site.btaFunds for Recovery and Resolution of Banks, Investment Firms Regulated by Law

Funds for Recovery and Resolution of  Banks, Investment Firms Regulated by Law

Sofia, July 30 (BTA) -  Parliament adopted conclusively Recovery
 and Resolution of Credit Institutions and Investment Firms Act
on Thursday providing for the establishment of a Bank Resolution
 Fund and an Investment Firms Resolution Fund.

The law provides that in the event of a partial transfer of
assets of an institution under resolution to a private purchaser
 or to a bridge bank, the residual part of the institution
 should not incur greater losses than those which they would
have incurred if the institution had been wound up at the time
that the resolution decision is taken. The law-maker designates
the Bulgarian National Bank (BNB) as an authority in charge of
resolution of banks and the Financial Supervision Commission
(FSC) as the authority responsible for the resolution of
investment firms. BNB and FSC should promptly inform the Finance
 Minister of their decisions.   

An institution, that is not part of a group subject to
consolidated supervision draws up and maintains a recovery plan
providing for measures to be taken by the institution to restore
 its financial position following a significant deterioration of
 its financial situation.

Based on the BNB judgment of the possibilities for resolution,
the Finance Minister may address a reasoned proposal to the
Council of Ministers for applying the government financial
stabilisation tools while complying the state aid regulations.
On its part, the Government shall set the amount by which the
state will participate in the capital of a bank in a resolution
regime.