European Commission Approves Liquidity Support Scheme for BG Banks
The European Commission approved a liquidity support scheme for Bulgarian banks to the tune of BGN 3.3 B, said the Commission in a press statement.
On Sunday (June 29), Bulgaria asked the Commission to authorise the provision of a credit line of BGN 3.3 B to the banking system in order to respond to speculative attacks that occurred over the past week.
The scheme provides the necessary and proportionate liquidity in the wake of external, non-bank related events, said the EC.
Last week, it transpired that certain individuals have been targeting the third largest bank, First Investment Bank, urging customers to withdraw their deposits.
This created concerns about the liquidity of the bank in question and risked spilling over to some other institutions, despite the fact that the Bulgarian banking system is well capitalised and has high levels of liquidity compared to its peers in other Member States. For precautionary reasons, Bulgaria has taken this measure to further increase the liquidity and safeguard its financial system.
The Commission has approved the measure as being compatible with the Internal Market. In its assessment, it concluded that the State aid implied by the provision of the credit line is proportionate and commensurate with the need to ensure sufficient liquidity in the banking sector in the particular circumstances.
The European Commissioner for Competition, Joaquin Almunia, welcomed this measure to stabilise the Bulgarian banking system.
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