Depositors with a failed bank in Bulgaria will have access to their funds within up to seven workdays after the bank halted payments, the Finance Ministry has proposed.

A draft unveiled by the ministry is proposing a new law that would replace the current Deposit Insurance Bill to bring Bulgaria’s legislation in line with EU directives.

The change will help prevent a repeat of the stalemate faced by depositors with troubled Corporate Commercial Bank, or KTB, who have had no access to their funds since June when Bulgaria’s central bank seized control of the lender following a bank run.

Under current Bulgarian legislation depositors had to wait for nearly five months until the central bank finally stripped KTB of its banking licence last week, opening the way for the start of repayment of state-guaranteed deposits as of 4 December.

While keeping unchanged the current ceiling of BGN 196 000 for a state-guaranteed deposit of any person or legal entity in a Bulgarian bank (professional investors, central government and local government institutions excluded), the draft law introduces increased protection of certain types of deposits relating to key events in life such as retirement, divorce or selling property.

EU law requires each member state to ensure increased protection of deposits bigger than BGN 196 000 relating to such events for a period of time varying from three to 12 months. The ceiling for such deposits is tied to the standard of living in each individual EU member states.

To comply, the Finance Ministry is proposing deposits of up to BGN 250 000 falling into this category to be covered by state guarantee for a period of up to three months.

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