EC Opens Infringement Proceedings Against Bulgaria over KTBBulgaria in EU | September 25, 2014, Thursday // 13:31| views
The European Commission (EC) said on Thursday it is opening infringement proceedings against Bulgaria for its failure to allow clients of troubled Corpbank (KTB) access to their money.
The Commission said in a press release it is sending a letter of formal notice to Bulgaria, the first formal step in infringement proceedings.
Bulgaria has until 15 October to respond.
The European Union's executive body said the launch of infringement proceedings has been prompted by Bulgaria’s failures to correctly transpose two articles of the Deposit Guarantee Scheme (DGS) Directive and comply with the principle of free movement of capital within EU.
“By opening these infringement proceedings, the Commission is exercising its responsibility to monitor compliance with EU law by Member States. The Commission expects that depositors will be given immediate access to the amount of bank deposits to which they are entitled,” the statement read.
Highlighting that that EU law takes precedence over national law, the Commission stressed that while Bulgarian law stipulates that the DGS is authorised to pay the claims of depositors against a bank only if the central bank has revoked its banking licence, the Commission’s DGS Directive contains no such requirement.
“Under general EU law principles, national authorities are required to apply the Directive in spite of contradicting provisions of national law,”the Commission said.
As regards the principle of free movement of capital, the conservatorship imposed by BNB on KTB and its wholly-owned subsidiary Victoria Bank “appears to constitute a non-justified and disproportionate restriction to the free movement of capital,” the Commision said.
The Commission noted that the BNB has put the two banks under its special supervision and completely suspended their operations even though “domestic law allows less intrusive measures, permitting a choice between full and partial suspension of payments and limitation of activities”.
Bulgaria’s central bank (BNB) seized control of KTB and Victoria Bank in June following a deposits run, suspending all of their operations and ordering an audit of their books that has to be completed by October 20.
With depositors at the two banks having had no access to their money for more than three months and with BNB’s decision of 16 September 2014 to extend the period of special supervision over KTB and Victoria Bank to 20 November and 22 November, respectively, “the current situation may undermine public trust in the deposit guarantee scheme in Bulgaria,” the Commission said.
We need your support so Novinite.com can keep delivering news and information about Bulgaria! Thank you!