Bulgarian Cabinet proposes new rules on state companies’ deposits
Bulgaria’s caretaker Government has drafted a bill amending the regulations on deposits held by state-owned companies, meant to prevent the concentration of state funds in one bank. The bill is subject to public debate until May 13, at which point the working group that drafted the amendments will review all suggestions and make further changes if it deems them necessary.
The two major changes to the regulations are that companies controlled by the Government – namely those in which the Bulgarian state has an ownership stake of more than 50 per cent – will be allowed to hold no more than 25 per cent of their deposits in one lender. Furthermore, the regulations will no longer have the status of a recommendation, but will become mandatory.
Speaking after the Cabinet’s meeting on April 30, caretaker Prime Minister Marin Raykov, who ordered the creation of the working group that amended the regulation and chaired its meetings, said that that 54 per cent of state-owned companies’ deposits were currently held by one bank.
Raykov declined to name the financial institution, saying that he was prevented by bank confidentiality rules.
The most likely guess – and one widely made by Bulgarian media – is Corporate Commercial Bank. In 2009, Boiko Borissov’s cabinet made public such figures, which put the lender’s share of state companies’ deposits at 37 per cent. A year later, the bank’s share grew to 70 per cent.
Similarly, last month ratings agency Fitch said in a report on Bulgarian Energy Holding – the corporate entity set up to consolidate state holdings in the energy sector – that 87 per cent of the company’s deposits, or 624 million leva, were being held by Corporate Commercial Bank as of September 2012.
Should the Cabinet pass the draft amendments in their current form, state-owned companies would have six months to ensure compliance. If they fail to do so, the respective ministries that exercise control of the state’s shares on behalf of the Government will have the right to impose compliance on the companies’ boards of directors, Finance Minister Kalin Hristov said.
State-owned companies will have to report every quarter on the state of their deposits to the respective ministries that exercise control of the shares on behalf of the Government. This data will have to be made public on the ministries’ websites, although the exact amounts deposited and the identity of the banks will remain privileged information, according to the draft bill.
(Caretaker Prime Minister Marin Raykov. Photo: government.bg)