Brussels, 30/06/2014 (Agence Europe) - On Monday 30 June, the European Commission announced that it had approved a Bulgarian bank bailout scheme (see EUROPE 11106).
On 29 June, Bulgaria asked the Commission to authorise the provision of a credit line of 3.3 billion BGN (€1.7 billion) in state aid for the banking system to respond to speculative attacks that started on 20 June and forced the government to temporarily close Commercial Corporate Bank and First Investment Bank. The Commission says the aid scheme is proportionate and commensurate with the need to ensure sufficient liquidity in the banking sector in the particular circumstances.
Following articles in the media about imminent insolvency, queues started forming at Commercial Corporate Bank on 20 June, which then spread to First Investment Bank when similar messages circulating on the internet caused panic. First Investment Bank paid out a significant amount to depositors before closing temporarily in the early afternoon of Friday 27 June to replenish the liquidity in the branches and ATMs. The Commission says: “The Bulgarian banking system is well capitalised and has high levels of liquidity compared to its peers in other member states”. It is understood that First Investment Bank will be provided with ample liquidity under the scheme to ensure that it is able to reopen on 30 June. The Commission reports that a number of people were arrested over the weekend for deliberately causing problems at the banks by sending out messages urging people to withdraw their savings. (EL)