EC gives green light for 3.3B leva in state aid for Bulgarian banks

Written by on June 30, 2014 in Business - Comments Off on EC gives green light for 3.3B leva in state aid for Bulgarian banks

The European Commission said on June 30 that it has authorised Bulgaria to use 3.3 billion leva (about 1.69 billion euro) for a credit line that would ensure sufficient liquidity in Bulgaria’s banking system.

The Commission said that the state aid implied by the liquidity measure “is proportionate and commensurate with the need to ensure sufficient liquidity in the banking sector in the particular circumstances.”

The circumstances the EC was referring to is the news that “certain individuals have been targeting Corporate Commercial Bank and First Investment Bank, urging customers to withdraw their deposits,” the Commission said.

“This created concerns about the liquidity of the bank in question and risked spilling over to some other institutions, despite the fact that the Bulgarian banking system is well capitalised and has high levels of liquidity compared to its peers in other member states.”

Bulgaria’s decision to increase liquidity was a precautionary measure and was welcomed by European competition commissioner Joaquin Almunia, the EC said.

The First Bulgarian Bank (FIBank) became the subject of a bank run on June 27, following a smear campaign that the lender itself described as “the unprecedented criminal organised campaign of rumours and public statements”.

The bank shut down all operations with customers over the weekend to replenish its liquidity and said on June 30 that its branches had re-opened and would work their usual hours and that the lender had “enough cash to meet the needs of our customers.”

(European Commission’s Berlaymont building. Photo: JLogan)

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