Bulgarian Parliament Approves BGN 1.2 B Loans to Deposit Insurance Fund

Business » FINANCE | June 9, 2016, Thursday // 14:35
Bulgaria: Bulgarian Parliament Approves BGN 1.2 B Loans to Deposit Insurance Fund The plenary chamber of the Bulgarian National Assembly. Photo: BGNES

The parliament approved on Thursday the taking out of two new loans amounting to a total of BGN 1.2 B, which will be provided for the needs of the Bulgarian Deposit Insurance Fund (BDIF).

The International Bank for Reconstruction and Development (IBRD) and the European Bank for Reconstruction and Development (EBRD) will each provide BGN 600 M in loans to BDIF.

The loans will go to filling the reserves of the fund which were significantly depleted after the insolvency of Corporate Commercial Bank (KTB) in 2014 when the fund had to repay the insured deposits at KTB.

The loans, which are guaranteed by the Bulgarian government, are to contribute to the greater financial independence and long-term sustainability of BDIF.

This is expected to increase confidence in Bulgaria's banking sector and support the efficient functioning of the financial market.

The funds are aimed at optimising the funding structure of the fund and strengthening its financial and institutional capacity in order to enable it to meet its deposit insurance and bank resolution obligations.

The largest opposition Bulgarian Socialist Party (BSP) and the left-wing Alternative for Bulgarian Revival (ABV), which last month withdrew its support for the government, voted against the loans.

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Tags: Bulgaria, BDIF, loan, deposit, KTB, IBRD, EBRD, banking, BSP, ABV
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