Bulgaria to Seek Integration into EU Bank Supervision Mechanism

Business » FINANCE | July 14, 2014, Monday // 23:08
Bulgaria: Bulgaria to Seek Integration into EU Bank Supervision Mechanism Bulgarian President Rosen Plevneliev. Photo by BGNES

Bulgaria's President, political leaders and other officials agreed Monday that Bulgaria should take immediate steps to join Europe's Single Supervisory Mechanism.

Separately, the country is to submit itself to a peer review from the European Banking Authority.

The cabinet is also due to review the 2014 budget, with additional money set aside for the National Health Insurance Fund (NZOK), which runs a deficit worth hundreds of millions of BGN, President Rosen Plevneliev reported after holding talks with leaders of parliamentary parties, Prime Minister Plamen Oresharski, central bank Governor Ivan Iskrov and Finance Minister Petar Chobanov.

After years of keeping macro-financial indicators low, participants in political consultations also agreed that the budget deficit limit could be raised to 3% in the 2014 targets, the threshold allowed under EU rules.

Consultations were called at the Presidency in Sofia after the Bulgarian National Bank (BNB) took away the license of Corporate Commercial Bank (KTB) and announced it would nationalize its subsidiary Credit Agricole Bulgaria.

It cited illicit banking practices as being among the reasons for that move.

Plevneliev then called emergency talks at which Bulgaria's financial situation was to be discussed.

Politicians, however, failed to agree on whether any legislative changes should be introduced after the events at KTB to protect savings exceeding EUR 100 000 in the bank, as some experts suggested.

The Single Supervisory mechanism is envisaged to be a first element of Europe's banking union, allowing the European Central Bank to oversee key financial organizations across the bloc from November this year.

It is due to become fully operational by 2016.

Prime Minister Plamen Oresharski announced in December 2013 that joining the European Banking Union was not a priority.

Back in 2012, Ivan Iskrov and the 2009-2013 center-right GERB government issued similar statements.

The single supervision is currently designed to be mandatory only for Eurozone members.

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Tags: Eurozone, NZOK, Credit Agricole Bulgaria, BNB, KTB, banking union, Single Supervisory Mechanism, GERB, Petar Chobanov, Ivan Iskrov, Prime Minister Plamen Oresharski, Rosen Plevneliev, European Banking Authority, ECB
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