Press Releases

The Bulgarian Deposit Insurance Fund (BDIF) informs the depositors with ‘Corporate Commercial Bank’ AD (KTB) about the terms and procedure for payout of guaranteed deposit amounts following the revocation of license for banking activity of Corporate Commercial Bank (KTB), dated 6 November 2014, by the Bulgarian National Bank (BNB). Under Art. 23, para 5 of the Law on Bank Deposit Guarantee BDIF commences payout of guaranteed sums to depositors not later than 20 (twenty) business days of license revocation. The 20-day deadline is the necessary span for BDIF to receive data on guaranteed depositors and amounts by the conservators of KTB and to organize a smooth reimbursement of depositors’ sums. Payout will be carried out by servicing banks, designated by BDIF. Due to the large number of depositors with KTB BDIF will designate several servicing banks with a view to avoiding unnecessary crowding and tension and providing smooth reimbursement. BDIF repays in full guaranteed deposit amounts of Bulgarian and foreign physical persons and legal entities up to BGN 196,000 (EUR 100,000) for a depositor, regardless of the number of his/her accounts with the bank. The guaranteed sum includes the principal and the interest accrued as of the date of license revocation. Deposits in foreign currency are repaid in Bulgarian levs recalculated as of the initial day of payout. BDIF will inform depositors with KTB about the servicing banks which will execute the reimbursement and depositors’ distribution across servicing banks not later than 25 November 2014. Information will be announced in media, on BDIF website, and through paid announcements in two major dailies. As of the initial day of reimbursement, 4 December 2014, guaranteed depositors with KTB will have access to the full amount of their reimbursable sum. For reimbursement depositors shall report in person at their designated servicing bank, where they shall present an ID (for natural persons) and shall dispose of their funds. Depositors may withdraw their money in cash, order a transfer to another bank, or place it in an account with the servicing bank. There is no statutory requirement, and hence no need for depositors, to submit an application in order to receive their reimbursable amounts. BDIF Management Board announces that: ‘BDIF is duly preparing and is ready to fulfill its mandate with regard to deposit guarantee. Guaranteed depositors will be repaid within the statutory deadline.’   Depositor may receive more information at +359 700 144 03 and www.dif.bg.

At a sitting of the Ad Hoc Committee on Budget and Finance held on 29 October 2014 BDIF Chairman, Mr. Rossen Nikolov, presented before the Committee’s MPs a report on the activities undertaken by BDIF for providing liquidity and back-up financing in the event of payout of guaranteed deposits with Corporate Commercial Bank and/or ‘Victoria’ Commercial Bank, the measures securing BDIF technical preparedness to fulfill its mandate, as well as the preparatory work for ensuring subsequent sustainability of the deposit guarantee scheme. The highlights of the report in Bulgarian can be viewed here.

With regard to the letter of the Chairperson of the European Banking Authority (EBA) to the Bulgarian National Bank (BNB) and the Bulgarian Deposit Insurance Fund (BDIF) of 17 October 2014 with which a Recommendation to the Bulgarian National Bank and Bulgarian Deposit Insurance Fund on action necessary to comply with Directive 94/19/EC is conveyed, we would like to communicate herein: On 24 October 2014 BDIF sent a reply to the letter by EBA where BDIF Management expresses their  concern about the restricted access of depositors to their amounts held in bank accounts with Corporate Commercial Bank (KTB) and CB ‘Victoria’ (VCB) and about the lack of decision of the competent authority to allow full or partial access to deposits or to revoke the bank/s license. However, BDIF is of the opinion that the financial stability system implies coordinated actions of the responsible institutions in times of crisis, especially when the fourth largest bank in the country is concerned. Considering this, since the banks’ placement under special supervision BDIF has respected the leading role of the BNB in dealing with the problem as the single institution in charge of the banking supervision and authorised to resolve the case. Nevertheless, BDIF expresses its readiness to fulfill its mandate with regard to deposit guarantee. For proactive readiness for payout, should banking licenses of KTB and/or VCB be revoked three tests with real data on deposits with both banks have been carried out by BDIF. Test results were reviewed by BDIF Management Board and sent to BNB and the banks’ conservators with a recommendation for the actions that need to be taken to supplement the data. Depositors shall bear in mind that the amount of funds under BDIF management is not definitive for the level of guarantee and depositors’ entitlement to reimbursement. BDIF portfolio amounts to BGN 2 bln and 110 mln (EUR 1 bln and 79 mln), of which BGN 1 bln and 540 mln (EUR 787 mln) are available in BDIF current accounts with BNB, and BGN 570 mln (EUR 275 mln) are invested in short term securities, issued by the Bulgarian government. BDIF, jointly with the Ministry of Finance and Bulgarian and foreign credit institutions is working on various options to fill the funding gap in accordance with the provisions in the Law on Bank Deposit Guarantee (LBDG), as well as to provide immediate solvency against the securities in BDIF portfolio. The options to finance the shortage of BDIF funds amounting approx. to BGN 1 bln and 700 mln (EUR 869 mln), which have been being worked upon since crisis breakout and are in their final phase, include: Issuance of BDIF bonds, secured by a state guarantee, and their placement in the local market; Loan by the Bulgarian government; and Loan by international banks. BDIF Management Board will choose the optimal combination of financing sources, taking into consideration all financing conditions, incl. the price of the borrowing. Regardless of the BDIF funding need for the payout of guaranteed deposits with the fourth largest bank in Bulgaria, the stability of the deposit guarantee system will be preserved. Given the controlling functions BDIF has in bank bankruptcy proceedings and its ranking in the hierarchy of claims, BDIF expects to be able to pay back its loans with the proceeds in the distribution of liquidated property of the bankruptcy estate. Please note that the deposit transactions concluded after the insolvency date defined by the court may be declared null and void. Further to that, BDIF has held talks for exploring the possibilities of EBRD accommodating it with a stand-by credit line, which will ensuring BDIF viability to fulfill its mandate and will enhance the confidence in the deposit guarantee system. We avail of the opportunity to indicate again that BDIF repays depositors’ funds with banks up to BGN 196,000 (EUR 100,000) in case of license revocation by the BNB. A depositor’s guaranteed amount with a bank includes the principal and the interest accrued by the date of license revocation. Guaranteed are deposits in levs and in foreign currency of physical persons and legal entities. Deposits in foreign currency are repaid in Bulgarian levs at BNB’s exchange rate as of the initial day of payout. Reimbursement is executed via a servicing bank, determined by the BDIF Management Board. In case of license revocation of KTB and/or VCB BDIF will provide depositors access to their funds within the deadline set out in LBDG. As of the initial day of payout depositors may receive their guaranteed amounts at the servicing bank upon presentation of an ID document and signing on spot a declaration stating that none of the circumstances under Article 5, paragraph 1, items 2 – 5 and paragraph 2 of the LBDG are available. In case of payout, a template of the declaration shall be available at the servicing bank and uploaded on BDIF website. We would like to declare that there is no statutory requirement, and consequently, there is no need for the depositors to submit applications to BDIF or the servicing bank in order to receive their guaranteed deposit. In view of the large number of depositors and with the aim of their optimal servicing, BDIF is working on the option of parallel repayment via the branch network of several banks. In order to avoid subjectivity and market distortion clear and fair criteria for selection of servicing banks have been elaborated. BDIF has developed instructions to the servicing banks and detailed work schedule. The servicing bank shall repay the full guaranteed amount to depositors. Upon their discrimination, depositors may withdraw their money, may order a transfer to another bank, or leave it in an account with the servicing bank. To conclude with, we would once again like to express our sympathy to depositors with KTB and VCB and to ascertain our readiness to fulfill our statutory mandate, should there be a license revocation. Link to BDIF reply to EBA.

In view of the press release issued today by the European Commission regarding the infringement proceedings against Bulgaria related to depositors’ access to their funds with Corporate Commercial Bank (KTB) and Commercial Bank ‘Victoria’, we would like to communicate herein: The Bulgarian Deposit Insurance Fund pays out depositors’ funds with banks up to the guaranteed limit of BGN 196,000 (EUR 100,000) in case of license revocation by the Bulgarian National Bank. BDIF respects the role of the Bulgarian National Bank as the single institution responsible for the implementation of banking supervision and authorised to take a decision so as to solve the problems with the KTB and CB ‘Victoria’. BDIF, on its part, is technically prepared to fulfill its mandate to pay out guaranteed deposits within the statutory deadline. As of the date of placement of KTB and CB ‘Victoria’ under special supervision BDIF, in close cooperation with the Ministry of Finance and the banking industry, is working for market solutions to make up for the shortfall of resources shall payout of guaranteed deposits with both banks be triggered. BDIF would like to express its concern and understanding to the affected depositors. More information on the infringement proceedings is available at the website of the Ministry of Finance .

The Bulgarian Deposit Insurance Fund posted its 2013 Annual Report. BDIF Management Annual Activity Report and the annual financial statements for the review year are now available in electronic form in Bulgarian and English. BDIF Management Annual Activity Report outlines the European and global initiatives for new financial architecture and reports on the 3-year implementation of the priorities outlined under the 2011-2014 Governance Strategy: timely access of depositors to their guaranteed amounts, alternative methods for bank resolution, risk management, adequate funding and safe and transparent asset management, effective communication and maintenance of depositors’ confidence, good corporate practices and transparent and effective governance. 2014 budget is also accounted for. ‘BDIF 2013 Annual Report provides an overview of the progress made in accordance with the Strategy adopted in 2011,’ said Mr. Rossen Nikolov, BDIF Chairman, adding, ‘Our achievements so far give us confidence that BDIF will continue to accept the challenges ahead and execute its statutory functions, thus helping maintain the depositors’ confidence and the stability of the banking system’. The Appendices to the BDIF Management Annual Activity Report present the major financial indicators, make a review of the economic environment, the banking system in 2013 and the deposit guarantee scheme in Bulgaria, as well as the investment policy and asset management. BDIF Financial Statements are prepared in compliance with the International Financial Reporting Standards and certified by an independent auditor.

Today, 13 May 2014, the Governing Council of the Bulgarian National Bank approved the Report on the performance of BDIF administrative expenses budget for 2013. The Report was presented by BDIF Management Board in compliance with Art. 12, para. 1, item 6 of the Law on Bank Deposit Guarantee. BDIF administrative expenses budget for 2013 amounted to BGN 1,674,960, whereas its performance as of 31 December 2013 stood at BGN 1,374,048.

All banks transferred the annual premium contributions payable to the Bulgarian Deposit Insurance Fund. Under the Law on Bank Deposit Guarantee member banks shall pay annually, by 31 March in the current year, premium contributions amounting to 0.5 per cent of the eligible deposits for the preceding year, determined on an average daily basis. Insurable deposits in foreign currency are recalculated in levs at the exchange rate of the Bulgarian National Bank for the respective day. In the event of delayed payment of contribution, banks pay statutory penalty interest to the BDIF. Exempt from paying premium contributions are EU branches, and third countries bank branches on condition that their home country scheme provides equivalent level and scope of coverage. Alpha Bank — Bulgaria Branch, BNP Paribas S.A. — Sofia Branch, Citibank Europe Plc. – Bulgaria Branch, ING Bank N.V. — Sofia Branch and I?BANK AG — Sofia Branch do not participate in the Bulgarian deposit insurance system. Respectively, those branches do not pay premium contributions to the BDIF, since as per EU requirements deposit protection is provided by the home country scheme. ‘With the transfer of 2014 annual premiums from member banks, amounting to BGN 263.4 million, as of date BDIF funds total BGN 2.104 billion. This ranks BDIF among the best capitalized funds according to international standards’, said Mr. Rossen Nikolov, Chairman of BDIF Management Board. BDIF accumulated funds shall be used for payout of the insured deposit amounts in the event of a bank failure. The level of coverage is BGN 196,000 per depositor per bank. Insured are deposits of physical persons and legal entities in levs and in foreign currency. By guaranteeing depositors’ funds BDIF contributes to maintaining the stability of and confidence in the banking system in Bulgaria.

Today the Governing Council of the Bulgarian National Bank approved the Annual budget for administrative expenses of the Bulgarian Deposit Insurance Fund for 2014, presented by BDIF Management Board. The budget amounts to BGN 1,671,860.

Today, 6 June 2013, the Governing Council of the Bulgarian National Bank approved the Report on the implementation of BDIF administrative expenses budget for 2012. The Report was presented by BDIF Management Board in compliance with Art. 12, para. 1, item 6 of the Law on Bank Deposit Guarantee. BDIF administrative expenses budget for 2012 amounted to BGN 1,715,022, whereas its performance as of 31 December 2012 stood at BGN 1, 454,620, which is a saving of 15%.

The Bulgarian Deposit Insurance Fund posted its 2012 Annual Report. BDIF Management Annual Activity Report and the annual financial statements for the review year are now available in electronic form in Bulgarian and English. BDIF Management Annual Activity Report renders the implementation of the priorities outlined under the 2011-2014 Governance Strategy: timely access of depositors to their guaranteed amounts, alternative methods for bank resolution, risk management, adequate funding and safe and transparent asset management, effective communication and maintenance of depositors’ confidence, good corporate practices and transparent and effective governance. 2013 budget and plans are also accounted for. ‘BDIF 2012 Annual Report reflects our ongoing efforts to improve the performance of the institution and to facilitate a better understanding of deposit guarantee by the depositors’, said Mr. Rossen Nikolov, BDIF Chairman, adding: ‘Streamlining operations with a view to providing better deposit protection, along with boosting depositors’ confidence in banks and BDIF alike helps maintain the national financial system stability.’ The Appendices to the BDIF Management Annual Activity Report present the major financial indicators, make a review of the economic environment, the banking system in 2012 and the deposit guarantee scheme in Bulgaria, the investment policy and asset management, and give an outline of the international legal seminar hosted. BDIF Financial Statements are prepared in compliance with the International Financial Reporting Standards and certified by an independent auditor.