ANNOUNCEMENT 01 Jan 2014In January 2014, the government of Bulgaria announced a change in private-sector financial support.
NUMBER OF INTERVENTIONS
Letter by EU Commission to the Bulgarian government, C(2014) 4554:
Press release by the EC on 30 June 2014:
On 29.06.2014, the Commission of the European Union approved the request of the government of the Republic of Bulgaria to implement a liquidity support scheme concerning Bulgarian banks.
The scheme worth 3.3 billion BGN (ca. 2.32 billion USD on the inception day) will be handed out through state deposits with a 5-months maturity to Bulgarian credit institutions. According to the Commission, "the State deposits will be remunerated in line with State aid rules and will be at least at the level observed in the market for the same maturity in the period preceding the State intervention by one month."
The Bulgarian authorities argued this measure was necessary due to the speculative attacks that erupted in the middle of June, 2014 (speculative attacks that were triggered by the initiatives of specific individuals to targeting Corporate Commercial Bank and First Investment Bank, urging customers to withdraw their deposits).
The Commission stated "that the Scheme concerns the provision of State resources to a certain sector, i.e. the financial sector, which is open to intense international competition. It is therefore capable of affecting trade between Member States and of distorting competition, to the extent that it confers an advantage on participating banks. The Scheme essentially provides banks using the credit line with an advantage by providing loans that would otherwise not be available to them in the prevailing circumstances. The measure is selective because it is only open to the financial sector". (par. 17 of C(2014) 4554) However, the EC argued this measure was compatible with the internal market due to the given circumstances - as "it is appropriate to allow banks to reassure their depositors" (par.29)
As this scheme has been effective as of the beginning of 2014, the 1 January 2014 is selected as the inception date.
The GTA includes state guarantees and other financial incentives thatare likely to affect the restructuring and performance of firms facinginternational competition, whether from imports, in export markets, andfrom foreign subsidiaries.
The list of affected trading partners is based on the largest foreign banks operating in Bulgaria: ING, BNP Paribas, Alpha Bank, Citibank, Zaraat Bankasi and Regional Investment Bank.