Concerns of a Greek default are causing much concern in Bulgaria and other neighbours of the country. 

Countries most affected include; Albania, Macedonia, Serbia and Bulgaria. The concern stems from Greek banks and companies who could have cash calls in the event of a default, restricting funding for their foreign enterprises.

Banking Concerns

Balkan countries have small economies and a history of financial vulnerability. The event of a full blown Greek default could potentially have wide scale negative impact on the region, especially the banking sector.

Greek banks for example hold between 20% - 30% of the Bulgarian banking sector.

However, Greek owned banks in Bulgaria do not hold Greek government securities and do not receive funding from their parent companies.

There is also legislation in place to ensure that Greek banks in Bulgaria cannot transfer capital back to parents companies, without permission from the central bank.

Bulgarian newspaper, Vesti suggests that it would only become a problem if there was a run on the banks to withdraw deposits.

Governor Resignation

The Bulgarian central bank has just lost its leader of 12 years. Ivan Iskrov resigned stating that he has done everything he can to prevent a banking crisis in the event of a Greek default.

However, he was cautious stating, “the process of solving the Greek debt crisis will probably be a long one and will remain a potential source of uncertainty and tension.”