EC opens infringement proceedings against Bulgaria for breaching deposit guarantee laws due to the problems with Corpbank

The European Commission (EC) said it is opening infringement proceedings against Bulgaria for its failure to allow clients of troubled Corporate Commercial Bank (Corpbank) access to their money. The Commission said in a press release it is sending a letter of formal notice to Bulgaria, the first formal step in infringement proceedings. The launch of the proceedings has been prompted by Bulgaria’s failures to correctly transpose two articles of the Deposit Guarantee Scheme (DGS) Directive and comply with the principle of free movement of capital within the EU. The Commission said that it expects that depositors will be given immediate access to the amount of bank deposits to which they are entitled. EC stressed that while Bulgarian law stipulates that the DGS is authorised to pay the claims of depositors against a bank only if the central bank has revoked its banking licence, the Commission’s DGS Directive contains no such requirement. Under the general EU legislative principles, national authorities are required to apply the Directive regardless of contradicting provisions of the national law. BNB seized control of Corpbank and Victoria Bank in June following a deposits run, suspending all their operations and ordering an audit of their books that has to be completed by 20 October. The depositors at the two banks have no access to their money for more than three months and on 16 September BNB decided to extend the period of special supervision over Corpbank and Victoria Bank to 20 November and 22 November, respectively.