Bulgaria's Banking Affair: Trust Sells, but Who's Buying?
Three phrases related to Bulgaria’s banks have lately nailed my attention.
Friday: “You have to withdraw everything from First Investment [Bank] and KTB, well, generally from all banks, but these two are the most urgent one!” (a young woman at a bus stop)
Sunday: “Bulgaria's president has said he will dissolve parliament and appoint an interim government, amid concerns over the country's banking system.” (BBC)
And Monday: “The queues in front of the First Investment Bank on Monday (30 June), although smaller than on Friday, were still numbering around 100 people.” (EUObserver)
One might say the rumor and the two reports above are incomparable. But these three make a story. It’s perfectly clear: there is a threat to banks, President dissolves Parliament, around 100 people permanently line up in front of the FIB.
In reality, no bank failed, the interim government was planned beforehand, and on Monday only a few were waiting at the FIB branch near Novinite’s office in Sofia.
However, if one reads two or three pieces of information – well-intentioned as they can be – a different picture emerges: “Something wrong is happening. They’re hiding that banks are in trouble.”
Trust has never been in fashion.
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TinuzH, if you really not understand a simple thing like internet banking, and transferring money in stead of taking cash...
You clearly know nothing about the Bulgarian banking system but still you are saying the people who do know are corrupt, criminals and more because they are not as stupid as you...
Really incredible. And yes, the banking system is stable in Bulgaria. That is a fact, and yes, people who deliberately try to destabilise the banking system by trying people to do a bankrun (organised) should be put in jail. That's why in every country they have laws like that.
Please, go and talk about the prices of milk now and leave the people who do understand what they are talking about alone...
thanks for your reply I am really impressed.
I am a mathematician with more of 35 years of experience in LSS data analysis, protection and encryption and BA of intangibles and your analysis is really fantastic (but with only one point of view) so no comment.
The motto of my companies here in Bulgaria is: Не можем да решим проблемите, като използваме същия начин на мислене, който сме използвали, когато сме ги създавали
Your mentality and approach is part of the dirty game of the so called oligarchs.
Simply use the democracy in the right way, next election go and vote for the right people.
All the rest is silence.
PS I come from the south of Italy and really love Bulgaria and the Bulgarians so take it easy
Francesco, like you I do believe this is storm in a cup of water however I find your comments extremely ignorant.
The contradictory statements issued by officials only exacerbate the problem. Let alone their promise to prosecute anyone who questions them. I did not know Stalin and/or Hitler was back from the dead. Meanwhile we have to make up our own minds.
So let's look at some facts and do the math.
1. 800mio in withdrawals last Friday. With online operations suspended the 800mio figure seems to me to be plugged out of thin air. 800mio divided by app. 68 offices would mean every office holds app. 11mio in cash. Yeah right. Divided by 336000 customers would mean app. 2100 per customer. Somewhere on this site it is mentioned that Bulgarians have trouble saving money due to high costs and low wages. So probably some oligarchs withdrew 700mio prior to the panic and once the panic started the people withdrew the rest. In any other country that's called "insider trading" and is a criminal offence.
2. If the government needs assistance to tune of 1.5bn from the EU (in the form of getting an extension to pay back a loan not ready cash) -days after having raised 1.5bn with a successful bond issue - it means that the government does not have the money to guarantee deposits. And the EU will not be forthcoming with much more cash. They are tired of bail outs and BG is not a member of the eurozone and therefore a collapse in BG does not threaten the eurozone. Also the BG economy is not big enough for a collapse to be a threat to the rest of the EU.
3. What happened in the last few years in other countries in similar situations. What does "well capitalized" mean for banks? Greece did not need a bail out and its debt was viable (according to official european institutions and banks) until one day people said it was bankrupt. Banks in Cyprus supposedly were healthy and in better shape than banks in the rest of the europe (in every chance it was stated by board members, the central bank and the government that they were in a very good shape) until all of the sudden a bail in was needed in a Saturday morning that involved not only shareholders or bondholders but depositors as well. Now NPL are at about 50% and a new recapitalization is on the way. Bank assets are safe and sound as long as central bank say so...which brings us back to point 2.
I truly hope they will manage to somehow to staff of a crisis and that the system is as fine as they say it is but the above makes just a bit skeptical. If this truly is a coordinated attack, I would sooner believe that it is coordinated by some oligarchs - and not some spotty hackers - and yes they should be thrown in jail if it can be proved. But we all know the ties between government , the judiciary system and oligarchs in BG.
I had no problems, the First Investment Bank (FIB) works perfectly, my accounts (16) are ok.
Monday and so far I have not found problems and worked perfectly, depositing money and also using web access for paying taxes and my suppliers.
The way some people comment on the events, many times trying to find a mysterious explanation always related with the oligarchs or the financial failure, they are only indicative of a deep financial immaturity not from banks but from customers.
For me they are criminals like those who have sent text messages and emails because they destroy the economic recovery of Bulgaria, damaging investors and consequently the Bulgarian people.
In any case they work in favor of an oligarch by attacking another and this is extremely stupid