Bulgaria Says No to Keeping Clients in the Dark over Bank Rates

A woman looks on in front of the central office of UniCredit Bulbank in Sofia. UniCredit Bulbank is the biggest bank in Bulgaria. Photo by EPA/BGNES

Banks in Bulgaria will be obliged to inform customers of any significant movements in interest rates on their accounts or expenses if they are in credit under legal amendments that parliament adopted on Friday.

The amendments to the Law on Credit Institutions aim to improve the protection of customers' rights and tighten the control over banking groups and financial holdings, which operate in several EU member states.

The changes will come into force as of the beginning of next year.

So far the majority of banks in Bulgaria have been failing to inform customers about changes to the interest they are earning on their cash or the refund they have to pay for a loan.

They rely largely on people seeing adverts in newspapers or visiting their branches to find about about interest rate cuts or rises.

Earlier in the week Bulgaria's central bank tightened the rules for banks capital and liquidity to bring them in line with European capital adequacy legislation.

The Bulgarian National Bank has repeatedly stated that the banking system in the country is stable even thought Greek banks hold nearly a 30% of the Bulgarian banking market, a 20% share of the bank loans and one-third of all deposits.

Some of the biggest lenders in Bulgaria are managed by Italy's UniCredit, Greece's National Bank of Greece, Hungary's OTP and Austria's Raiffeisen.

Other Greek banks present in Bulgaria include EFG Eurobank, Piraeus, Emporiki and Alpha Bank.

Experts have warned that Bulgaria risks seeing its banks sucked under by the fiscal sins of neighboring Greece,

Earlier this year Bulgaria's central bank assuaged fears over funds outflow from Greek bank subsidiaries in the country to headquarters in Greece, saying this is part of the free movement of capital.

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