Bulgaria Parliament Moves to Ensure Faster Repayment of Guaranteed Bank Deposits

Bulgaria’s Parliament on Thursday decided state-guaranteed deposits in banks to be repaid within seven workdays after a bank suspends payments.

According to a draft amendment to the Law on Bank Deposit Guarantee adopted on first reading, the Bulgarian Deposit Insurance Fund will be obliged to redeem guaranteed deposits of up to BGN 196,000 (EUR 100,000) after a bank halts payments rather than wait for up to 20 business days after the central bank has withdrawn the banking licence of an insolvent bank.

While the amendment doesn’t change the maximum guaranteed amount, it provides an opportunity to depositors to be granted access to their assets within a narrower timeframe based only on the fact that their bank has halted payments.

It was the lack of such a provision in the existing legislation that forced depositors in collapsed Corporate Commercial Bank, or KTB, to wait for nearly six months last year before the state started repaying their guaranteed funds on December 4.

Other draft amendments to the to the Law on Bank Deposit Guarantee approved on Thursday provide for annual premiums paid by commercial banks into the Bulgarian Deposit Insurance Fund to be tied to the sum of deposits covered by state guarantee that each of them had attracted and the risk profile of the respective bank.

The amendments should be voted on second and final reading to become law.

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