Bulgaria : Regulation No. 9 on the Evaluation and Classification of Risk Exposures of Banks and the Allocation of Provisions to Cover Impairment Loss

This document articulates a regulation issued by the Bulgarian National Bank (BNB) on the evaluation and classification of risk exposures of banks and the provisions that banks could make to cover impairment loss, if any.

The document is divided into chapters and provides information on the:

• General provisions of the regulations classifying the risk exposures of banks, the methods for assessment of risks and the processes that have to be followed upon detection;
• Criteria for classification and risk exposure evaluation and the conditions under which the risk exposure can be re-classified based on the inputs from the banking supervisory authorities;
• Rights of the banks to allocate specific provisions to cover impairment loss of significant exposures;
• General guidelines on the interest accrual regime that banks could follow, and the different restrictions on raising income through interests;
• Conditions under which the banks can re-structure their risk exposures as well have provisions of either declaring or not declaring the non-performing exposures in the balance-sheet;
• Information that must be given in the consolidated report which the bank has to provide to Bulgarian National Bank.
• Penalties and sanctions which are likely to be invoked in case of violation of the regulation.