The European Bank for Reconstruction and Development (EBRD) is providing a €300m loan to the Bulgarian Deposit Insurance Fund (BDIF).
Established in 1999, the BDIF aims to promote the stability of the country’s financial system.
The EBRD loan will restore BDIF’s reserves due to a major bank failure in 2014, It will offer a better financial independence and sustainability in the long run to the fund’s finances.
It will optimize the funding structure of the BDIF, which is now required to take steps as per the new legislation frameworks for deposit insurance and bank recovery and resolution, implemented in mid-2015 to transpose requirements of the respective EU directives.
The EBRD said strengthening the deposit insurance system will increase confidence in the Bulgarian banking sector and support the efficient functioning of the financial market.
The loan has a nine-year maturity with a grace period of six years. It supports the development of the local banking market infrastructure.
EBRD director for EU banks Lucyna Stanczak-Wuczynska said: "We are encouraged by the authorities’ commitment to boosting the deposit insurance system. A stronger, more resilient system will contribute to a more stable banking sector in Bulgaria."
EBRD regional director for Romania and Bulgaria Matteo Patrone said: "We are complementing the authorities’ efforts to strengthen stability of the financial sector and this transaction is testimony to the EBRD’s commitment to Bulgaria, its financial sector and savers in the country."
The EBRD has so far invested more than €3.3bn in over 220 projects in Bulgaria.
Image: EBRD Regional Director for Romania and Bulgaria, Matteo Patrone (c) signs the loan agreement with Bulgarian Minister of Finance
Vladislav Goranov (r) and BDIF Chairman Radoslav Milenkov (l). Photo: courtesy of European Bank for Reconstruction and Development.