Europe approves credit line to rescue Bulgarian banks

The European Commission has approved a credit line 1,700 million euros for Bulgarian banks to stablize the banks in the country. The credit line to the state is “proportionate and appropriate to the need to ensure sufficient liquidity to the banking sector in the current circumstances.” The credit line will ensure that banking system can answer “speculative attacks last week,” allegedly arranged to cause a financial crisis in the country.

Brussels believes that ” the Bulgarian banking system is well capitalized and has high liquidity levels compared with their counterparts in other Member States ” and believes that the problems come from ” external events not related to banking.”

The president, Rossen Plevneliev, denied on Sunday that the country’s banks were to collapse. The statement coincided with the arrest of six people in the country accused of “spreading false information” about various banks. Last week there were “attacks” on two of the largest banks urging customers to withdraw their deposits. The massive influx of customers to withdraw money forced the temporary closures.

The National Security Agency Bulgaria reported Monday the arrest of two more persons in connection with an alleged plot aimed at destabilizing the country’s financial system by broadcasting  false information through the Internet and mobile phones.

The agency reported that the arrest of these two individuals, both Bulgarian, was held in Sofia in the course of an operation initiated after detecting the creation of a network of marketing services companies responsible for sending hundreds of emails and text messages.

In this bulletin, the detainees were released information on the liquidity problems faced by some Bulgarian entities, as CorpBank fourth largest bank, which had to be intervened by the government last week and could end up being nationalized if its reference shareholders not agree on a recapitalization plan.

Also, the alleged conspirators have spread information about the delicate situation of the Deposit Guarantee Fund of Bulgaria, which would have no ability to safeguard the savings of citizens if bank problems aggravate the country.

These new arrests take place after the Bulgarian police arrested five other people during the weekend after last week a second run on deposits by citizens who lined up at the doors of the offices of the banks to withdraw money on fears of losing their savings.

Also, in recent days the third largest bank by lending volume, First Investment Bank, also suffered a major leak, prompting the central bank warned of a systematic attack on the banking system.

On the other hand, the president of Bulgaria, Rosen Plevneliev, said that Parliament is set to dissolve on August 6 when a new caretaker government will be appointed to hold  parliamentary election in Bulgaria previously agreed by political parties on October 5.

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Posted by Khalil Khan on Jul 1 2014. Filed under Business. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.