Council of Ministers Establishes New Rules for Credit Institutions
The Council of Ministers in Sofia, Bulgaria has issued new regulations to strengthen the supervision and regulation of credit institutions in the country.
Key Changes
- Credit institutions will no longer be allowed to accept public deposits or other repayable funds, with certain exceptions.
- Exceptions include:
- The Bulgarian state and municipalities
- International public organizations having one or more Member States as their members
- Acceptance of repayable funds in cases determined by law
- Exceptions include:
- New requirements for credit institutions to ensure effective risk management:
- Minimum paid-in capital of BGN 10 million
- Issue only dematerialized shares
Name and Branding Restrictions
- Credit institutions may not use words such as “bank” or its derivatives in their name unless explicitly regulated by law and subject to supervision aimed at protecting depositors and investors.
- The prohibition also applies to any entity whose name bears a resemblance to an existing bank operating in Bulgaria without consent from the Bulgarian National Bank (BNB).
Management and Representation Requirements
- Credit institutions will be required to have a minimum of two persons who are jointly responsible for managing and representing the institution, with at least one person proficient in Bulgarian.
Board Composition Requirements
- Members of the management board and supervisory board must possess varied qualifications and experience appropriate to the specifics of the bank’s activities and main risks it is exposed to.
- Members of the management board and supervisory board may not participate in the composition of the management or supervisory bodies of other legal entities without prior consent from the BNB.
Purpose
The new regulations are aimed at strengthening the stability and integrity of Bulgaria’s financial system and ensuring the protection of depositors and investors.