ECB to extend backstop to Bulgaria on Greek ructions: Bloomberg

FRANKFURT (Reuters) - The European Central Bank is set to extend a financial backstop facility to Bulgaria and could also help other countries in the region avert contagion from Greece, Bloomberg News reported on Friday, citing people familiar with the situation. The ECB would provide access to its refinancing operations, offering euros to the banking system against eligible collateral, Bloomberg cited the people as saying. The ECB and Bulgaria's central bank and finance ministry declined to comment on the report. Greece has strong financial and trade connections with Bulgaria, which is not a euro zone member but is in the European Union. Banks with Greek shareholders control about 22 percent of the assets of the Bulgarian banking system. Standard Bank analyst Demetrios Efstathiou said an extension of the facility by the ECB would be a positive move. "It would provide the Bulgarian central bank with the necessary euro liquidity to deal with a possible bank-run against Greek-owned banks, which is probable in the event of a 'No' vote in Sunday's Greek referendum," Efstathiou said in a research note. In the referendum, Greeks will say whether they are in favor of a cash-for-reforms proposal from Athens' international creditors -- now expired -- which the leftist government is urging voters to reject. (Reporting by Jonathan Gould in Frankfurt and Tsvetelia Tsolova in Sofia; Editing by Catherine Evans)