European Commission gives green light for 3.3B leva (about 1.69 billion euro) in state aid for Bulgarian banks

The European Commission said on June 30 that it has authorised Bulgaria to use of 3.3 billion leva (about 1.69 billion euro) for a credit line that would ensure sufficient liquidity in Bulgaria’s banking system.

The Commission said that the state aid implied by the liquidity measure “is proportionate and commensurate with the need to ensure sufficient liquidity in the banking sector in the particular circumstances.”

The circumstances the EC was referring to is the news that “certain individuals have been targeting Corporate Commercial Bank and First Investment Bank, urging customers to withdraw their deposits,” the Commission said.

“This created concerns about the liquidity of the bank in question and risked spilling over to some other institutions, despite the fact that the Bulgarian banking system is well capitalised and has high levels of liquidity compared to its peers in other member states.”

Bulgaria’s decision to increase liquidity was a precautionary measure and was welcomed by European competition commissioner Joaquin Almunia, the EC said.

The First Bulgarian Bank (FIBank) became the subject of a bank run on June 27, following a smear campaign that the lender itself described as “the unprecedented criminal organised campaign of rumours and public statements”.

The bank shut down all operations with customers over the weekend to replenish its liquidity and said on June 30 that its branches had re-opened and would work their usual hours and that the lender had “enough cash to meet the needs of our customers.”
http://sofiaglobe.com/2014/06/30/ec-gives-green-light-for-3-3b-leva-in-state-aid-for-bulgarian-banks/?utm_source=rss&utm_medium=rss&utm_campaign=ec-gives-green-light-for-3-3b-leva-in-state-aid-for-bulgarian-banks
30/6/14
-----------------------------

• Bulgaria's bank crisis eases after Europe okays credit line...

Bulgaria's banking crisis eased on Monday with fewer depositors queueing to withdraw savings after leading politicians assured them that their cash was safe and the European Commission gave Sofia the green light to provide state aid to its lenders.
Bulgarians had flocked to branches of First Investment Bank on Friday and withdrew 800 million levs ($560 million) after a run had shut down another big lender. The central bank said criminals had tried to disrupt the financial system.
The authorities appealed for calm and arrested four people suspected of sending emails and mobile phone messages containing false information about the health of Bulgaria's banks.
Queues formed nevertheless outside branches of First Investment Bank, although they were smaller than Friday's, and by lunchtime they had disappeared in central Sofia.
Approval of Sofia's request to provide 3.3 billion levs ($2.3 billion) in state aid - a precautionary measure - helped shares in First Investment Bank rise 24 percent, reversing Friday's losses.
Echoing the International Monetary Fund, the EU executive also said the Bulgarian banking system was "well capitalised" - comments that also helped to soothe the situation.
"People have clearly calmed down, which was to be expected after all the statements," said Petar Ganev of the Sofia-based Institute for Market Economics.
"However, there are still risks of new attacks against the banking system as no doubt this was a well-prepared attack ... I hope people, including the politicians have learned from all this because it is essential to restore confidence," he said.
President Rosen Plevneliev urged Bulgarians to keep faith with the banks in a national appeal on Sunday after emergency talks with political party leaders and central bank officials.
"There is no cause or reason to give way to panic. There is no banking crisis, there is a crisis of trust and there is a criminal attack," Plevneliev told a news conference.
First Investment Bank declined to comment on how much money had been withdrawn on Monday but the bank has said it has sufficient funds to meet customers' demand..........................http://www.hurriyetdailynews.com/bulgarias-bank-crisis-eases-after-europe-okays-credit-line.aspx?pageID=238&nID=68482&NewsCatID=344
30/6/14