Brussels Approves 1.7 bln Euro Bulgarian Liquidity Support Scheme For Banks
The European Commission said on Monday it has approved Bulgaria’s request that the country extend a 3.3 billion lev ($2.3 billion/1.7 billion euro) credit line in support of its banking system following speculative attacks that occurred over the past week.
“[…] the state aid implied by the provision of the credit line is proportionate and commensurate with the need to ensure sufficient liquidity in the banking sector in the particular circumstances," the Commission said in a press release, adding that it has approved the measure as being compatible with the internal market.
The Commission also said that the Bulgarian banking system is well capitalised and has high levels of liquidity compared to its peers in other EU member states.
The Commission is in close contact with the Bulgarian authorities to monitor the situation, it added.
On June 20 the central bank (BNB) placed Corporate Commercial Bank (Corpbank), the fourth biggest lender in the country, under special supervision over risk of insolvency after it was notified by Corpbank that it has run out of liquidity. BNB applied the same procedure to its subsidiary Victoria Commercial Bank a couple of days later.
On Friday, the central bank said in a statement there was an organised attack carried out through rumours and ill-intentioned statements against local banks, First Investment Bank (Fibank) in particular, which jeopardizes the stability of the country's banking system.
The Commission said in the statement that Fibank will be provided with ample liquidity under the scheme to ensure that it will be able to reopen on 30 June.