EU Bank Watchdog Urges Bulgaria to Ensure Instant Access to KTB Deposits

Business » FINANCE | October 21, 2014, Tuesday // 09:42
Bulgaria: EU Bank Watchdog Urges Bulgaria to Ensure Instant Access to KTB Deposits KTB building in Sofia. Photo by BGNES

European Banking Authority said Monday Bulgaria should allow immediate access of depositors at Corporate Commercial Bank (Corpbank, KTB) to their savings.

Both the Bulgarian central bank BNB and the Deposits Insurance Fund (DIF) are breaching Article 1(3)(i) and Article 10 of Directive 94/19/EC, the deposit-guarantee law of the European Union, the banking watchdog warned in a statement.

Bulgaria should either completely remove restrictions and ensure depositors' access to their money in both KTB and its daughter Commercial Bank Victoria (formerly Credit Agricole Bulgaria) or should launch the mechanism to make transfers from the DIF, the banking authority (EBA) has demanded in a formal recommendation.

Parliamentary approval would be needed for the latter option, and the first session of Bulgaria's National Assembly is to be held October 27, or next Monday.

The EBA reportedly demanded from the BNB that it ensure depositors' access to their money in both KTB and its daughter Victoria (formerly Credit Agricole Bulgaria).

Under current legislation in the bloc, or namely the Deposits Guarantee Schemes (DGS) Directive, depositors are to be compensated for up to EUR 100 000 of their assets within 25 business days after access to their accounts has been blocked.

Infringement proceedings were started by the EU Commission against Bulgaria on suspicions of breaching EU law on September 25. A press statement from the EBA issued on the same day revealed the authority was also carrying out an investigation.

Corpbank, Bulgaria's fourth-largest lender, was placed under BNB's special supervision in mid-June after its liquidity was depleted by a run and it had to freeze all operations.

For weeks angry depositors have held protests in front of either KTB or BNB, demanding access to their accounts.

Some 0.2-0.5 million people are affected by the crisis at Corpbank.

Calls from the European Banking Authority came briefly after a long-expected audit report was submitted at the BNB of conservators at KTB and Victoria.

The document was prepared by AFA, Deloitte Audit and Ernst&Young.

Interim Finance Minister Rumen Porozhanov announced earlier in October payment guaranteed deposits would begin in November after a final decision is taken on its future.




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Tags: infringement proceedings, DIF, BNB, Victoria, Corporate Commercial Bank, Corpbank, KTB, European Banking Authority, EBA, Rumen Porozhanov

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