site.btaEBRD Lends 300 Million Euro to Bulgarian Deposit Insurance Fund

EBRD Lends 300 Million Euro to Bulgarian Deposit Insurance Fund

Sofia, March 24 (BTA) - Finance Minister Vladislav Goranov and European Bank for Reconstruction and Development (EBRD) Regional Director for Romania and Bulgaria, Matteo Patrone, signed here on Thursday a sovereign guarantee agreement for the loan of 300 million euro EBRD provides to the Bulgarian Deposit Insurance Fund (BDIF), the Finance Ministry said in a press release Thursday. The sovereign guarantee agreement is subject to follow-up ratification by the Bulgarian Parliament.

Together with this, Patrone and BDIF Chairman Radoslav Milenkov signed the 300 million euro loan agreement between ERBRD and the deposit insurer.

The loan is for a term of nine years with a six-year grace period.

In a press release EBRD said that it is supporting Bulgaria's efforts to enhance the country's deposit insurance system, by providing the loan to the BDIF, an independent public institution and the sole deposit insurer in Bulgaria. The project is part of EBRD efforts to boost the resilience of the economies where it invests.

The EBRD loan will make a significant contribution to replenishing the BDIF in the wake of a major bank failure in 2014 and will optimize the funding structure of BDIF. The loan will be conditional on the accomplishment of steps undertaken by BDIF in light of the new legislation frameworks for deposit insurance and bank recovery and resolution, implemented in mid-2015 to transpose requirements of the respective EU directives. The EBRD will thus contribute to greater financial independence and long-term sustainability of BDIF. Reinforcing the deposit insurance system will increase confidence in the Bulgarian banking sector and support the efficient functioning of the financial market.

Patrone said at the signing ceremony that the loan is a landmark investment for the EBRD as it supports the development of the local banking market infrastructure. "We are complementing the authorities' efforts to strengthen stability of the financial sector and this transaction is testimony to the EBRD's commitment to Bulgaria, its financial sector and savers in the country," he said.

The Bulgarian Deposit Insurance Fund was established in 1999. Its objective is to promote the stability of, and trust in, the country's financial system. BDIF protects bank deposits, contributes to the efficient execution of credit institutions' resolution and provides optimal protection of creditor interests in bank bankruptcy proceedings.

The EBRD is one of the largest institutional investors in Bulgaria. To date, the Bank has invested over 3.3 billion euro in more than 220 projects in the country.

EBRD's strategy in Bulgaria for the next four years focuses on strengthening financial sector intermediation through targeted investments and improved governance; enhancing competitiveness of companies, including small and medium-sized enterprises (SMEs), through improved efficiency, governance and innovation; and narrowing the infrastructure gap through commercialisation and supporting reforms.