EC Urges Bulgaria to Start Paying Guaranteed Deposits at KTB Bank

The European Commission has warned the Bulgarian National Bank to speed up the repayment of guaranteed deposits of natural and legal persons at the Corporate Commercial Bank (KTB).

In a letter of the EC, signed by Jonathan Faull, Director-General of the Internal Market and Services Directorate-General, BNB and the Bulgarian authorities are notified that they are delaying the provision of the access to the deposits at KTB.

The letter informs that EU law envisages that the repayment of deposits start within20 days from the moment when the bank stopped functioning and it was clear that there was no possibility of it resuming its activity.

The letter, as cited by the Bulgarian National Television, concludes that the Bulgarian authorities are overstepping the legally enshrined time limit for deciding the matter.

The letter of the EC addresses outgoing Finance Minister Petar Chobanov and BNB Deputy Governor Kalin Hristov.

The EC says that it finds the situation very worrying and cautions that it may take steps to guarantee the application of EU law, which observers interpret as an infringement procedure warning.

The EC insists that the deadlines stipulated in EU law must be observed because the Community legislation has a primacy over national legislation of the Member States.

Jonathan Faull also assures Bulgaria that the EC is ready to offer expert assistance if necessary.

A few days ago, BNB announced that it could extend the period of conservatorship after September 21, thereby triggering fears that the repayment of blocked deposits would start no earlier than end-2014.

KTB was placed under conservatorship by BNB on June 20 after a bank run which saw depositors withdraw more than one-fifth of total deposits...