.4capital and assets) and areas of specialization (see Table 1) . The pre-1987 segmentation, despite the measures undertaken for diversification, still prevailed. NBB was the largest bank, accounting for 23 percent of total assets and for 57 percent of total capital; SSB was specialized in the housing sector and accounted for 46 percent of the deposits; and BFTB was specialized in foreign exchange transactions and accounted for 93 percent of total foreign exchanoe liabilities. In contrast, SCBs and CCBs accounted for a very small proportion of the banking business and lacked independence. They were fully owned and controlled by the NBB. Moreover, while the SSB accounted for most of the deposits, mostly from households, only a portion were used to finance mortgages. The NBB used them to fund the SCBs and CCBs.

Table 1: Liabilities and Assets by Group of Banks, as of 1990 (As Percentage of Total)

|--- --<br>---|<br>--<br>--<br>---|Sources<br> <br>--<br>-<br>.|of Funds<br>.<br>.<br>.<br>--<br>--<br>|.<br>-<br>.<br>--<br>---<br>|.<br>-<br>--<br>|Ass<br>.....................<br>|ets<br>....**.**.... ...**.**............<br>|
|---|---|---|---|---|---|---|---|
|Deposit<br>1; .|s Central<br>Govt's<br>Credits|NBB's<br>Credit<br> 2/|Credits<br> <br>s Foreig<br>Exchang|<br>iCapital<br>n4/<br>e<br>3/|Other<br>Net<br>5/|Total|Net of<br>Clearing<br>6/|
|Nationat<br>Bank of Bulgaria,<br>IB8<br>15.8X<br>|O.OX<br>|0.0|0.0|56.5X|12.0C|23.7K|20.5X|
|Strte and Savings<br>Bank, SSB<br>46.2X|1.5X|0.0|0.1X|2.8X|4.0|13.3K|13.9K|
|Bulgarian<br>Foreign<br>Trade Bank, BTFS 10.1X|<br>3.1X|1.2K<br>|93.6X|<br>13.1X|64.7K|23.5X|24.4X|
|specialized<br>Coamercial<br>Banks, SC811.2K<br> <br>|1.0|60.8X|6.3X|16.1K|32.0X<br>|15.1K|15.7%|
|Cmnmon<br>Come rciat Banks,CCB<br>16.8K<br>of which:|94.5K|38.0X|0.0K|<br>11.4X|-12.7X|24.5X|25.5X|
|Largest<br>57/<br>4A.4X|n.a.|31.8K|n.a.|di.6K|n.a.|56.3X||
|Smallest<br>5 7/<br>1.0K<br>,....**...**..._.<br>.__<br>..<br>.....<br>,....<br>........<br>................<br>_..............|n.a.<br>....|0.6K<br>.............|<br>n.a.<br>.......|3.4K<br>...............................|n.a.|0.7K|.|

SOURCE: National Bank of Bulgaria, Monetary Survey.

Notes: (1) In the case of NBB, consists of currency outside banks and time, savings and foreign currency deposits; and for the otner banks consist of: demand; time, savings and foreign currency; and import and restricted deposits. Total CCB's deposits exclude Municipalities' demand deposits in line with IMF's methodological guidelines for 1990 Monetary Survey estimates. (2) Consists of both NBB's loans to banks recorded in the Monotary Survey as "Credit from National Bank" and in "Other Liabilities;" and exclude NB's loans for the purpose of the clearing system. (3) Excludes foreign currency deposits. (4) Define as the paid-in capital and exctudes non-capitalized retain profits and reserves. (5) Defined as the item the Monetary Survey's item "Others Items, Net" and excludes NBB a loans to CCB and SCB and the valuation effect of foreign exchange loans granted, in the case of BFTS. Both of these are classify in "Other Ite-, Net" in the Monetary Survey. The v2luation effect is recorded in "Other accounts receivable." (6) Exclude "Other Assets" which mainly consist of the outstanding amounts in the clearing system. (7) Indicates the proportion concentrated by the largest (smallest) five banks. Largest (and smallest) five banks are defined in relation to each variable, e.g., deposits, capital, assets.

{ii) Concentration. The three largest banks held most of the assets, deposits and capital, while the 67 commercial banks held only a very small share of assets, deposits and capital. In fact, the Bulgarian financial system was characterized by the coexistence of very large banks together with very small banks. NBB, SSB and BFTB (see Table 1) held 24, 13 and 23 percent of total assets; 16, 46 and 10 percent of total deposits; 3nd 56, 3 and 13 percent of total capital, respectively. In contrast and on average, each SCB accounted for 1.8 of total assets, 1.4 percent of total deposits and 2 percent of total capital; and each CCB accounted for 0.4 percent of total assets, 0.6 percent of total deposits and 0.2 of total capital. Concentration is also a problem within the CCBs. The la.gest five banks in terms of deposits held 44 percent of total CCBs