Банкеръ Weekly



Commercial banks in Bulgaria paid in time their annual security tax. This is the name that the managers gave to the payments they have been making regularly to the Deposit Insurance Fund since 2000. The payments amount to 0.5% of the deposits and accounts that individuals and companies make to each credit institution. They need to be paid no later than March 31 every year.In 2005, banks allocated BGN63.1MN to pay their duty to the insurance fund. BULBANK, DSK Bank, United Bulgarian Bank, HVB Bank Biochim, Raiffeisenbank (Bulgaria), First Investment Bank, and Post Bank owe the biggest amounts. Their total payments to the fund, more than BGN55MN, account for over 87% of all payments added to the fund accounts in the period January 1 - March 31.The managers of some of Bulgaria's largest and most stable banks complain that their payments to the fund engage considerable amounts which, if invested in credits or government securities, would bring them profit of BGN1MN or BGN2MN a year. It has been unofficially discussed in the financial circles that banks might not pay 0.5% of their attracted resources to the fund. As the BANKER weekly already wrote twice, the idea is to make this installment different for each bank depending on its credit rating given by an international agency. The higher the rating, the lower the rate.There are also bankers who launch more radical proposals - for example, to adopt the deposit insurance model applied by Canada and the USA. Banks in these countries do not pay installments in advance but commit themselves, in case of bankruptcy of a credit institution, to provide the money necessary to cover the deposit insurance. In the USA, the insurance of one deposit goes up to USD100,000. But a mechanism of this kind will hardly be adopted in Bulgaria. Bulgarian people still feel safer if they know that the accounts of the fund that protects their savings contain real money instead of promises.All deposits of individuals and companies in Bulgaria smaller than BGN25,000 will be guaranteed by the Deposit Insurance Fund. Since 29 banks and two branches of foreign credit institutions in the country transferred their BGN63.1MN 2004 installments to the fund, it now has almost BGN318MN. The fund resources are sufficient to cover the protected deposits in case of bankruptcy of any bank holding assets worth up to BGN500MN. In case a larger credit institution is declared insolvent, the fund is allowed to borrow money from the State or raise the banks installments in order to be able to cover all guaranteed deposits.

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