The European Banking Authority (EBA) has launched an investigation of possible breach of EU law in Bulgaria, in connection to the situation with the troubled Corporate Commercial Bank (KTB), said the authority in a press statement.

“Following a stage of preliminary enquiries, the Chairman of the EBA has opened an investigation into a possible breach of Union law by competent authorities in the Republic of Bulgaria,” the statement says.

“This investigation will look into whether measures taken in the conservatorship of Bulgarian bank “Corporate Commercial Bank AD (KTB)” constitute a possible breach of the requirements in the EU Deposit Guarantee Scheme Directive (DGS), according to which depositors should be compensated no later than 25 working days after the unavailability of deposits.”

“By opening this proceeding, the EBA is exercising its responsibility to investigate alleged breach or non-application of Union law by EU Member States. The Authority may subsequently address a recommendation to the concerned competent authority setting out the action necessary to comply with Union law.”

The EBA is an independent EU Authority which works to ensure effective and consistent prudential regulation and supervision across the European banking sector. Its overall objectives are to maintain financial stability in the EU and to safeguard the integrity, efficiency and orderly functioning of the banking sector.

The main task of the EBA is to contribute to the creation of the European Single Rulebook in banking whose objective is to provide a single set of harmonised prudential rules for financial institutions throughout the EU. The Authority also plays an important role in promoting convergence of supervisory practices and is mandated to assess risks and vulnerabilities in the EU banking sector.

The EBA was established on 1 January 2011 as part of the European System of Financial Supervision (ESFS) and took over all existing responsibilities and tasks of the Committee of European Banking Supervisors.

The EBA investigation is the second EU measure against Bulgaria over KTB, after earlier on Thursday the European Commission opened infringement proceedings against Bulgaria for its failure to allow clients of KTB access to their money.