Brussels, 26/11/2014 (Agence Europe) - On Tuesday 25 November, the European Commission approved state aid granted to the Bulgarian bank First Investment Bank (Fibank) (EUROPE 11111).
According to the European institution, the measures taken were needed to preserve financial stability in Bulgaria, a country which saw a mass withdrawal of deposits last summer. Furthermore, the restructuring plan adopted in exchange for the state aid will allow Fibank to be viable in the long term, without unduly distorting competition within the single market.
The Bulgarian state asked to extend until 28 May 2016 part of the deposit made to the bank, or €460 million out of an initial envelope of €600 million. The Commission takes the view that this aid to shore up the liquidity of Fibank was related to the knock-on effects of the 'bank run' in Bulgaria, rather than to a structural issue. A full and immediate repayment of the deposit would risk destabilising not only the bank but also the Bulgarian financial system, it states in a press release.
In its restructuring plan, the Bulgarian bank undertakes to pay back the treasury facility on specific dates. Its governance and its risk management policy have been tightened up. It will pay no dividends and will refrain from aggressive commercial behaviour and any acquisitions. (MB).