Bulgaria Downsizes Financial Supervision Commission

Petar Chobanov, head of the Bulgarian Financial Supervision Commission. Photo by Klasa Daily

The Bulgarian government has decided to shrink the size of the country’s Financial Supervision Commission (FSC) from 7 to 5 members.

The suggestion was upheld Wednesday by the Economy Committee of the Bulgarian Parliament, which approved draft amendments of the Financial Supervision Commission Act.

Currently, the FSC has one chair, three deputy chairs each of whom is in charge of one of the following portfolios – investment activities, insurance, and social security, and three members. The three additional members do not have specific portfolios but serve as substitutes for the deputy chairs whenever needed.

The MPs from the ruling rightist majority who initiated the amendments believe that the membership of the FSC is bloated given the size of the non-banking financial sector in Bulgaria.

“You are going to make the members of the Commission fully dependent on the ruling majority, they will not have any independence,” objected Socialist MP and former Economy Minister Petar Dimitrov during the discussions.

Another Socialist MP, Dimitar Stoynev, said those in power apparently aimed to replace the current members of the Commission.

“Five insurance companies went bankrupt in Greece but we are striving not to allow such things to happen on Bulgarian soil,” said the Chair of the Bulgarian FSC, Petar Chobanov, during the hearing of the Parliamentary Economy Committee.

In addition to downsizing the staff of the FSC, the draft amendments provide for new license procedures under which the person wishing to receive a license for a non-banking financial enterprise have to reveal the identity of the people owning their shareholders with at least 10% of the votes in the company board.

The Financial Supervision Commission will be entitled to refuse a license to a company whose shareholders cannot be identified.

Currently, Bulgaria’s banking and crediting sector is supervised by the BNB, whereas the insurance firms, retirement funds, and other non-banking financial companies are monitored by the Financial Supervision Commission. The Commission is independent and is accountable to the Parliament.

Members of the ruling party GERB, including the Chair of the Parliamentary Finance Committee Menda Stoyanova, has put forth the idea of setting up a unified body for financial supervision in Bulgaria by the end of 2010. However, no specific plans have been made public yet.

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