site.btaBank Deposit Guarantee Act Passes Conclusively

Bank Deposit Guarantee Act Passes Conclusively

Sofia, July 30 (BTA) - The National Assembly approved an entirely new Bank Deposit Guarantee Act on second reading Thursday. It had been proposed by the Council of Ministers. The Act transposes the EU's 2014 Directive on Deposit Guarantee Schemes into national legislation.

It says that by May 1 of each year the Bulgarian Deposit Insurance Fund (BDIF) will set the size of the annual premium payment owed to it by each bank for the current year, taking into account the bank's risk profile and the amount of guaranteed deposits in the bank in the previous year, calculated as the average of the amounts at the end of each quarter. Banks, including Bulgarian subsidiaries of foreign banks, will make their annual premium payments for the current year by May 31 of each year.

BDIF funds will be used to repay bank depositors within the guaranteed deposit amount pursuant to the law. BDIF will guarantee full repayment of the deposits held by one depositor in one bank, regardless of the number and size of the deposits, up to a limit of 196,000 leva. BDIF funds will also be used to finance restructuring activities under the terms and procedures of Article 144 of the Recovery and Resolution of Credit Institutions and Investment Firms Act.

Guaranteed deposits in a bank will not be repaid if they were made by other banks in their own name and at their own expense; by financial institutions pursuant to Article 3 of the Credit Institutions Act; by insurers and reinsurers pursuant to Article 8 of the Insurance Code; by compulsory or voluntary pension insurance funds; or by investment brokers. Nor will deposits be repaid to collective investment schemes, national investment funds, alternative investment funds and special purpose vehicles; public-financed organizations pursuant to Paragraph 1, Point 5 of the Public Finance Act; the Investor Compensation Fund, BDIF and the Guarantee Fund pursuant to Article 287 of the Insurance Code.

BDIF will put the deposit guarantee system to regular stress tests. Such tests will also be conducted when the Bulgarian National Bank provides information about problems in a bank which could cause the deposit guarantee system to be activated. Stress tests will be conducted at least once every three years, the Act says.

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By 05:17 on 26.08.2024 Today`s news

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