Bulgaria has achieved limited progress in addressing several issues raised by the European Commission, including completing the reform of the insolvency framework and upgrading the governance framework for state-owned enterprises, the EU institution said on Wednesday. Some vulnerabilities in Bulgaria's banking sector also remain, although the sector has strengthened overall as banks addressed the recommendations arising from the 2016 asset quality review, with one exception, the Commission said in its European Semester Winter Package. In 2016, an asset quality review (AQR) and stress tests of Bulgarian banks showed the capital adequacy of each bank after potential adjustments from AQR remains above the minimum regulatory requirements. Taking the results into account, follow-up plans were developed, including measures aimed at maintaining existing capital buffers for some banks or increasing capital buffers for others. The results signaled that local lenders First Investment Bank and Investbank would benefit from increasing their capital buffers by retaining earnings, increasing their capital or cutting down on risk exposure. The follow-up plans also included recommendations for Central Cooperative Bank (CCB), Municipal Bank, International Asset Bank, Tokuda Bank and Texim Bank, which were advised to review their business and capital plans to improve resilience to unfavourable shocks.