EBA欧洲银行-EBA-REC-2014-02-28Recommendation-to-the-BNB-and-BDIF29_8页_371kb

Summary of EBA/REC/2014/02: Recommendation to the Bulgarian National Bank and Bulgarian Deposit Insurance Fund

Core Content

This document is a recommendation from the European Banking Authority (EBA) to the Bulgarian National Bank (BNB) and the Bulgarian Deposit Insurance Fund (BDIF) regarding their actions in response to the insolvency risk of Corporate Commercial Bank AD (KTB) and Victoria Commercial Bank EAD (VCB), both of which were placed under conservatorship and special supervision on 20 and 22 June 2014, respectively.

Key Events and Background

• 20 June 2014: BNB placed KTB under conservatorship due to a risk of insolvency, suspending all obligations including access to deposits.
• 22 June 2014: BNB placed VCB under special supervision, also suspending all obligations.
• 25 June 2014: Independent auditors were instructed to review KTB's assets and liabilities.
• 11 July 2014: BNB announced audit results, but requested further evaluation due to missing information.
• 31 July 2014: EBA requested preliminary information from BNB regarding deposit access and BDIF's role under Directive 94/19/EC.
• 19 August 2014: BNB and BDIF responded, stating that BDIF could not make payments until the bank's license was revoked.
• 16 September 2014: BNB extended conservatorship for KTB and VCB to 20 and 22 November 2014.
• 11 September 2014: BDIF received claims and inquiries, but could not make payments due to legal constraints.

Main Findings

• Unavailability of Deposits: The BNB's decision to suspend all obligations of KTB and VCB constitutes a determination that deposits are unavailable, as per Article 1(3)(i) of Directive 94/19/EC.
• Delay in Determination: The BNB failed to make an express determination of deposit unavailability within the five working day timeframe required by the Directive, despite the fact that the conditions for unavailability were met.
• BDIF's Role: The BDIF is legally required to pay verified claims once the competent authorities determine deposits are unavailable. However, the BDIF cannot act without such a determination.
• Legal Interpretation: The BNB is obligated to interpret national law in light of the Directive’s objectives, even if the national law requires insolvency before any payout can occur.

Key Legal Points

• Article 1(3)(i) of Directive 94/19/EC: A deposit is considered unavailable if the competent authorities determine the credit institution is unable to repay it.
• Article 10(1) of Directive 94/19/EC: Deposit guarantee schemes must pay verified claims within 20 working days of the determination of unavailability.
• Article 4(3) of the Treaty on European Union: National authorities must take all appropriate measures to ensure the implementation of Union law.
• Directive 2014/59/EU: Emphasizes the need to ensure depositors continue to have access to their deposits during resolution.

EBA Recommendations

I – Recommendations

1. Compliance with Union Law: BNB and BDIF must take all appropriate measures to ensure compliance with Article 1(3)(i) and Article 10 of Directive 94/19/EC, including interpreting national law in line with Union obligations.
2. Access to Deposits: BNB is recommended to ensure depositors have access to protected deposits by either removing the restrictions from conservatorship or making an immediate determination of unavailability and informing BDIF.
3. Deadline for Action: The BNB must take one of the actions described in point 2 by 21 October 2014.
4. Partial Access: If full access is not feasible, BNB should ensure partial access to deposits immediately, with full access as soon as possible.
5. Accelerate Audits and Decisions: BNB should expedite the ongoing audits of KTB and VCB and the decision-making process regarding their future to provide certainty to depositors and creditors.

II – Implementation and Monitoring

1. Reporting to EBA: BNB and BDIF must inform the EBA within 10 working days of receiving this recommendation about the steps taken or planned to ensure compliance.
2. Formal Opinion Compliance: If the European Commission issues a formal opinion, the addressees must inform the EBA within 10 working days of receiving the opinion about compliance measures.
3. Detailed Reporting: All information must be included in a report that clearly outlines the expected compliance timeline and provides evidence of actions taken and planned.

Conclusion

The EBA concludes that the BNB's actions in placing KTB and VCB under conservatorship and suspending access to deposits have breached Union law. The BDIF, while not yet able to act, is expected to do so once the BNB provides the necessary determination. The recommendations emphasize the need for swift action to ensure depositors' rights are upheld in accordance with the Directive and the EU Treaty.