Sharp Rise in New Deposits, Particularly in Euros, Central Bank Data Shows

Statistics from the Bulgarian National Bank (BNB) reveal a sharp increase in newly opened deposits, especially euro-denominated accounts. In September alone, households deposited BGN 325 million.

Experts attribute this surge to Bulgaria’s imminent entry into the eurozone and a move to regularise previously unreported cash. Bulgarians currently hold over BGN 96 billion in bank accounts.

Are There Fees, and What Are the Banks’ Terms?

The Boyadzhiev family has long kept their money in the bank, which not only spares them queues at branches to exchange cash but also offers several other advantages.

Elena Boyadzhieva said: “The money will be automatically converted from leva to euros, which I think is the best option. Using cards for withdrawals and payments will also become easier.”

Filip Boyadzhiev added: “Why queue up when it’s so much easier this way?”

In September, household deposits were a third higher than the same month last year. Since 4 June, when positive convergence reports were published, many banks temporarily waived deposit fees.

Tihomir Toshev, a credit consultant, explained: “Unfortunately, only a small proportion of people are depositing the cash they keep at home. This recent influx into bank accounts has driven the growth in deposits. In recent years, deposit growth typically ranged from 7 to 9 per cent; it is now just over 12 per cent. This increase is largely due to people bringing cash stored at home – in wardrobes, boxes, and so on – into the banking system. Unfortunately, this still represents a small portion of all cash, and many are likely to start bringing money to banks, post offices, and other outlets in January.”

Euro-denominated deposits are also rising. In September alone, term deposits in euros reached BGN 334 million – more than double the figure from the previous month.

Toshev added: “Some Bulgarians have held money in euros for years. We experienced serious hyperinflation in the past, and over the years the leva has repeatedly depreciated.”

Even those who do not act immediately can exchange leva for euros free of charge at banks and Bulgarian Posts for the first six months. Thereafter, the BNB will continue to offer unlimited, free conversions. Experts expect Bulgarians will still prefer to keep most of their savings in cash.

“Why put it in the bank? I’m not keen on that kind of investment scheme,” said one individual.

Others are neither reflected in BNB statistics nor keep cash at home.

Katya Mezdrychka, a pensioner, said: “We have nothing to deposit. We are poor pensioners. How can we give money to a bank? We barely make it from one month to the next, from the 7th to the 7th.”

Stoimenka Mazurska, another pensioner, said: “We’re poor, with nothing to deposit. We get minimum pensions; what should we save for – food, medicine, or for the grandchildren? We even avoid our children; we’re ashamed in front of our grandchildren.”

Vetka, also a pensioner, added: “I’m a pensioner and I don’t have such savings to put in. I simply cannot deposit anything.”

However, as deposits increase, average returns decline. The most liquid banks currently offer zero interest. For example, a BGN 5,000 deposit at the maximum 3 per cent rate would yield BGN 150 per year. Interest rates for euro deposits are higher.

Toshev explained: “Some smaller banks offer interest rates between 1 and 3 per cent. It’s not a huge sum, but if you keep the money at home in a wardrobe, the return is zero.”

BNB data also show that by the end of September, mortgage loans totalled just over BGN 30 billion, a 27 per cent increase year-on-year. Consumer loans have risen to almost BGN 21 billion.