The Bulgarian National Bank eased the reserve requirement to 10% from 12% in a move which will untie some BGN 1.1 billion of attracted resources given the current level.

The decision takes effect on December 1, 2008 and applies to banks’ all attracted resources.

In addition, as of January 1, 2009 commercial banks will deposit with the watchdog 5% of the resources they attract from abroad, which is half the current level, and be required no minimum reserves on funds from the central and local government budgets.

The new requirement is very good news for the economy as it will allow banks to prop up local businesses, and if businesses are fine, everyone is fine, Violina Marinova, DSK Bank chief executive and chairwoman of the Association of Banks in Bulgaria, told Dnevnik.

EIBank CEO Petar Andronov said this was a positive and expected step after BNB committed itself to pursue a countercyclical policy.

The measure will ease interbank lending rates and help banks improve liquidity management, Andronov said adding he expects the central bank will take more action in line with its countercyclical policy.

The central bank’s decision to cut the minimum reserve ratio is due to the fact that the increase of more than a year ago to a great extent achieved its purpose, the statement said.

On September 1, 2007 the watchdog tightened the requirement to 12% from 8% to cool down the frantic credit market, which sped up 63.7% year-on-year for the full 2007 compared to 24% year-on-year for 2006.

In October the market topped BGN 48.6 billion slowing down to 44.5% on the year.

The reserve requirement cut is the next in a series of measures the central bank took to thaw the credit market.

At the start of October the watchdog decided to consider as reserve assets half of the cash lenders hold in their vaults pumping out some BGN 600 million of liquidity.

Commercial banks were also allowed to use 1/12 of their reserves at a market rate with no penalties imposed.

Both measures stay in force.

(Dnevnik)

Indices on the Bulgarian Stock Exchange rebounded from Wednesday’s brief drop making up for much of the losses from the previous session.

After technical glitches halted trading for the record some three hours, SOFIX of the 20 blue-chip companies picked up 1.79% passing 360 points.

Dnevnik 20 of the biggest and most liquid companies made a more modest gain of 0.61% closing at 56.28 points.

“Now we are looking at a new strategy by some of the players – they buy when some shares plunge to sell out as soon as they can make a one or two percent return,” said Ivo Seizov, executive director of investment brokerage Bulbrokers.

The approach has been so far used mainly in foreign markets and derivatives trade but it is also wise and lucrative for the BSE at the moment, according to Seizov.

Turnover passed the BGN 20 million mark on Thursday, but almost all of it came from the exchange of 1.7 million shares of fuel distributor Petrol at BGN 11.45 apiece.

Some stocks were shored up by nice consolidated reports.

Synergon Holding and mining company Kaolin ranked among the biggest advancers.

Despite news of a final cut of EUR 220 million of EU aid, road builders Holding Patishta and Trade Group Hold closed in the black.

(Dnevnik)

Bulgaria’s banking heavyweight DSK Bank launched a promotion on U.S. dollar denominated deposits as rates on three-month term deposits climbed to 9% on an annual basis.

The nine-percent interest came with five- and six-month saving products only days ago, and a couple of months ago it took 18, 24 or more months to achieve such a return with growing interest deposits and only in the final period.

Experts say the rise in U.S. dollar deposit rates is a sign that banks are expecting bigger return from investments in this currency.

DSK Bank’s special offer for new one-month deposits for individuals is on until January 17, 2009. The bank adds 2% to the standard interest rate for a three-month term.

This is the fourth promotional deposit launch inside four days.

Postbank on Tuesday unveiled a three-month holiday deposit with a 9.5% annual interest rate for local-currency products of over BGN 100,000 and 9.25% for smaller amounts.

Deposits of over EUR 50,000 come with an annual rate of 7.5%. The rate is 7.25% for smaller savings.

MKB Unionbank’s latest deposit offers a 7.5% advance annual rate for levs and 5.5% for euro.

Alpha Bank’s new saving account gives up to 7.5% if in levs and up to 5.5% if in euros.

(Dnevnik)

Flexible working hours and the creation of an unemployed training company will help offset mass unemployment during the economic crisis, business representatives told social minister Emilia Maslarova at a meeting

The Confederation of Employers and Industrialists in Bulgaria proposed that textile companies be allowed to adjust working hours to workload following the steep decline in orders, said executive director Evgenii Ivanov.

The National Insurance Institute should take up a portion of the reduced working hours, according to the organisation.

The Government should move in to prevent companies from going out of business and stave off lay-offs and persistent unemployment, according to Ivanov.

The Bulgarian Industrial Association proposed the creation of a company to train and retrain people out of jobs and pay them bottom wages instead of compensation. Those unwilling to retrain should be cut off from any unemployment benefits, according to the association.

Trained workers should be dispatched to needy employers.

The measures may rein the jobless rate within the 7-8% limit, or it will spiral off to a double-digit level, employers warned.

(Dnevnik)

Italcementi Group’s Devnya Cement will build its clinker and cement plant despite the tense economic environment, said HR manager Valentina Grozdanova.

Work on the BGN 500 million project began in late July. The production unit should be operational in 2010.

In spite of its healthy financial condition, Devnya Cement will cut cement production by some 20% after the crisis sapped demand on the U.S. and Turkish markets, Grozdanova said adding that no workers will go redundant.

The company will continue exports to Romania and Serbia but it is hard to make any forecasts for next year, Grozdanova said.

The measure was prompted by the haze around the allocation of additional greenhouse emission quotas under the Kyoto Protocol for the coming years.

Devnya Cement executive director Alex Car told Dnevnik in an August interview that this was an unacceptable way of doing business and makes planning very hard.

The company has focused on the domestic market chasing after an 11% rise in 2008 output.

Under corporate data, Bulgaria’s three cement makers - Devnya Cement, Holcim and Titan - are expected to produce over 4.3 million tonnes this year.

Despite the grim consumption outlook, output is seen at 4.9 million tonnes for next year.

(Dnevnik)

Bulgarian maritime carrier NMB will trim its crew by 17 percent in the face of the global economic turmoil, said Hristo Donev, one of the company’s executive directors.

All crews will be squeezed to 19 from 23 sailors but the privatisation contract rules out any lay-offs.

The sailors will be most probably moved to subsidiaries the new owner, KG Maritime Shipping, was to set up in line with the new holding structure.

The size of the crews to stay on the ship complies with Bulgaria’s maritime safety requirements and with international standards, Donev said.

The crews will not be expanded even after the crisis is over with sailors outnumbering the bottom required for NMB’s type of vessels.

The measure is aimed at helping the maritime carrier weather the global economic crisis.

Some half a dozen of the company’s newer ships have dropped anchor hoping for cargoes as have done all old vessels earmarked to be sold.

However, the crisis has fully frozen the second-hand ship market, and the low prices and the global oversupply of iron make scrap no longer an option.

According to unofficial reports, NMB has suspended about half of its fleet.

The crisis will force many of the region’s maritime shipping companies to stop or abandon ships, while others will have to sell for scrap and lay off sailors from inefficient vessels, market players say.

More than 1,100 vessels have dropped anchor in the Black Sea region, which is double the numbers harmed by previous grave market conditions.

(Dnevnik)