Bulgaria: New Rules for Banks

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The Bulgarian National Bank (BNB) has introduced new regulations for banks operating in the country, aimed at ensuring stability and transparency in the financial sector.

Name Requirements

• Any bank that intends to operate on Bulgarian territory must use the same name as it uses in its home country.
• If a bank’s name bears resemblance to another existing bank in Bulgaria, the BNB may request additional distinctive features to differentiate the two.

Establishment and Management

• Banks will be required to be established as joint-stock companies.
• A minimum paid-in capital of 10 million Bulgarian leva (BGN) is necessary for establishment.
• Dematerialized shares must be issued, with each share entitling its holder to one vote.
• The bank’s statute must include information on the following:
  • Bank transactions
  • Authority to sign and represent the bank
  • Internal control mechanisms

Management Requirements

• A minimum of two directors are required, who are jointly responsible for managing and representing the bank.
• At least one director must be proficient in Bulgarian.
• Legal persons cannot be elected as members of the bank’s management board or supervisory board.

Risk Management

• Members of the bank’s management board and supervisory board must collectively possess sufficient knowledge, skills, and experience to ensure effective risk management.
• At least one member of the supervisory board or non-executive members of a bank’s board of directors must be independent.
  • An independent board member is defined as someone who:
    • Is not an employee of the bank
    • Does not hold a position corresponding to senior management in a company that is part of a group subject to prudential consolidation

Effective Date

The new regulations come into effect immediately and are aimed at ensuring the stability and transparency of Bulgaria’s financial sector.