Half a Century Later: Bulgaria Leaves Two Soviet Banks

Business » FINANCE | January 24, 2023, Tuesday // 13:16
Bulgaria: Half a Century Later: Bulgaria Leaves Two Soviet Banks

The National Assembly voted on the first reading of a bill submitted by the Council of Ministers for the denunciation of two agreements for Bulgaria's participation in two banks with majority participation by Russia, founded in 1963 and 1970 in Moscow.

The International Bank for Economic Cooperation (IBEC) and the International Investment Bank (IIB) were established in Moscow with the aim of "supporting investment activity and deepening economic cooperation mainly between the socialist countries of the Council for Mutual Economic Assistance."

The member countries of the IIB are Russia, Bulgaria, Vietnam, Cuba, Mongolia, Hungary, Romania, Slovakia and the Czech Republic. The authorized capital is 2 billion euros. Russia is the largest shareholder with a 47.21% stake. Bulgaria's participation in the contributed capital is EUR 42.2 million - 9.88%.

The member countries of IBEC are Russia, Bulgaria, Czech Republic, Poland, Romania, Slovakia, Mongolia, Vietnam and Russia. The authorized capital is EUR 400 million. Russia is again the largest shareholder with a 51.595% stake. Currently, Bulgaria's participation is EUR 15.1 million - 7.56% of the contributed capital.

In Bulgaria, IBEC supported with loans the projects of "Bulgartransgaz" for the construction of "Balkan Stream", of "Doverie United Holding" and "Eurohold Bulgaria" - for the development of the insurance business in Poland, Bulgaria and Romania.

In the context of the war in Ukraine, as EU member states Poland, the Czech Republic, Slovakia, Romania and Bulgaria joined the common position of the Council of the European Union on economic and financial issues, from which the two banks should leave. The only European country that refuses to join the common position is Hungary, which has a stake in the IIB.

The Czech Republic will leave IBEC and IIB on January 26, 2023, Poland on January 29, Slovakia on January 30, and Romania a little later on June 9. The remaining member states in the IIB are Russia, Vietnam, Mongolia and Hungary, and in the IBEC - Russia, Mongolia and Vietnam.

The only parliamentary group that spoke against the decision for Bulgaria to leave the two banks is "Vazrazhdane". Tsoncho Ganev declared the decision a "servitude", and Kostadin Kostadinov stated that with this decision, the parliament will play the role of a rubber stamp, which certifies an already made decision in the EU on behalf of Bulgaria. According to him, this is humiliating and shameful.

People's representatives, with the exception of the "Vazrazhdane" parliamentary group, voted "in favor", and BSP abstained. The denunciation of the agreements will take effect six months from the receipt of the official notifications sent by the Bulgarian government to the management boards of the two banks.

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Tags: banks, Bulgaria, Russia, ibec, IIB

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