site.btaParliament Passes Banking Supervision Amendments on First Reading

Sofia, November 22 (BTA) - Bulgaria's National Assembly Wednesday voted, 109-0 with 54 abstentions, to pass on first reading amendments to the Credit Institutions Act, moved by Budget and Finance Committee Chair Menda Stoyanova MP of GERB.

The Committee's report says that the revisions are intended to improve the regulatory framework of banking supervision, to implement the recommendations of the 2017 report under the IMF and World Bank Financial Sector Assessment Program, and to honour the commitments assumed by the Bulgarian National Bank (BNB) in response to the report.

Regarding the licensing criteria, the amendments set an additional condition to disclose the beneficial owner of a qualifying or larger shareholding in a company subject to a licensing procedure. It is proposed to obligate banks to provide information to the BNB when they become aware of circumstances suggesting that persons directly or indirectly holding more than 50 per cent of the capital exert negative influence.

Since the BNB has committed itself to broadening the range of persons the exposures to whom should be treated as exposures to connected parties, other proposed revisions improve the supervisory regime for the risk arising from exposures to the bank's administrators, owners of a qualifying or larger shareholding in the bank, persons who control the bank, subsidiaries of the bank and the other persons defined as connected parties.

Stoyanova explained that the idea is to strengthen the effectiveness of supervision by the BNB "so as to avoid a repeat of cases like Corpbank which shook the State." In her words, the amendments create legislative conditions for the implementation of all recommendations and requirements of the European Banking Authority by the BNB and the Bulgarian banks. Stoyanova said that before the provisions come up for a conclusive second reading, they will be modified to take into consideration the opinion of the banking sector.

"The BSP back all provisions related to strengthening banking supervision and enhancing the security of the banking system," said Roumen Gechev MP of BSP for Bulgaria. "Still, the parliamentary group will abstain when this bill is put to the vote because it disagrees with key changes to the banking system being decided in the space of three or four days," he specified.

"The United Patriots will back the bill," Nikolai Alexandrov MP said, adding that the debate should be held at a professional level.

"The Movement for Rights and Freedoms will back the bill, even though its MPs voted against at the committee stage," said Yordan Tsonev MP. The reason is the understanding he sees that the provisions must be revised before the second reading. As he put it, "when adopting legislative amendments the Bulgarian legislator should be guided mainly by EU law rather than by the recommendations of any institution whatsoever."