State Aid to FIB in Line with EU Rules, Commission Says
The European Commission said on Tuesday it has found that liquidity support granted by Bulgaria to First Investment Bank (FIB) was in line with EU state aid rules.
Bulgaria granted a five-month state deposit of BGN 1.2 B (EUR 600 M) to FIB following a bank run in June as part of a Bulgarian liquidity scheme approved by the Commission. The maturity of the deposit will expire on Friday.
Bulgaria has now applied for an extension of the state deposit of BGN 900 M by a maximum of 18 months, until 28 May 2016. Part of the deposit will be repaid within 12 months.
The Commission said in a statement it has found that the liquidity support for Bulgaria's third-largest bank was related to "the liquidity crisis that occurred in Bulgaria in June and July 2014, and was not due to a structural problem of the bank."
"Full repayment of the deposit now could destabilise both the bank and the Bulgarian financial system," the EU executive body explained.
Margrethe Vestager, EU Commissioner in charge of competition policy, commented: "I believe that today's decision will strengthen public confidence in First Investment Bank. The bank presented a sound restructuring plan and a list of commitments, which will restore its liquidity and ensure its long-term viability without unduly distorting competition."
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