The European Central Bank (ECB) is set to evaluate six banks in Bulgaria as a step towards offering the Banking Union membership.

The banks to be assessed are UniCredit Bulbank, DSK Bank, United Bulgarian Bank (UBB), First Investment Bank, Central Cooperative Bank, as well as Investbank.

Of these, UniCredit Bulbank, DSK Bank and UBB are local units of global banking groups. The rest three are owned by local entities.

The move follows Bulgaria’s request in July this year to build close ties with the ECB.

“The comprehensive assessment is required as part of the process of establishing close cooperation between the ECB and the national competent authority of an EU Member State whose currency is not the euro,” ECB said in a statement.

The exercise will follow the same methodologies used by the ECB Banking Supervision in its regular assessments of banks.

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By GlobalData

It will include an asset quality review as well as a stress test, and will also include the assessment of the relevant national legislation.

“In this regard Article 7(2)(c) of the SSM Regulation requires that the national legislation of a Member State which seeks to establish close cooperation ensures that its national competent authority will be obliged to adopt any measure in relation to credit institutions requested by the ECB,” ECB said.

The assessment will begin this month, with the results expected to be out by July next year. The assessment’s cut-off date is 31 December 2018.