Up until 2008 the financial sector in Bulgaria was a magnet for foreign investors. Their enthusiasm was fueled by the global super cycle prior to the crisis, as well as local factors: the underdeveloped market had a good margin potential, and the country's membership of the European Union held the promise of better environment and fewer risks.
European investors have sold to local buyers before, mainly because of the commitment of parent banks to divest non-strategic branches abroad in return for the state aid they received during the crisis. That was the driving factor behind the withdrawal of Allied Irish Banks, which in 2011 sold at a solid loss their controlling interest in BACB (Bulgarian American Credit Bank) owned by Tsvetelina Borislavova (former owner of Cibank), and Hungary's MKB Bank (then owned by Germany's Bayern LB) which in 2013 sold Union Bank to Fibank (First Investment Bank). Similar motives have been driving the withdrawal of Greek banks from Bulgaria and most regional markets - last year National Bank of Greece exited UBB (United Bulgarian Bank) in a record transaction of 610 million euro. Yet, the transaction does not fit within the overall pattern of Western withdrawal since the buyer, Belgium's KBC Bank, comes from the West. The sale of the Bulgarian branch of Greece's Piraeus Bank is currently underway.
There are nevertheless examples of voluntary withdrawal of international financial groups due to lagging performance and failure to make it to the top ranks. In 2014, Credit Agricole sold its local branch to Corporate Commercial Bank only a week before the Bulgarian bank collapsed. Société Generale is currently set to sell en bloc six of its regional branches, including the Bulgarian one - Société Generale Expressbank.
The insurance business has lost no big foreign investors; only a few companies with minor market shares have decided to leave and sell their companies or portfolios to local buyers. Here, the Bulgarian Euroins Insurance Group stands apart as an aggressive buyer of the highest instance.
The crisis has not changed the key players in the pension insurance companies as well. In 2013, the leader Doverie was almost bought after an agreement was reached with a group of local and Russian businessmen led by Russian magnate Sergei Mastyugin; the transaction failed after he was arrested and Russia's central bank closed his Investbank.
Current market conditions seem ripe to shake the financial market. Low margins, negative interest rates and stricter regulations make relatively small banks or other financial institutions less and less profitable. At the same time, cheap money and the rising popularity of stock exchanges in recent years provide for an easy way out at a good price. Yet, local owners are rarely big or solvent enough to buy off a foreign player, so for the time being foreign investors are more likely to be succeeded by other investors from abroad rather than local buyers. Several attempted sales of shares in local banks (small ones like Commercial Bank Victoria that practically only holds a banking license), medium-sized (Municipal Bank) and big (First Investment Bank) have not attracted any particular interest from abroad, so transactions in the future are likely to be determined by a combination of market share and clean portfolio.