Interrelationships Among Safety Net Participants: the Case of Bulgaria

Roumyana MarkovaInternational Cooperation and PR Dept.

Bulgarian Deposit Insurance Fund

Safety Net Participants

• Bulgarian National Bank (BNB)

• Banking Supervision Department (with BNB)

• Bulgarian Deposit Insurance Fund

Bulgarian National Bank

• Introduction of Currency Board in mid 1997

- Lender of Last Resort only in systemic crisis- lending facility: the deposit of the BankingDepartment with the Issue Department

BNB Banking Supervision Dept.

• Drafts regulations (approved by BNB)

• Supervises banks

• BSD Directorates- Supervision Policy and Methodology- Supervision Administration- On-site Supervision- Off-site Supervision and Analysis- Special Supervision

Bulgarian Deposit Insurance Fund (BDIF)

• BDIF was established by the Law on Bank Deposit Guaranty passed in April 1998

• BDIF is a legal entity effectively operating as of January 1999

BDIF Mandate

• Law on Bank Deposit Guaranty (LBDG)- determines and collects banks’ annual and entry premiums- invests its assets in accordance with LBDG provisions - repays the insured amounts of deposits in failed banks

• Law on Bank Bankruptcy (LBB)- administers bank bankruptcy proceedings by controllingthe trustee

Relationships with BSD/BNB

• LBDG requires BNB to provide:- all the information available on the amount of bank depositsand required for calculating banks’ premiums

- full current information on the financial status of banks inview of assessing the risk associated with DIS implementation

- upon BDIF request BSD may conduct off- and on-siteinspections concerning the deposit base and present the findings

Memorandum of Understanding, Nov 1999- upon failure to pay the premium due within 3 months BDIFnotifies BNB to undertake the measures prescribed in the Lawon Banks

Relationships with BNB

• Under LBDG- BDIF drafts regulations for LBDG implementation to beapproved by BNB

- BDIF Vice Chairman is designated by BNB- BDIF Annual Report is presented to BNB- BDIF administrative expenses budget, together with reporton its performance is approved by BNB

Relationships with BSD/BNB

• Under LBB:- BDIF appoints trustees from a list kept by BSD

- BSD and BDIF give statement of opinion to the court forselling a failed bank as an enterprise

- BDIF drafts regulations for LBB implementation to be approved by BNB

Relationships with Association of Commercial Banks

• Under LBDG:- BDIF Member of the Management Board is designated byAssociation of Commercial Banks

Letter of Cooperation, Aug 2001

Thank You For Your Attention

Bulgarian Deposit Insurance Fund27 Vladaiska Street, 1606 Sofia, Bulgaria

Tel.: +359 2 953 1217, 953 1318; Fax: +359 2 952 1100E-mail: contact@dif.bg

Internet: http://www.dif.bg