Bulgaria's Deposit Insurer Signs EUR 300 M Loan Deal with EBRD

BDIF Chairman Radoslav Milenkov (L), EBRD Director for Romania and Bulgaria Matteo Patrone (C) and Bulgaria’s Finance Minister Vladislav Goranov (R) sign the loan deal, Sofia, 24 March 2016. Photo credit: mfa.bg

The European Bank for Reconstruction and Development will extend a loan of EUR 300 M to the Bulgarian Deposit Insurance Fund (BDIF) under a deal signed in Sofia on Thursday.

The loan has maturity of  nine years with a six-year grace and will replenish BDIF’s reserves, giving “a greater financial independence and sustainability in the long run” to the Fund’s finances, the Bulgarian Finance Ministry said in a statement.

"The loan will be conditional on the accomplishment of steps undertaken by BDIF in light of the new legislation frameworks for deposit insurance and bank recovery and resolution, implemented in mid-2015 to transpose requirements of the respective EU directives," the EBRD said in a separate statement.

The funding agreement was signed by BDIF Board Chairman Radoslav Milenkov and the EBRD Regional Director for Bulgaria and Romania Matteo Patrone. Separately, Finance Minister Vladislav Goranov and Matteo Patrone signed a loan guarantee agreement which has to be ratified by parliament to take effect.

Matteo Patrone commnted in the statement that the loan was "a landmark investment for the EBRD as it supports the development of the local banking market infrastructure."

The World Bank approved a EUR 300 M loan to the BDIF last week.

The BDIF used the bulk of its reserves to cover billions in assets of deposit holders at insolvent Corporate Commercial Bank (KTB), which collapsed in 2014.

The BDIF had BGN 486 M (EUR 248 M) at hand as of end-2015, most of them in government securities. The government has said that it needs a total of EUR 500 M to ensure stability of the banking system in the long run.

 

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