FSC) in consortium with the Bulgarian National Bank (BNB) and De Nederlandsche Bank (DNB) on the one side, and the financial regulators of Montenegro – the Central Bank of Montenegro (CBM), the Securities and Exchange Commission (SEC), the Insurance Supervision Agency (ISA) and the Ministry of Finance of Montenegro, on the other, successfully completed the 24 months’ twinning project MN 08 IB FI 01 “Strengthening the regulatory and supervisory capacity of the financial regulators”. The project was launched on 30 November 2009, financed by the European Union (EU) through the “Instrument for Pre-Accession Assistance” with a budget of €1,199,966.94.
The project has contributed to the harmonization of the Montenegrin legislation with the EU acquis communautaire in the area of banking, securities, pensions, insurance and anti-money laundering and terrorist financing (AML/CFT), as well as to strengthening the financial stability, the cooperation between the beneficiary country (BC) institutions and enhancing their administrative capacity. The project results are an important step towards the preparation of the country for the negotiation process to EU accession.
The main results achieved are as follows:
– 8 new laws were prepared, 3 of which were adopted by the Parliament: the Law on Financial Stability Council, the Law on Take-over Bids and the Law on Investment Funds.
– An Action Plan for Basel II implementation, a new Capital Adequacy Decision, a framework for the implementation of Pillar 2 requirements of Basel II Accord and the respective guidelines, manuals and reporting forms were prepared. This will allow the CBM to plan its work over the next few years and help it set priorities. 
– A Financial Stability Council was established and action plans for crisis management situations prepared. 
– Gap analysis on the compliance of Montenegrin legislation with EU requirements was prepared as well as guidance papers for the transposition of all major directives in the area of securities and pension. Nine operational manuals and methodological instructions are ready and most of them are already implemented. Twenty four different trainings, including 2 international conferences, were carried out.
– In the area of insurance supervision Guidelines on how to perform self-assessment of the core principles of the International Association of Insurance Supervision (IAIS) were prepared, as well as a Self-assessment report of the IAIS core principles. Work plans for off-site and on-site inspections were adopted. The preparation for transposition of the Solvency II directive in Montenegro is on a positive track and a Road map is being implemented. Also, a National Bureau of Insurers was established.  As a result of the extensive training and joint work the insurance supervision was strengthened.
– AML/CFT inspection manuals, inspection programs, a MoU on cooperation between the BC institutions for the prevention of money laundering and terrorist financing were elaborated.
– Increased public awareness – an Investor protection and awareness strategy was drafted and is under implementation; information brochures on AML/CFT for the public and for the financial institutions, as well as on the capital market and the voluntary pension funds were issued and distributed; a SEC Information centre was established, a communication seminar for journalists and a seminar for law enforcement authorities on AML/CFT were carried out.

Additional information could be found in Section “Projects”, where the Brochure for the closing event of the twinning project is published:
http://www.fsc.bg/public/upload/files/menu/DipljanCrnaGoraBG_ENFINAL_0.pdf

Study of the state of the non-banking investment intermediaries for the period June – November, 2010

On the web site of the Financial Supervision Commission, under Statistics heading, Capital Market section for 2010, there has been posted a Study of the state of the non-banking investment intermediaries for the period June – November, 2010
The study makes a review of the basic indicators of this type of companies on an aggregate basis. The statistics show that the number of the non-banking financial intermediaries decreases, and the changes in the equity of the companies with minimum required capital of BGN 1 500 000 is considerably less than that of the other companies for the period under review. Nevertheless, there are not any non-banking investment intermediaries, which are in violation of the requirements for capital adequacy and liquidity, and the market value of the trade and non-trade book of these companies increased, except for the months of August and October. The market value of the securities, provided for fiduciary management, as well as their client assets grew for the period June – November, 2010 by respectively 3.08% and 5.63% (calculated as geometric mean for the reviewed period).

Students Visited the FSC

On January 19, 2006 the Financial Supervision Commission hosted a one-day visit by students from the 11th and 12th classes of Atanas Burov Professional High School of Light Industry and Economics, the town of Gorna Oryahovitsa. The students were acquainted in detail with the activity of the supervisory institution and its structure; thereafter, they visited the Bulgarian Stock Exchange and Elana Investment Company.

The visit was a continuation of the Development of the Non-banking Financial Sector in Bulgaria Educational Programme, which has been organized by the Commission for 3 years now for high school students from the schools of economics in the country. The aim of the said Programme is to provide professional education, information while promoting the financial culture among students, as well as furthering their knowledge with regard to the financial markets and the role of the regulatory institution. The idea of the above initiative is to enrich the knowledge of the growing up and to awaken their interest in the financial sphere.

Stoyan Mavrodiev: FSC is a pillar of the financial stability in Bulgaria

Prime Minister Marin Raykov, BNB Governor Ivan Iskrov and the President of the Bulgarian National Audit Office, Valeri Dimitrov, delivered speeches on the occasion of the 10th Anniversary of the FSC 

 

Last week the FSC officially celebrated its 10th Anniversary in the presence of Prime Minister Marin Raykov, the Minister of Finance Kalin Hristov, the Bulgarian National Bank Governor Ivan Iskrov, the President of the Bulgarian National Audit Office Valeri Dimitrov, ambassadors, representatives of the financial community in the country and partners.

 

In his opening speech the Chairman of the FSC Stoyan Mavrodiev stressed that it is the good work and responsible behavior of the institution that have contributed to keeping Bulgaria financially stable without serious disruptions and without the need of loans. As a Member of the Financial Stability Council, the FSC works together with all the institutions concerned for making sound policy and averting experiments in the financial field. „Despite all the difficulties that the country and its citizens face, Bulgaria has been relatively stable throughout the global crisis“, he added. Stoyan Mavrodiev focused on the successful international performance of the Commission, which is actively involved in the new European supervisory architecture.

 

In his speech Prime Minister Marin Raykov said that the creation of strong, independent, effective and accountable regulators is a prerequisite for the proper functioning of any economy. The purpose of the 2003 reform was to create a regulator to consolidate and ensure effective supervision of the non-banking financial sector. According to the Prime Minister, the effects of the banking and non-banking sector regulation are visible in various aspects of the economy. He stressed that the example of the well structured regulators in the financial sector should be applied in the reform process of all regulatory bodies in the country. Prime Minister Raykov reported that as a result of the activities of the FSC and the BNB, the financial sector in the country has sailed smoothly through the global financial crisis, which is a clear indicator of the regulators’ quality. „From the standpoint of the experience accumulated over the past decade and the supervisory capacity within the FSC, it can be safely stated that the creation of a unified regulatory authority in 2003 was a modern and effective solution helping to build a stable non-banking financial sector“, concluded the Prime Minister.

 

The Governor of the Bulgarian National Bank Ivan Iskrov, who was involved in the introduction of the FSC Act, presented a brief history and the reasons for the establishment of the Commission. „We strove to create a strong, united, independent regulator of the financial markets similar to the banking supervision through the merger of the three agencies dependent on the executive power – the State Securities Commission, the Insurance Supervision Agency and the Agency for Social Insurance Supervision“, said the Governor. According to him, the strong personal and financial independence of the FSC, which should be accountable to the National Assembly and the public, is the key to a good operation. „Over the past few years, the Financial Supervision Commission went through a very difficult period of intense audit and check-ups including attempts to subordinate the regulator and experiments, such as budget cuts, etc., but it resisted, which means that its mechanism has been correctly set“. Mr. Iskrov recalled that the previous Minister of Finance was trying to take BGN 2 bil. from the Silver Fund, but the idea was undermined by the BNB and the FSC with the support of the ECB and the IMF, allowing today’s fiscal reserve of the country to be nearly BGN 5 bil. In his speech, the Governor of the Bank also said: „Today, the Financial Supervision Commission works very successfully with its Bulgarian and European partners. The Commission has a good reputation on an European level, which is very important for our country“.

The President of the Bulgarian National Audit Office, Prof. Valeri Dimitrov, who was also one of the architects of the Commission 10 years ago, said that the FSC is a stable institution which has proved to be very efficient. Along with the National Bank, the Commission is a modern authority that follows the best practices. Prof. Dimitrov wished Mr. Mavrodiev to continue his successful mission for effective regulation and supervision of non-banking sector, and the good interaction with the BNB and MoF.

Stoyan Mavrodiev met Bill Clinton and Wesley Clark in Vienna

The Chairman of the Bulgarian Financial Supervision Commission – Mr. Stoyan Mavrodiev visited the Second annual international forum organized by the Centre for Global Dialogue and Cooperation in Vienna, Austria. As the sole representative from a Bulgarian state institution who participated in the event, he held meetings with President Clinton, General Wesley Clark – Supreme Allied Commander Europe of NATO 1997-2000, and the governing body of the Qatar Investment Fund, headed by its President – Professor Al Meer. They discussed a number of opportunities to attract foreign investment in the country to generate revenue for the budget of Bulgaria of over 100 million euros, which could result in new jobs. Presentations and proposals were made during specifically organized meetings. Mr. Mavrodiev said: “I will inform the Prime Minister Borisov about the identified ideas for investment opportunities in Bulgaria as I will personally deliver the messages”.

The Chairman of the FSC took part in the discussions together with the official panelists at the event – Vladimir Kavaric, Minister of Economy of Montenegro, Anatoly Karpov – First Deputy Chairman of the Russian State Duma Committee for Natural Resources, Environment and Ecology, Giles Chichester – President of the European Energy Forum, and Dr. Claus Raidl – President of the Austrian Central Bank. The messages of the Prime Minister of Zimbabwe and of the Deputy Prime Minister of Kosovo were outlined as well. The conference ended with the official award ceremony which was preceded by the keynote speech of Bill Clinton.

Statistics on the returns of the pension funds have been announced

The data on the achieved returns of the pension funds has been checked and summarized by the Social Insurance Division of the FSC. It has been verified that the presented returns data reflects the distributed returns in the individual accounts.  
Detailed statistics on the pension funds returns are published on our web site, section Statistics and Publications.               

Statement of the Financial Supervision Commission in connection with received media inquiries regarding the public company Gradus AD

The Financial Supervision Commission (FSC) performs regular ongoing inspections of the received financial and reporting information by all public companies whose securities are admitted to trading on a regulated market, including Gradus AD. For the period during which the company is public from 2018 to date, no violations of the legislation relating to the activities of public companies have been identified. Until the acquisition of public status, the activity performed by Gradus AD and its subsidiaries is not subject to supervision by the FSC.

From August 2018 to the end of April 2021 the total traded volume of shares in the company’s capital is 10,147,628.00 shares, lowest price of BGN 1.35 and highest price of BGN 1.85 The book value of one share of Gradus AD as of 31 March 2021 is BGN 1.30. The price of one share of the same company at the closing of the market on 05.05.2021 is BGN 1.56, and as of – 07.05.2021 – about BGN 1.45, i.e. there is a decrease of 6.4%. The above does not give grounds for suspicion of fraud or irregularities in the sale of shares of the company on the Bulgarian Stock Exchange AD.

During the period in which Gradus AD was a public company, the FSC did not receive any complaints or signals from persons who had invested in the company’s securities.

The shares of Gradus AD have been traded on the Bulgarian Stock Exchange AD since mid-2018, and in compliance with the regulatory requirements they have been admitted to trading on the regulated market on the basis of a prospectus approved by the Financial Supervision Commission. The Prospectus has been prepared for public offering of an issue of shares in the amount of up to 55,555,556 ordinary, registered, dematerialized, freely transferable shares with a nominal value of BGN 1 each. The offer covers up to 27,777,778 new shares offered for subscription with the capital increase of Gradus AD (new shares) and up to 27,777,778 existing shares (existing shares). In addition, the supply manager has the right to distribute an additional 6,638,888 shares (over allotted shares). It is envisaged that the final issue value of the shares will be determined at an auction in the price range of a minimum amount of BGN 1.80 and a maximum amount of BGN 2.35 per share.

In each procedure for confirmation of a prospectus for public offering of securities, the FSC is guided by the main objectives of financial supervision, namely:

 ensuring protection of investors in securities, including by ensuring conditions for raising their awareness of the capital market

 ensuring conditions for the development of a fair, open and efficient capital market and

 maintaining stability and public confidence in it.

When confirming a prospectus for public offering of securities, the FSC should establish its compliance with the requirements of the Public Offering of Securities Act (POSA), its implementing regulations and directly applicable European legislation, as well as ensure the disclosure prospectus of the entire required information for making an informed investment decision. In the procedure for confirming a prospectus, the provision of complete and accurate information should be established, which is necessary according to the specific features of the issuer and the securities offered to the public for investors to accurately assess economic and financial condition, assets and liabilities, financial results, prospects for development of the issuer, as well as the rights related to the securities. The scope of the necessary information to be disclosed in the prospectus is defined in the directly applicable European legislation, and according to the national legislation in the process of approving the prospectus includes both checking the availability of the required information and assessing the accuracy and completeness of the statement. in the prospectus information.

In reviewing the content of the prospectus, the FSC is guided by the above objectives of its financial supervision, and not by the specific characteristics of an issuer or the specifics of its activities.

The application for confirmation of a prospectus for an initial public offering of shares issued by Gradus AD was submitted to the FSC in April 2018, and at its meeting the FSC reviewed the submitted prospectus and decided to require the applicant to remedy some deficiencies and inconsistencies in the content of the prospectus within one month.

The FSC requested the adjustment and supplementation of the prospectus in order to ensure maximum disclosure of data on the financial position of the issuer and its group and the risks associated with its activities in order to enable investors to have the necessary information before deciding whether to invest in the proposed securities. In order to enable potential investors to make an informed and motivated investment decision and as far as the minimum issue value of BGN 1.80 and the maximum price of new shares of BGN 2.35 are higher than the book value of one share before the capital increase, the FSC requested to provide a detailed justification of the price range for determining the issue value of the shares.

As a result of the FSC’s request, the prospectus states that the minimum and maximum emission values are determined on the basis of a comprehensive analysis, including financial indicators, expected development of the group, risk factors, global and regional macroeconomic development, etc., as well as the desire of the issuer Gradus AD to achieve a diversified investor base. It is specified that the performed financial analysis includes generally accepted methods, including the method of market multiples of analogue companies, the method of discounted cash flows, the method of discounted dividends. Information was presented that the market multiple method identified a group of 15 companies operating within Europe, emerging markets and globally, which are focused on the main business of the group, namely the production of chicken and meat products. For this group the P/E (price per share to earnings per share), EV/EBITDA (value of the company to earnings before interest, taxes and depreciation) and P/B (market capitalization to equity) indicators were calculated. The median values of these indicators are stated to be 10.36 for P/E, 8.20 for EV/EBITDA and 1.77 for P /B. It is stated that the determination of the minimum issue value is based on the weighted average share value of BGN 1.88, received on these three indicators, and this price is further consistent with the issuer’s desire to achieve a broad investor base. It is indicated that the above supply interval is consistent with the triple appraisal expertise for valuation of the non-monetary contribution of the subsidiaries in the capital of Gradus AD, according to which the maximum appraisal of in-kind contributions amounts to BGN 544 million or BGN 2.46 per share, as again the maximum issue value is in accordance with the wishes of the issuer Gradus AD and the market conditions.

The Financial Supervision Commission is not and could not be a party to the public offering, nor is it able to independently determine or confirm the issue value of the shares determined by the issuer. The directly applicable European legislation requires the prospectus to disclose the price at which the securities will be offered, or, if the price has not been determined in advance, the method for determining the offer price. The applicable legislation does not require the regulatory body to determine the issue value of securities, which is within the sole discretion of their issuer. A number of factors are important in determining the issue value of a share in a public offering, including, but not limited to, historical financial information and the current financial position of the company. That is why the turnover realized by the company does not have a direct impact on the issue price of one share of the company. In the specific case, the determined price range of the offer is a result of an assessment of the company by the market multiples approach of analogous companies, the method of discounted cash flows and the method of discounted dividends. The price range is in accordance with the performed triple appraisal expertise for appraisal of the non-monetary contribution of the subsidiaries in the capital of Gradus AD. This valuation was prepared by three independent appraisers appointed by the Registry Agency, it is final and the responsibility for its preparation lies with the appraisers who prepared it. In the exercise of its powers, the Financial Supervision Commission has requested detailed information on how the specified price range is formed and has provided disclosure of this information in the prospectus.

Gradus AD was established on 28.11.2017 and owns and manages the following subsidiaries, forming the Gradus economic group: Millennium 2000 EOOD; Lora-2004 EOOD; Gradus-1 EOOD; Zhuliv EOOD; Gradus-98 AD and Gradus-3 AD. Until the acquisition of public status, the activity performed by the Gradus economic group companies is not subject to supervision by the FSC.

The prospectus presents financial information for supervisory purposes, which is prepared in order to show what would be the financial result of Gradus AD if the company was established on 01.01.2017 and held the same number of shares / units of Gradus -1 EOOD, Gradus-3 AD, Millennium 2000 EOOD, Gradus-98 AD, Zhuliv EOOD and Lora-2004 EOOD, as it holds as of 31.12.2017. When compiling the unaudited financial information for supervisory purposes, the audited consolidated annual financial statements of Gradus AD and the audited annual financial statements as of 31.12. 2017 of Gradus -1 EOOD, Gradus-3 AD, Millennium 2000 EOOD, Gradus-98 AD, Juliv EOOD and Lora-2004 EOOD were used, as all listed annual financial statements have been prepared in accordance with International Financial Reporting Standards. The FSC also received the audited financial statements of the subsidiaries of Gradus AD for the three-year period of historical financial information.

The financial information for supervisory purposes has been prepared in accordance with the accounting policies adopted by the issuer Gradus AD in the audited annual consolidated financial statements for the period ended 31 December 2017.

The content of the prospectus for public offering of shares of Gradus AD includes a report dated 30.03.2018 on the assurance of the independent auditor on the compilation of financial information for supervisory purposes, included in the prospectus prepared by Krasimira Radeva, registered auditor and manager of Baker Tilly Klitou and Partners OOD, which contains a statement that:

 (a) the unaudited financial information for supervisory purposes has been compiled, in all material respects, according to the applicable criteria described in the accompanying explanatory notes; and

(b) the basis for preparing the unaudited financial information for supervisory purposes is in accordance with the company’s accounting policies.

In the proceedings for confirmation of the prospectus for public offering of shares of Gradus AD, the FSC has established compliance of the prepared prospectus with the requirements of the POSA, the bylaws on its implementation and the current Regulation EC No. 809/2004, as well as disclosure in the prospectus of all the information required under the current Regulation No. EC № 809/2004, which is a prerequisite for making an informed investment decision.

By Decision No. 542-E of 28.05.2018, the FSC approved the prospectus for public offering of an issue of up to 55,555,556 (fifty-five million five hundred and fifty-five thousand five hundred and fifty-six) ordinary, dematerialized, registered, freely transferable shares with a nominal value of BGN 1 each, of which up to 27,777,778 (twenty-seven million seven hundred seventy-seven thousand seven hundred seventy-eight) new shares to be issued as a result of capital increase of Gradus AD, Stara Zagora and up to 27,777,778 (twenty-seven million seven hundred and seventy-seven thousand seven hundred and seventy-eight) existing shares, with an issue value determined in the price range of BGN 1.80. (minimum issue value) up to BGN 2.35 (maximum issue value) and with ISIN code BG1100002184, as well as for public offering of up to 6,638,888 over allotted shares of the capital of Gradus AD, according to decisions of 29.12.2017 and 26.03.2018 of the General Meeting of the shareholders of Gradus AD and a decision of 30.01.2018 of the Board of Directors of the company.

Gradus AD has conducted a marketing campaign, including an investment presentation, a TV commercial, as well as Internet advertising aimed at potential investors. As a result of the marketing campaign, the information about the public offering reaches a wide range of investors, each of whom makes an independent choice whether to invest or not. The initial public offering of up to 55,555,556 shares of Gradus AD ended successfully on 19.06.2018, with 22,608,710 new shares subscribed and paid. as well as 22,608,710 existing shares, with an issue value of BGN 1.80 each. The public offering took place on the Bulgarian Stock Exchange AD, Segment for initial public offering, through the mechanism Initial Public Offering Auction (“IPO Auction”). All investors who subscribed for shares in the auction for public offering of shares of Gradus AD have participated under equal conditions in the offering within the set deadlines and the pre-announced price range. The final issue value of the shares in the amount of BGN 1.80 per share determined as a result of the auction is the same for both individual investors and institutional investors.

On 25.06.2018, BGN 81,391,356 were received to the accumulation account of Gradus AD, representing: BGN 40,695,678 as funds from the initial public offering of shares from the increase of the company’s capital and BGN 40,695,678 funds from the initial public offering of existing shares of the company.

The registered capital of Gradus AD, Stara Zagora at the time of issuing the confirmation of the prospectus for initial public offering of shares from capital increase amounts to BGN 221,000,000, divided into 221,000,000 ordinary, registered, dematerialized, freely transferable voting shares and with a nominal value of BGN 1.00 each, as a result of the issuance of 22,608,710 new shares of the same class, with a nominal value of BGN 1.00 each, under the conditions of initial public offering, the company’s capital has been increased to BGN 243,608,710, divided into 243,608,710. ordinary, registered, dematerialized, freely transferable voting shares with a nominal value of BGN 1.00 / share. The capital increase was entered in the commercial register on 17.07.2018, in view of which, pursuant to Art. 110, para. 3, first sentence in connection with para. 1, item 1 of the POSA, Gradus AD, Stara Zagora became a public company.

As can be seen from the Share Registration Act issued by Central Depository AD, the proposed 45,217,420 shares (including newly issued and existing shares) have been subscribed by 1,135 persons (81 legal entities, including mutual funds and pension funds, as well as by 1,054 individuals).

During the initial public offering of shares of Gradus AD no violations were found, as all applicable to the date of its implementation requirements of applicable law were met. The information disclosed in the prospectus for initial public offering of shares issued by Gradus AD is in full compliance with the requirements of the applicable legislation, as the prospectus indicates the persons responsible for the completeness and accuracy of the data presented in the prospectus.

The Financial Supervision Commission acted on its own initiative and assigned an inspection of the activity of the public company Gradus AD regarding the observance of the applicable special legislation from the moment of acquiring the status of a public company. In case the FSC receives additional information, data and / or documents relevant to the inspection, they will be analysed and the results of the analysis will be included in the inspection.

Statement by Mr. Vasil Golemanski, Chair of the Financial Supervision Commission in the quarterly bulletin of the Association of Banks in Bulgaria

Integrated Capital Markets: Bulgaria’s Path to Sustainable and Innovative Finance
Снимка_В.Големански_АББ

In times like these, the direction of development is not dictated by circumstances but by the choice to act purposefully with a clear vision. As Europe strives for better integration of its capital markets, Bulgaria must not only catch up but also be part of the change towards sustainable and innovative finance.

A strong banking system remains the backbone of the economy, but the new realities require more – more flexible forms of financing, digital connectivity and transparent access to investments. For long time now it’s not just about regulations, but about building an ecosystem in which markets develop sustainably, businesses grow and citizens participate in an informed way.

Change is underway. The Digital Operational Resilience Act entered into force across the EU in 2025 and sets specific requirements for the financial sector regarding cybersecurity and ICT risk management. At the same time, the MiCA Regulation, which represents the first EU framework for regulating crypto-assets, is already in force and national legislative measures, implementing the Regulation, are about to be adopted by the Bulgarian Parliament. These initiatives are clear signals that the financial system is moving towards higher standards of security, innovation and trust. In this context, the Financial Supervision Commission organised an important conference for the non-banking financial sector, promoting the joint work in the process of implementing the two regulations and the achievement of resilient environment.

It is often spoken of the Eurozone as a political goal, but for those who are busy in the capital markets’ area it has a broader significance, it is an affirmation that Bulgaria should be observed as a stable and predictable partner. The accession will eliminate currency risk, reduce transaction costs and facilitate cross-border investments. These opportunities should not be missed. The Financial Supervision Commission, as a responsible authority directly involved in the process of the Republic of Bulgaria’s accession to the euro area, monitors the progress of all supervised entities in introducing the euro in the non-banking financial sector.

The results of the survey conducted by the Financial Supervision Commission indicate that the preparation of the non-banking financial sector for introduction of the euro is at a very advanced stage. Many participants have already taken concrete steps for adaptation, amongst them updated internal plans, informing customers and partners, and information systems updates. Despite the progress, there are still sectors, like the technology and the regulatory one, which need to be improved.

The Financial Supervision Commission actively works to upgrade supervisory capacity through innovative digital tools, supports sustainable financing and ESG standards, and promotes a culture of openness and transparency among market participants. Apart from that, it acts as one of the initiators of the process of implementing the principles of corporate governance in Bulgaria, following internationally recognized standards for transparency, accountability, effective supervision and protection of shareholder rights. It is a key part of the requirements set by the OECD to strengthen confidence in the financial sector in Bulgaria. Ensuring good corporate governance not only improves the stability of markets, but also attracts new investments and supports the long-term growth of the economy.

The insurance sector and the pension funds have the actual potential in becoming a sustainable source of financing for the economy. The multi-fund model already allows consumers to choose between different investment strategies in accordance with their life cycle and risk tolerance. The next step is to fully use this tool to direct savings towards productive investments and to support the real economy.

For the market to be vibrant, it needs active and well informed participants. This means better financial literacy, digital solutions for access to products and clear communication. The development of capital markets in Bulgaria cannot be left to the natural course of events – it requires strategic vision, institutional capacity and broad public support. Only through partnership between the public and private sectors, through innovation and trust, can we build a modern and sustainable financial environment.

In 2025, the Financial Supervision Commission has set itself the goal of demonstrating that the power of regulation is not in restriction, but in creating an environment for trust, innovation and growth. Stable supervision, a predictable regulatory framework and an open dialogue with the participants in the sector – this is the model by which Bulgaria confirms its place in the heart of the European financial architecture.

You can see the entire newsletter here.

Statement by Mr. Boyko Atanasov, Chairman of the Financial Supervision Commission in the quarterly bulletin of the Association of Banks in Bulgaria


Financial Supervision Commission – committed to sustainable results in digitalisation, green investments and regulatory amendments

Boyko Atanasov

In the context of post-Covid pandemic, the global digitalisation, the European Green deal, the outbreak of military actions in Ukraine, and on the threshold of our accession to the Eurozone, the Financial Supervision Commission  (FSC) continues to work for the continuous stability of the insurance market in Bulgaria, for establishing innovations in the regulation of capital markets, as well as, for complete austerity measures and absolute transparency of the actions and processes of the pension insurance market.
The development trend of the capital market is in the direction of digitalization and creation of conditions for more participants and reduced administrative burden. The positive interconnection between innovation and financial technology has already changed the appearance of the typical consumer behaviour and thinking, and this process has led to new opportunities for the implementation of optimized business models. At the same time, we, the financial sector participants, have the mission to analyse and forecast the potential risks. In this direction precisely, the FSC focuses its activity to balance between the promotion of innovation by the investment companies and the consumers’ protection from the negative aspects that the new online space implies.
In view of achieving results regarding the adopted development strategy, the Financial Supervision Commission went through specific steps such as evolving the financial literacy of the financial services’ consumers and investors, improving the communication process by holding regular meetings with FinTech companies to discuss minimum risks and maximum benefits from technology, promoting development of startup companies by activating the possibilities of the created Innovation Hub, as well as, adapting the new regulatory framework for collective financing. Together with the participants of the non-banking financial sector, we create a sustainable and favourable environment for innovative business with an emphasis on the need for partnership between the national regulator and the business.
Dynamics in technology development and digitalisation play a key role in changing consumer attitudes and growth expectations. The role of the FSC is to provoke the achievement of synchronicity between the regulatory requirements and their implementation in the digital environment, with the ultimate goal being to reduce the administrative burden. Part of the concrete results are the functioning Innovation Hub, the providing of a single point of contact with FinTech companies and the amended regulations for accessibility of small and medium enterprises to the capital markets. The mobile application of the FSC, the establishment of a unified information system for submitting and receiving information from supervised entities in electronic standardized format are in the process of creation.
One of the most important developments in the current situation is the proposal of the European Commission to introduce the European single access point (ESAP), the framework, which would integrate innovations in order to reduce administrative burdens. Its aim is to provide centralised public access to all the necessary information in terms of financial services. The ESAP aims at providing easy, fast and comparable access to data on European companies for the investors, thus facilitating the access to financing of European companies. ESAP is expected to contribute to the further integration of financial services and capital markets within the EU single market and to promote the development of smaller national capital markets and economies by providing greater visibility for them. FSC, in line with the European Commission, will ensure the application of the future legislation and will create conditions for the realization of the ESAP project.
The “Green deal” is another topic of great importance for both FSC and the EU. Environment, social responsibility and transparent governance are already an integral part of the strategic programs of the institutions and regulators in Europe. In accordance with the objectives of the EU, at national level FSC provides support through concrete actions in directing national and European financing sources for more sustainable economy, planning instruments for post-crisis business recoveries and balancing regional development.
I do believe, and I see the concrete results, that the Bulgarian regulator in the non-banking financial sector strategically arranges its actions in supporting the achievement of the "Green Deal" goals. In this line of thinking, all of us, as a society, have the responsibility of focusing on renewable energy, energy efficiency, green buildings, clean transport and products created by the circular economy. Following the adoption of the European Green Deal, FSC's focus will be on financial risks to institutions and the financial system, as well as on sustainability risk (ESG risks).
When it comes to achieving sustainable targets, examples are always important. Green bonds are an appropriate financial instrument for large-scale sustainability projects, by giving access to a stable instrument for financing EU-taxonomy compliant green projects. On the other hand, investors in such bonds will be able to more easily assess and compare the sustainability of their investments, which will reduce risks and strengthen their confidence in the market. The new EUGBS voluntary standard will be open to all EU and non-EU issuers, including corporations, financial institutions and issuers of covered bonds and asset-backed securities, as well as governments and other public authorities.
In this regard, the challenges for the FSC to exercise its supervisory powers over capital market participants in compliance with the requirements set out in the Sustainable Finance Legislation Package, namely the Sustainable Finance Disclosure Regulation (SFDR), the Climate Benchmarks Regulation and the Taxonomy Regulation, are essential.
FSC is also a major participant in the process of creating the National Plan for the Introduction of the Euro in Bulgaria. The vision of FSC for this key process for the Bulgarian economy includes systematization of the necessary measures and actions in connection with the currency conversion of financial instruments. We intend to carry out the necessary monitoring of the expected stages for the adaptation of the clearing and settlement systems to work with the euro.
In the context of the current complicated international situation caused by the war in Ukraine, as well as the sanctions and restrictions imposed by the EU, USA, Canada and UK, upon the Russian Federation, the Russian Central Bank, and on various credit institutions, companies and natural persons, the FSC took prompt measures, whereat it published recommendations and guidelines addressed to the investment, insurance and social insurance sectors, through which it demanded from them to exercise extreme caution and perform intensive risk management policy before start investing in financial instruments issued by issuers connected to the Russian Federation.
The challenges we rise to, provoke our caution and concentration when trying to attain the goals set in order to enhance the consumer protection as well as to encourage the investors in a stable, well-regulated and transparent non-banking financial sector.
Against the background of this worldwide transformation, the FSC commences a new strategic period from 2022 to 2024. The change for the regulatory body includes long-term planning, a strong expert team, as well as decisiveness for developing innovations in the sphere of digitalization and the regulations on capital market development. The whole process will go along with a constructive dialogue which is planned to be conducted with all interested parties in the processes regulated by the FSC.
An important aspect of the development of the Bulgarian capital, insurance and social insurance market relates to the active and effective business communication aimed at developing conceptions and sustainable strategies. The goal we pursue is to provide predictability of our actions and to act impartially when taking decisions concerning the development of Bulgaria.

STATEMENT BY FSC

Invitation for independent external reviewers
for the Asset Quality Review of the Bulgarian pension funds sector and Balance sheet review of the Bulgarian insurance sector
 
The Financial Supervision Commission (FSC) is publishing new invitations for independent external reviewers on its website with a new deadline (March 31, 2016) for providing applications.
 
This new request for calls follows the assessment by the Steering Committee (SC) – composed by the members – the FSC and the European Insurance and Occupational Pensions Authority (EIOPA), and the observers – the European Commission (EC), the European Securities and Markets Authority (ESMA), the Bulgarian Ministry of Finance and the Bulgarian National Bank – of the current availability of resources within the firms which replied to the first call for independent external reviewers. It was noted that the capacity proposed does not match the needs for reviewing the insurance and pension fund sectors, as reviewers are currently busy with the statutory auditing and, for some of them, with the review in the banking sector.
 
Accordingly, the SC recommended to the FSC to postpone the start of the three-month data collection exercise by reviewers to July 15 instead of April 1, 2016. The date for publication of the results will be December 1 instead of August 15, 2016.
 
The cut-off date for the reviews in both sectors is changed to June 30, 2016.
 
An independent external reviewer, which already has submitted a proposal with regard to the previous invitation of the FSC for the same tasks and which wishes to participate in the selection pursuant to the present invitation, must within the above deadline for submission of proposal notify the FSC of its wish to participate in the selection and does not have to submit the documents which the FSC has at its disposal. The new invitations include minor changes and further clarifications compared with the previous invitations.

The full text of the two invitations is available at the following internet address: in Bulgarian and English