The bank deposits of the Bulgarian households exceeded EUR 20 billion. Meanwhile, only deposits of up to EUR 100,000 are guaranteed by the law. The result was clearly seen during last year’s crisis with the fourth biggest bank in Bulgaria - the Corporate Commercial Bank. The bank went into insolvency due to unsecured credits and the bad management of its major shareholder. As a result, the Bulgarian Central Bank closed CCB and finally took its banking license. All depositors at the problematic bank wanted to benefit from their legal right to take their money from the Bulgarian Deposit Insurance Fund. However, it turned out that the fund did not have the necessary EUR 1.5 billion. Thus, the authorities had to take a foreign loan, in order to feed the accounts of the fund, which had to pay the depositors. In other words, both the Deposit Insurance Fund and the state incurred debts. At the end of this financial operation the fund’s indebtedness amounted to EUR 1 billion. Moreover, there is no guarantee that the crisis would not repeat in any other Bulgarian bank. In that case, the Deposit Insurance Fund will have to cover the amount of all bank deposits guaranteed by the law.

Recently it became clear that the commercial banks in Bulgaria fed the accounts of the Deposit Insurance Fund with their first annual installments and let the fund take a breath of fresh air. The money, however, is only EUR 130 million, whereas the total amount of the households’ deposits is currently over EUR 20 billion. This dangerous situation, however, has to double the efforts of the fund, which on the one hand owes money and on the other owns a substantial amount of assets at the bankrupt Corporate Commercial Bank. Several days ago specially selected assignees entered the bank, following some special amendments to the legislation. Their main task is to trade the remaining assets of the bankrupt bank at the highest price possible, in order to pay off the loan extended by the state and feed the account of the Deposit Insurance Fund with more money. This is a very difficult task and its outcome is not clear at all. According to some experts, the operation may last for around ten years and no one knows exactly how much money will be collected in the end, bearing in mind the doubtful deals of the CCB owned by the Bulgarian banker and businessman Tsvetan Vassilev who left Bulgaria last year. Moreover, this mission is very risky, too. One week ago, it became clear that the business empire of the Bulgarian oligarch, as many people like to call him, is in fact among the bank’s biggest debtors. However, this business is now being sold to foreign investors who promise to pay off debts to the tune of EUR 900 million, most of which to the CCB. However, the doubts about their solvency still remain. The fact that no one trusts the new “European investors” is proven by the latest move of the National Revenue Agency which recently levied distraint on assets, which in Tsvetan Vassilev’s words were already sold to the new investor. The purpose of the Bulgarian authorities is clear: they want to make all debtors of the bankrupt bank pay off their debts. The public opinion towards the latest measures of the authorities is quite positive. This is so, because almost all Bulgarians keep some money in bank deposits and want to make sure that they will be able to get their money back if their bank faces critical situation.

English version: Kostadin Atanasov