BULGARIA Law and Practice Contributed by: Nikolay Cvetanov, Boris Lazarov, Asen Apostolov and Patrizia Foffo, Penkov, Markov & Partners
The Deposit Guarantee Scheme in Bulgaria is administered by the BDIF. The objective of the BDIF is to contribute to the stability and cred - ibility of the financial system in the country, and to this end it shall ensure protection of deposits and repayment of covered deposits, assist the effective resolution process for credit institutions and ensure optimum protection of the interests of creditors in the bank bankruptcy proceedings. The main function of the BDIF is the repayment of the covered deposits up to the guaranteed amount. The BDIF guarantees the deposits of natural per - sons and legal entities – Bulgarian and foreign nationals. Guaranteed are all funds in a bank account of any type: a current account, a debit card account, a deposit, savings or accumula - tion accounts, an account in favour of a third party, or a joint account. Deposit guarantee is applicable to credit balances obtained as a result of funds deposited in an account, or from tem - porary situations resulting from regular banking transactions, which the bank is obliged to pay to its customers in accordance with applicable legal or contractual provisions. Financial instru - ments of an investment type are not considered a bank deposit and are not guaranteed by the BDIF, except nominal deposit certificates issued before 2 July 2014. There are also other deposits listed in BDGA that do not qualify for a guarantee due to the spe - cific quality of the depositor (ie, banks, when the deposits are opened on their own behalf and for their own account; financial institutions; insurers and reinsurers; retirement insurance companies and supplementary retirement insurance funds and payment funds managed thereby; invest - ment intermediaries; collective investment schemes, national investment funds, alternative
investment funds and special-purpose invest - ment companies; budgetary organisations). The BDIF guarantees the payment of the aggre - gate sums held by any single person on deposits at a bank, irrespective of the number of deposits and the number of financial means thereon, up to a level of EUR100 000. This sum includes the principal and interest accrued and shall be paid after the depositor submits before the BDIF a resolution of the BNB or a judicial authority act. An additional protection of up to EUR125,000 for a timeframe of up to three months is provided for certain types of deposits, resulting from: real estate deals for residential purposes; payments related to conclusion or dissolution of marriage, termination of a labour contract or civil service contract, disability or death; insurance or social insurance payments or from payment of com - pensation for damages from crimes or reversed sentence. The covered deposits are repaid regardless of whether the deposit holder also has liabilities (credit) to the same bank. The BDIF ensures that depositors have access to their covered depos - its not later than seven business days as of the date of the resolution of the BNB or a judicial authority act. The financial sources funding the BDIF are exhaustively listed in the local laws and they consist of the (i) annual and extraordinary premi - um contributions levied from banks, (ii) income from investing the financial means raised by the BDIF, (iii) the sums received by the BDIF from the property of the bank in the cases of subrogation and (iv) other sources (loans, donations, foreign aid, etc).
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