reorient business models is not specific to germany : however, here, too, german banks are performing somewhat below par by international standards. at least this is what the imf has diagnosed in its recent global financial stability report. it would make sense for the banks to pursue a strategy of diversifying sources of income and, in particular, of expanding sources of non - interest income. the good news is that in terms of costs, german banks are still performing relatively well by international standards. however, many areas remain where banks ’ profitability could be enhanced indirectly. the branch networks of cooperative sector banks are still quite extensive. although it serves to acquire and maintain customers, it is also a large cost component when compared with bis central bankers ’ speeches competing direct banks. although the total number of banks in germany has already been declining for some time, the german banking market continues to be relatively dense and has room for consolidation. against this background, all ideas need to be considered. mergers must not be off - limits, either – provided these are between strong partners and preserve sustainable business models. incidentally, as i mentioned earlier, supervisors will also be keeping an eye on business models. however, supervisors are, of course, not the better bankers. the final decision on business models should ultimately be taken by those who are being paid to do it and ultimately bear the risk. ladies and gentlemen, each bank has the power to shape its future. however, each bank is dependent on its economic environment. at the outbreak of the crisis, us banks suffered much more greatly than european banks, but they then also made a much faster recovery. this is not least because the us economy also stabilised relatively quickly. looking at europe, politicians are now called upon to undertake the necessary reforms : reforms for growth and reforms for stability. for only in a healthy economy can banks generate sustainable profits. this has always been so, and it will always be that way in future. 5. and the culture? however, not only are banks dependent on the economy – but also, of course, vice versa. a modern economy depends on a functioning banking system. i have spent the past 20 minutes talking about the challenges for the future – but the future is naturally also open to wishes, especially now with christmas approaching. my greatest wish is for the banking industry to return to its inherent role : as a provider of services to the real economy. what we need is genuine cultural change which will re - ingrain this image in the

dimitar radev : the bulgarian banking sector and the challenges in publication by mr dimitar radev, governor of the bulgarian national bank, in the quarterly bulletin of the association of banks in bulgaria, issue 60, january 2020. * * * the banking sector in bulgaria ended 2019 with very good overall indicators and positive trends – high capital adequacy and liquidity, credit activity, improving asset quality and the historically highest annual profit of the sector. the asset quality review and the stress test conducted by the european central bank confirmed the resilience of the sector overall. the banking sector in bulgaria will be strategically impacted by the developments in the process of accession to erm ii and the banking union, part of which was the assessment of six bulgarian banks undertaken by the ecb. the final stage of this process is to unfold in the coming months. the fulfillment of the commitments assumed by bulgaria, including strengthening the capital of two bulgarian banks, will be followed by relevant external assessment. following the set path, bulgaria is drawing near to achieving a fundamentally new level of eu integration – membership in euro area institutions. this will bring about significant change in terms of banking supervision and bank resolution activities. the very onset of the process of establishing close cooperation of the bulgarian national bank with the ecb has already expanded the scope and enhanced the intensity of the two institutions ’ joint work. actual membership in the banking union will further deepen our partnership with the ecb, the single supervisory mechanism and the single resolution mechanism. regarding supervision, according to the european central bank ’ s rules the ecb will supervise the biggest banks in bulgaria and the bnb ’ s experts will participate in joint supervisory teams. this joint work will cover the off - site supervision aimed at on - going risk monitoring and assessment and also the on - site examinations in banks operating in bulgaria. the other banks in bulgaria will remain under the bnb ’ s supervision, but supervisory information about them will be exchanged with the ecb continuously. the joint work with the ecb will also cover many spheres of the practical organisation and operation of banking supervision. for example, the bnb ’ s experts will have direct access to the overall analytical expertise in the single supervisory mechanism. historical experience shows that the accession to this mechanism generates new synergy between the national competent authorities and the ecb, and it is a two - way process. along with joining the single supervisory mechanism, bulgaria will also join the single resolution mechanism. this would imply distribution