BULGARIA Law and Practice Contributed by: Nikolay Cvetanov, Boris Lazarov, Asen Apostolov and Patrizia Foffo, Penkov, Markov & Partners
applicable to credit risk exposures in Bulgaria is 2%. Liquidity Requirements The banks should manage their liquidity in a manner that ensures they are able to meet their daily obligations regularly and without delay, both in a normal banking environment and in a crisis. They shall maintain adequate liquid man - agement systems for identification, measure - ment, management and monitoring of the liquid - ity risk, which aim to hold liquid assets to cover mismatches between cash in and outflows. The development and the implementation of the sys - tem are the responsibility of the internal liquidity management body of each bank. The liquidity requirements are supervised by the BNB and in case BNB determines that a bank has a significant liquidity issue which requires immediate action, the sub-governor in charge of the Banking Supervision Department, may require the bank to submit weekly or daily liquid - ity reports, to reflect its survival plans and its strategy to reach the liquidity thresholds. In case a bank violates the liquidity require - ments, BNB has various powers to impose enforcement measures for ensuring the stability of the bank, such as issuing a written warning, convening a general meeting of shareholders or schedule a meeting of the management board and the supervisory board, issuing a written order to cease and desist from the violation as committed, issuing a written order to take meas - ures for improving the financial condition of the bank, and other measures provided in the Credit Institutions Act and the Recovery and Resolution of Credit Institutions and Investment Firms Act. If a bank authorised in the Republic of Bulgaria carries on its activity through a branch in another
member state or if a bank from another mem- ber state carries on its activity through a branch in the Republic of Bulgaria, the bank liquidity is supervised by the BNB in co-operation with the competent supervision authorities of the home member state. Additional Requirements Applicable to Significant Banks For significant banks, there is an additional requirement that at least one-third of the mem - bers of the supervisory board or the non-exec - utive members of the management board of the bank should be independent. 8. Insolvency, Recovery and Resolution 8.1 Legal and Regulatory Framework The Bulgarian bank insolvency, recovery and resolution regulations include multiple legislative acts apart from the general insolvency rules and procedures envisaged in the local Commercial Act, and more specifically, the Bank Insolvency Act, the CIA, the BDGA and the Recovery and the Resolution of Credit Institutions and Invest - ment Intermediaries Act. Given the eventual consequences from a poten - tial bank insolvency in public interest perspec - tive, all the insolvency procedures are envis - aged in the special Bank Insolvency Act, which (together with the other applicable legislative acts) is in full compliance with the EU legal framework in this field. Substantially differentiating from the general insolvency procedure, bank insolvency may be initiated before the court only by the BNB, given that the latter has revoked the licence of the respective bank or considers that the deposits
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