Bulgaria to join EU banking union in wake of CCB collapse

Written by on July 14, 2014 in Bulgaria - Comments Off on Bulgaria to join EU banking union in wake of CCB collapse

Bulgaria’s political parties agreed on July 14 to launch proceedings to join the EU’s single supervisory mechanism of the European Central Bank as a first step towards joining the EU banking union.

The agreement was reached during political consultations hosted by President Rossen Plevneliev to discuss the financial situation in Bulgaria in the wake of last week’s allegations of mismanagement at the Corporate Commercial Bank (CCB), the country’s fourth largest lender.

On July 11, the central bank claimed that an audit of CCB’s assets found missing paperwork for loans worth 3.5 billion leva out of the bank’s 5.4 billion leva credit portfolio. The Bulgarian National Bank (BNB) said that it would repeal CCB’s licence and move its “healthy assets” to subsidiary Credit Agricole Bulgaria, which would be nationalised.

Plevneliev said that the BNB would seek a European check into Bulgaria’s banking supervision regulations and would then propose legislative changes to improve bank oversight.

Bulgaria’s law enforcement agencies would use all available means, including “all mechanisms for international legal co-operation to uncover all connected people and offshore companies that have been given loans in breach of regulations,” Plevneliev said after the meeting, which went on for more than four hours.

“We debated carrying out an international audit of the bank and uncover the assets bought with those loans and undertake the actions to recoup [the funds],” he said.

However, there was no agreement reached on whether to pass a special law to deal with the CCB fallout. This means that the current legislation, which guarantees loans of up to 100 000 euro, remains in effect.

Speaking after the meeting concluded, the leader of Bulgaria’s largest opposition party GERB, Boiko Borissov, re-iterated his demand, made at the weekend, for the resignation of the BNB board and central bank governor Ivan Iskrov.

Another issue discussed during the meeting, which was also attended by the men sitting in the prime minister and finance minister chairs – Plamen Oresharski and Petar Chobanov, respectively– was the need to revise the budget of the National Health Insurance Fund.

Last week, despite increasing political support from parties in Parliament, the cabinet opposed such a measure. But after the meeting on July 14, Plevneliev said that the government would put forwards its legislative proposal in the coming days.

(Photo: president.bg)

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