Банкеръ Weekly



Bank deposits of citizens and firms up to BGN25,000 will be guaranteed by the Bank Deposit Insurance Fund, Parliament decided on March 29, approving the amendments to the Deposits Insurance Act. The changes stipulate an increase of the amount of insured deposits from BGN15,000 to BGN25,000. The amendment will enter into effect three days after its publication in the Official Gazette. Bank Deposit Insurance Fund's experts have calculated that 64.15% of the all savings of private persons and companies will be insured under the the new guarantee provisions. As an absolute amount that makes about BGN10BN, distributed in almost 12 million deposits in forex and Bulgarian currency. After the amendments to the Deposits Insurance Act enter into effect, any citizen or firm may keep in a bank up to BGN25,000 without risking to lose the money if the credit institution goes bankrupt. If the depositor has more money, for instance BGN100,000, it would be wise to break the amount into four deposits of BGN25,000 into four different banks. This regime of guaranteeing deposits allows citizens to choose banks which are short of money and offer higher interest rates on deposits than the others. It's a fact that some domestic banks already offer a 9% annual interest on deposits, while others extend loans at a 6% annual interest. Managers of some of the big banks have proposed that the annual instalment of each bank into the Bank Deposit Insurance Fund should depend on its credit rating. The higher it is, the less the instalment should be. Currently, all banks remit to the fund 0.5% of the funds they have attracted from citizens and companies. Of course, not all bank managers agree to introduce such a mechanism as it does not correspond to their interests. The issue is yet to be discussed within the bank community, but it will be very hard to reach an unanimous stance on it.

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