BULGARIA Law and Practice Contributed by: Nikolay Cvetanov, Boris Lazarov, Asen Apostolov and Patrizia Foffo, Penkov, Markov & Partners
The main contributions to the BDIF come from the annual premium contributions by the banks. The BDIF determines the annual premium contri - bution for each bank on or before May 1st of the current year. Extraordinary contributions shall be levied should the available financial means of the BDIF be insufficient to cover the liabilities. The BDIF may also issue debt securities and receive allocations from the state budget to make up for the residual deficit of financial resources. 7. Prudential Regime 7.1 Capital, Liquidity and Related Risk Control Requirements Adherence to Basel III Standards The credit institutions in Bulgaria are subject to the requirements set in Basel III (CRR and CRD IV) and all stipulations of CRD IV have been transposed into local law mainly through the provisions of CIA. Risk Management Rules The management body of any bank shall adopt and periodically update, in line with the best internationally recognised practices for corpo - rate management of banks, policies, rules and procedures for the bank’s organisation, internal control framework, including independent risk management, compliance and internal audit departments. The adopted strategy shall be subject to regular review and approval by the supervisory board of the bank. The strategy shall include the establishment and maintenance of a risk management structure which is independent from the operational units and has sufficient authority, statute, resources and adequate access to the supervisory board. The head of the bank’s risk management struc - ture should be an independent senior manager
or a senior officer within the bank, provided how - ever that there is no conflict of interest. Addi - tionally, each significant bank shall also estab - lish a risk committee, composed of at least three members of the supervisory board or non-exec - utive members of the management board. The function of the risk committee is to advise the supervisory board of the management body on the bank’s risk strategy and assist in monitoring its implementation. Each bank should have internal risk manage - ment methodologies enabling it to assess the credit and counterparty risk, the identification, measurements and management of risks aris - ing from potential changes in interest rates and credit spreads, as well as the evaluation and management of market risks, operational risk and the risk of excessive leverage. Quantity and Quality of Capital Requirements and Capital Buffers The minimal required paid-up capital at the time of incorporation of the bank is BGN10 million (approximately EUR5 million) and it cannot fall below this amount at any time. The contributions of the shareholders up to BGN10 million may be solely monetary, but any subsequent capital increase may also be in kind, if a prior written approval of the BNB is issued. Any shareholders who have subscribed for 3% and more than 3% of the voting shares and the 20 biggest share - holders shall effect the payments against their shares with their own funds, provide evidence of the origin of those funds and declaration of the taxes paid thereon in the preceding five years. As to the capital buffers, the BNB has the right to determine the types of buffers, the terms and conditions for their formation and updating, tak - ing into account the standards set out in CRD IV. In 2024, the counter-cyclical capital buffer rate
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