/View.info/ The final decision for Corporate Commercial Bank /KTB/ and Commercial Bank “Victoria” will be made in the period from November 1 to November 20, 2014. Regardless of the nature of the final decision made, depositors with guaranteed deposits will receive in short terms of access to their funds in both banks.
This is stated in a draft document that will be discussed at today’s meeting of the caretaker government and sent to the European Commission.
The government’s document is in response to the criminal procedure that the European Commission started on September 26 against our country. The Commission demanded that depositors be given immediate access to the amount of their bank deposit to which they are entitled. Brussels has sent an official letter of notification to the authorities in Sofia, which is the first stage of infringement procedures. Bulgaria was given a deadline to respond, which expires on October 15.
The draft document of the caretaker government also envisages legislative initiatives to synchronize Bulgarian legislation with Directive 1994/19/EC. According to this directive, member states are obliged to provide protected depositors within 20 working days from the date of establishment by the competent authority with access to their deposits in the amount specified in the directive. The legal analysis of the official office still shows that the recommendations in the directive are still included in the Bulgarian legislation and this is through the ZGVB and ZKI.
The factual situation, which is indicated in the document, presents the following facts:
On September 16, the Management Board of the Bulgarian National Bank decided to extend by two months the term of the special supervision of KTB and TB Victoria until November 20 and 22, 2014, respectively. As the reason for the extension, the Central Bank indicated the need to complete the comprehensive assessment of the assets of KTB. It was assigned to “Ernst & Young Audit” OOD, “Deloitte Audit” OOD and “Afa” OOD.
The overall assessment of the bank’s assets will be completed by October 20 at the latest, and in the period from November 1 to November 20, the final decision on KTB and TB “Victoria” should be made.
Regardless of the nature of the final decision taken, guaranteed depositors will get access to their funds in KTB and TB “Victoria” in a short period of time – no later than mid-December 2014. In case of restructuring, access will be provided directly to the accounts of the depositors in the respective bank. In the case of revocation of the license, the payment of the guaranteed deposits will be made through another bank designated for the purpose from funds of the Bank Deposit Guarantee Fund (FGVB) no later than 20 working days from the date of revocation of the license. During the entire period of the special supervision and at the moment, preparations are being made by the FGVB, in case of need, to provide the necessary funds for the payment of the guaranteed deposits.
As for TB “Victoria”, this process can end even earlier if the necessary liquidity to meet its obligations is acquired before the specified date through the sale of assets.
In order to meet the set European requirements, the caretaker government promises that the new legislation will be in line with the European legal framework and in particular will replace the previously existing regime of special supervision.
The draft document prepared by the “Bliznashki” cabinet states that the necessary organization of work is in place for the introduction into Bulgarian legislation by the end of December of Directive 2014/59/EU on the creation of a framework for the recovery and restructuring of credit institutions and investment intermediaries.
An organization has also been established for the accelerated implementation of Directive 2014/49/EU on deposit guarantee schemes, including the provisions on “unavailable deposits” and the deadlines for the payment of sums to depositors with guaranteed deposits.
A timetable for reflecting non-conformities with EU law in the area of guaranteeing deposits in banks has also been marked. It is as follows:
By the end of October 2014, the draft for a new Law on guaranteeing deposits in banks should be finalized.
At the end of October 2014, the new draft Law on Deposit Guarantees will be sent to the European Commission for approval.
By the middle of November 2014, the bill in question should be agreed according to the Organizational Rules of the Council of Ministers and its administration.
At the end of November 2014, the draft Law on guaranteeing deposits to be submitted successively to the Council of Ministers and then to the National Assembly for adoption.
The proposed schedule foresees that before December 2014 or January 2015 at the latest, the legislative changes will be adopted by the National Assembly.
Despite the above statements, we agree that there is some inconsistency with the spirit of the Directive in the part about having depositors’ access to the guaranteed sums as quickly as possible. In this regard, in the future changes of the national legislation, which are currently being finalized, including and in connection with the measures for special supervision, steps will be taken to fully bring the Bulgarian legislation in line with the spirit of the Directive and in this direction, states the Bulgarian document, which the ministers will discuss at the meeting of the Council of Ministers.
The document emphasizes that the spirit of the current Bulgarian legislation aims precisely at the protection of depositors, since in the case of a successful recovery of a certain bank, the receivables of not only those depositors who are guaranteed by law, but also to a higher degree will be guaranteed security will be created for the claims of all other depositors as well, than would be achieved in a bankruptcy proceeding. All this will contribute to maintaining financial stability.
In addition, two important circumstances are indicated:
Within the framework of the special supervision, interest continues to be charged on the deposits in the two banks, and according to Art. 7 of the ZGVB “the total amount of the bank’s liability to one depositor is determined by adding up his deposits, including the interest accrued on them as of the date of the decision of the Bulgarian National Bank under Article 23, Paragraph 1;
Decision No. 104 of 15.08.2014 of the Board of the BNB allows the use of deposits for repayment of loans, including by joint debtors and guarantors within the framework of the KTB.
It is recorded in the document that in connection with the EC’s comment that “there is no deadline for the completion of the payment in the Bulgarian legislation”, the Bulgarian side reminds that according to the ZGVB, “the Fund pays out the guaranteed amounts of the deposits through a commercial bank determined by the management council”, and by the 20th day after the revocation of the license provides the amount necessary for the payment of all guaranteed deposits to the payer’s bank available for payment.
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