Press Releases

31 December 2010 enforces an amendment to the Law on Bank Deposit Guarantee (LBDG), under which the level of coverage has been increased from BGN 100 000 to BGN 196 000. In accordance with the amendment guarantee on bank deposits has been raised, whereas as of 31 December 2010 the BDIF guarantees payout in full of deposit amounts, regardless of their number and size, up to BGN 196,000 per depositor per bank. Guaranteed are deposits of physical persons and legal entities in national and foreign currencies. LBDG amendment is introduced with § 68. of the Law on Payment Services and Payment Systems, published in Darjaven Vestnik, issue 101 of 28 December 2010. Directive 2009/14/EC of 11 March 2009 amending Directive 94/19/EC on deposit-guarantee schemes as regards the coverage level and the payout delay requires by 31 December 2010 EU member states to provide deposit guarantee of EUR 100,000. Alignment of deposit guarantee regulations aims at enhancing member states depositors’ trust in the EU financial sector, as well as providing further stability in the Community financial market.

The Annual General Meeting and Conference of the International Association of Deposit Insures (IADI), in which representatives of the Bulgarian Deposit Insurance Fund (BDIF) participated, took place in Tokyo, Japan, on 27-28 October 2010. The events were hosted by the Deposit Insurance Corporation of Japan. BDIF Chairman, Mr. Bisser Manolov, was elected a member of the Executive Council for the third time, after two consecutive terms of office (2003-2006, and 2006-2009) at the Annual General Meeting. At the Conference entitled ‘Financial Safety-Nets: Going Forward’ were presented and discussed topics derived from the experience and the lessons learnt from the recent financial crisis – transition back to limited guarantee, re-privatization of nationalized banks, new regulatory landscape and the role of deposit insurance. Special regard was paid to the currently elaborated Assessment Methodology of the Core Principles for Effective Deposit Insurance Systems, issued by the Basel Committee on Banking Supervision (BCBS) and the IADI in June 2009. The Conference was attended by more than 200 representatives of DI, financial supervisory bodies and central banks from over 50 countries, as well as of international financial institutions and academia. ‘By year-end the Assessment Methodology of the Core Principles for Effective Deposit Insurance Systems is due to be finalized’, said BDIF Chairman, Mr. Bisser Manolov. ‘It is the outcome of the collaborative efforts of the BCBS, IADI, EFDI, EC, IMF and the WB. After being finally approved, it will be used in the Financial Sector Assessment Program by the IMF and the WB, for self-assessment by the DI, as well for reviews by third parties.’ The ‘Deposit Insurance Organization of the Year’ Award was bestowed to the Deposit Insurance Corporation of Japan. The International Exhibition on deposit insurance held its sixth edition. The BDIF is a founding member of the IADI, established on 6 May 2002 and domiciled at the Bank for International Settlements in Basel, Switzerland. Presently the IADI includes 69 Participants – Members and Associates, as well as 12 partner institutions.

In compliance with Art. 12, para 1, item 6 of the Law on Bank Deposit Guarantee the Governing Council of the Bulgarian National Bank issued a resolution for approval of the Report on the Performance of the 2009 Administrative Expenses Budget of the Bulgarian Deposit Insurance Fund. The approved 2009 Administrative Expenses Budget of the BDIF totals BGN 1 807 500.00. Its performance amounts to BGN 1 505 492.53 as of 31 December 2009, which represents a 17 per cent savings in compliance with a BDIF Management Board resolution for implementation of appropriate savings amounting to at least 10 per cent of the approved budget.

The general prescriptive period for reimbursement of guaranteed deposit amounts with International Bank for Trade and Development (IBTD) expires on 29 July 2010. Payout of guaranteed deposits with IBTD started on 29 July 2005. Whereas the Law on Bank Deposit Guarantee (LBDG) does not set out a deadline for reimbursement of guaranteed deposits, the provisions of the Law on Obligations and Contracts are applied, which stipulate a general five-year prescriptive term for compensation of claims. With reference to the above the depositors with IBTD, natural persons and legal entities, who under LBDG are entitled to compensation on their deposits and have not done so hitherto, shall take the necessary steps to receive their guaranteed amounts. The repayment of the guaranteed deposits with IBTD is effected by the United Bulgarian Bank (UBB) at its branches countrywide. Upon submission of the issued by the IBTD trustee certificate in the relevant UBB branch, depositors are entitled to order operations with the funds in their ex-officio-opened accounts with the UBB. The maximum amount of the guarantee on deposits with the IBTD is BGN 25,000 under the provisions of the Law on Bank Deposit Guarantee applicable at the time of license revocation of the bank in June 2005. Depositors’ enquiries will be answered by BDIF experts at +359 2 917 2048; 953 1217.

The Bulgarian Deposit Insurance Fund (BDIF) published its 2008 Annual Report, comprising the annual financial statements and the BDIF Management Annual Activity Report, in Bulgarian and English. BDIF Financial Statements, prepared in compliance with the International Financial Reporting Standards and certified by an independent auditor, include income statement, balance sheet, cash flow statement and statement of changes in net assets. BDIF Management Annual Activity Report contains general information about the BDIF and deposit guarantee in Bulgaria including analysis on BDIF’s financial performance in 2008 and the budget and planning for 2009, presentation of applicable financial instruments and financial risk management as well as an overview of the BDIF’s operations in 2008. Information on Bulgarian economy and the Bulgarian banking system in 2008 and a list of the BDIF member banks is provided in appendices. BDIF 2008 Annual Report in English is posted in the website.

The amending ordinance to Ordinance No. 23 on the Terms and Procedure for Payout of Insured Amount of Deposits with Banks with Revoked Licenses has been published today, 7 August 2009, in Darjaven vestnik, issue 63. The amendments to BNB Ordinance No. 23 render compliance to the provisions on the procedure for repayment of insured deposit amounts with the amendments to the Law on Bank Deposit Guarantee (LBDG) in force as of 12 June 2009, as well as with other technical aspects related to repayment issues in LBDG. Under the amendments in LBDG the repayment deadlines have been shortened in view of the new EU regulatory framework. The Bulgarian Deposit Insurance Fund (BDIF) shall start reimbursement of guaranteed deposit amounts no later than 20 working days from license revocation, in lieu of the previous 45 days. The deadline for announcement in no fewer than two major dailies of the initial day of repayment and the servicing bank is shortened to 7 working days at most, before the start of repayment. Amendments to Ordinance No. 23 abolish the previously required issue of certificates as a requisite for obtaining reimbursement of guaranteed deposit amounts. The bank with revoked license provides BDIF and the servicing bank with data on guaranteed deposit amounts. Thus, depositors may, from the initial announced day of repayment, receive their guaranteed deposit amounts in the servicing bank, where they shall submit the documents indicated in the ordinance. The modified procedure aims at facilitating depositors who are no longer obliged to first obtain a certificate from the failed bank. Still, in order to protect depositors’ interest they may, upon request, to be provided with certificate of their guaranteed amount from the failed bank. Amendments to Ordinance No. 23 are enforceable as of 11 August 2009, whereas the shortened deadlines for repayment of the guaranteed deposit amounts shall be in force as of 1 September 2009. The Bulgarian Deposit Insurance Fund guarantees full repayment of the guaranteed amounts of a depositor in a bank, irrespective of their number and size, up to BGN 100,000. Guaranteed are deposits of physical persons and legal entities in national and foreign currencies.

Today, 12 June 2009, the Amendments to the Law on Bank Deposit Guaranty (LBDG) has been published in Darjaven vestnik, issue 44, which transpose the provisions of the adopted on 11 March 2009 Directive 2009/14/EC amending Directive 94/19/EC on deposit-guarantee schemes as regards the coverage level and payout delay into Bulgarian legislation. Major amendments under Directive 2009/14/EC relate to the shortened deadlines for determination for licence revocation due to insolvency and for repayment of guaranteed deposit amounts, co-operation between deposit guarantee schemes, regular stress testing of deposit guarantee schemes, as well as enhancing public awareness. Under the amendments to LBDG the Bulgarian Deposit Insurance Fund (BDIF) shall repay guaranteed deposit amounts within twenty working days as of licence revocation in lieu of the present forty-five days. The twenty-working-day deadline may be extended by ten working days under exceptional circumstances. The deadline for data transfer on guaranteed deposits by the conservator, liquidator or trustee in charge to the BDIF Management Board has been shortened from fifteen to three working days. The deadline for announcement in at least two major dailies of the initial day of repayment and the servicing bank has been shortened from fifteen to seven days at most before deposit repayment. These deadlines enter into force as of 1 September 2009. In view of more efficient functioning of the EU member states schemes the amendments to LBDG introduce new obligations for BDIF: to co-operate with the bodies of the respective deposit guarantee scheme, as well as to perform regular stress testing of the system. These requirements are enforceable as of the date of publication in Darjaven vestnik. The Final Provisions of the amendments to LBDG introduce provisions in the Law on Credit Institutions on enhancement of banking services consumers’ protection regarding the scope of information provided to customers by banks, in the general conditions of the offered deposits and in the individual contracts alike, concerning the applicable deposit guarantee scheme, the level of coverage, the competent repayment authority, as well as the deposits not eligible for guarantee. These amendments enter into force upon publication in Darjaven vestnik.

All banks transferred duly the annual premium contributions payable to the Bulgarian Deposit Insurance Fund (BDIF). Under the Law on Bank Deposit Guaranty (LBDG) 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/EEA 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 ING Bank N.V. – Sofia Branch and Bank Leumi Romania S.A – Sofia Branch do not participate in the Bulgarian deposit insurance system and respectively do not pay premium contributions to the BDIF. ‘The 26 member banks have paid annual premiums for 2009 amounting to BGN 169.5 million and as of date BDIF funds total BGN 858.8 million’, announced Mr. Bisser Manolov, Chairman of the Fund’s Management Board. Funds accumulated in the Fund shall be primarily used for repayment of the insured deposit amounts of physical persons and legal entities in the event of a bank failure. Currently the level of coverage is BGN 100,000 per depositor per bank. Insured are deposits in levs and in foreign currency. The BDIF thus contributes to maintaining the stability of and confidence in the banking system in Bulgaria.

In accordance with Art. 12, para 1, item 6 of the Law on Bank Deposit Guaranty the Governing Council of the Bulgarian National Bank in a decision of 15 January 2009 approved the Administrative Expenses Budget of the Bulgarian Deposit Insurance Fund for the year 2009. The overall 2009 BDIF budget totals BGN 1,807,500. I. General Administrative Costs 1 707 500 I. 1. Office Maintenance 101 500 І. 2. Hired Services 386 500 І. 3. Personnel Remuneration 735 000 І. 4. Social Security Contributions and Bonuses 346 000 І. 5. Other Expenses 138 500 ІІ. Total Financial Expenses 30 000 ІІІ. Extraordinary Expenses – ІV. Expenses on Acquiring Tangible and Intangible Assets 70 000 TOTAL (I+II+III+IV) 1 807 500 The 2009 BDIF Budget provides the resources necessary for the effective implementation of the statutory functions of the BDIF and the accomplishment of the targeted aims in the year 2009, ensuing from the pending amendments to Directive 94/19/EC on deposit-guarantee schemes, as well as BDIF role as a financial safety net player. The major aims BDIF has set for 2009 are: 1. Reduction of the deadline for repayment of guaranteed deposit amounts in compliance with the shortened deadline envisaged in the amendments to the Directive; 2. Development of a database for analysis of the different levels of guarantee ensuing from the expected increase of guarantee to EUR 100,000; and 3. Elaboration of rules and procedures related to BDIF powers under the Law on Credit Institutions regarding BDIF participation in the capital increase of an ailing bank.