site.btaCentral Bank Authorizes Loan Repayment Operations by Banks under Supervision

Sofia, August 15 (BTA) - The central bank on Friday authorized Corporate Commercial Bank and its subsidiary Credit Agricole to carry out loan repayment operations while under supervision. The two banks were shut down following a run on deposits in late June. They will service unpaid loans from accounts that debtors, co-debtors or loan guarantors have with the banks. The decision was taken in compliance with the Credit Institutions Act and the Bulgarian National Bank Act.

Also, the central bank authorized non-cash currency exchange operations for the purposes of loan repayment.

The central bank has instructed the two banks' supervisors to take steps to strike off collateral when a loan is repaid in full. When a loan is partially repaid, the supervisors may free assets used as securities if the remaining cash and asset collateral cover at least 130 per cent of the loan balance.
 
Based on the Bulgarian National Bank Act, the central bank put forward an opinion that the transfer of loan payments between accounts of different holders with the two banks may be invalidated as it bypasses the size of the deposit guarantee under the Deposit Guarantee Act and is seen as detrimental to creditors.