Банкеръ Weekly



It will definitely be delayed, at least because of the new act on the Ministry of Interior adopted last February. The act will replace the previous one dated May 1, but the regulation for its application is still to be written. At the same time, it is the act on the Ministry of Interior that regulates which structure is going to control the adherence to the bank security regulation. So far these functions have been entrusted to the Police National Service Directorate, but according to the latest legal amendments this directorate should be closed down and integrated into the newly-established Police General Directorate. Before this happens, no amendments to Ordinance No I-171 can be made. That was the reason why BNB, the Ministry ran by Roumen Petkov and the Association of Commercial Banks terminated discussions on corrections in its texts. Still, there are lots of things that need to be amended, credit institutions representatives comment. In most of the cases that refers to relatively small details, but even they relate to certain expenditure that banks should envisage in their budgets. That is why branch experts comment that even if the regulation becomes valid during the current year, the requirements it contains will hardly be met before 2007.
One of the most disputed texts is the one obliging commercial banks to install
24-hour physical security guard
in their branches by year-end.
The text refers to first category sites - bank units that keep more than BGN150,000 a day or provide safety vaults. This section does not include the offices and external jobs of the credit institutions.
Putting 24-hour physical guard into operation will force banks with a large number of branches to make considerable expenses. It is easy to calculate the figures. The lowest monthly remuneration of a security guard amounts to BGN370 and one post should be serviced by four people at least. That makes at least BGN1,480 paid for monthly salaries alone. Should that be a bank with a hundred branches, its annual charges for security remuneration will go beyond BGN1.8MN. And this most thrifty calculation fails to include resources needed for technical equipment of the guards, not to mention the fact that not all guards are paid the lowest salary. Moreover, in order to be efficient, guarding some of the buildings requires more than one post.
Until now the Ministry of Interior has imposed some other requirements that may make the credit institutions pay through their nose. For example, during the ruling of Simeon Saxe-Coburg-Gotha (in early 2004) the Interior Ministry insisted on providing
each branch with a line rented from BTC
(the Bulgarian Telecommunication Company) in order to link it with the guarding company. This way of communication has to duplicate the current links provided by SOT (a signal guarding equipment company). At present, information submitted by the gauges installed by the security firms is delivered to their offices through a special transmitter. However, security experts warn that the signal from these transmitters can be muffled easily and the entire guarding system deactivated while the operator on duty may not even understand that. Security experts claim that this can be avoided if the links of the private SOT are duplicated by a line hired from BTC. Even if its cables are cut, the operator in BTC's local division inevitably gets a signal that there is a problem along the line and can warn the guard and the police. The monthly rent of such a line varies between BGN150 and BGN200. At first sight this is a very modest amount, but if that is a bank with a hundred branch offices the annual expenditure on this item may go up to BGN250,000.
According to the Ministry of Interior, the need of introducing new security methods of this kind is pressing considering
the three gravest bank robberies
committed in the past three years. In 2003, an HVB Bank Biochim branch public safety vault in Sofia was broken into. A year later the same happened to the public vault of the United Bulgarian Bank (UBB) in Botevgrad, and two months after that a branch of ProCredit Bank was robbed in the Sofia Mladost quarter. All the three branches had no physical guards. In the case of UBB, the criminals blocked the telephones and the INTERNET communications and muffled the GSM signals in the entire town of Botevgrad.
Most security experts comment that the existence of physical guards will make most of the thieves give up organizing robberies because the presence of guards means they have arms - which the perpetrators of the above-mentioned three robberies did their best to avoid. At the same time, some bank managers explain that they deliberately refuse to hire guards in order to avoid risking these people's lives. Ordinance No I-171 described above will make it clear whether or not they will be forced to do so. It also has to settle the matter with the
so-called teller bunkers
In the beginning 2004 the Interior Ministry insisted that all bank halls should be equipped with bullet-resistant glasses, steel-plated rafts, and barriers with special teller knots, resembling bunkers, behind whose embrasures the officers would be communicating with clients through special conference devices. That renewal would had cost about USD6-10MN to big credit institutions with many branches. Therefore, still in the spring of 2004 the idea was opposed and after a series of meetings between BNB experts and the Interior Ministry a compromise decision was reached in end-July 2005 that only the teller halls operating with cash and valuables up to BGN20,000 would be armoured. It was also specified that the banks' management boards should decide the size of amounts that could be kept in the money storage depots of various branches and offices. And branch directors should explicitly order what has to be done when that limit is exceeded.
At the same time, some security bosses of big Bulgarian banks still believe that the guards and armoured desks won't block thieves' inventiveness, quoting the relatively recent robbery of the cash storage depot in Kent, UK. On February 23, 2006 the bandits kidnapped the depot's Manager and forced him to give them the passwords for opening it. The announcement of Bank of England reads that GBP 25MN (more than EUR35MN) has been stolen and the amount might even turn up to be EUR40MN. Obviously, even the most perfect security systems cannot guarantee 100% safety.
The only salvation for banks are the insurances
against robberies. Credit institutions in Bulgaria have insured themselves by respective polices and therefore their managers do not have nightmares.
The problem concerning public safety vaults is much more complicated. The safety vaults in them are usually insured up to a set limit which is individual for each bank and is set by its executives and the insurance company's managers. However, it's a fact that it is never known if the insurance could cover exactly the citizens' losses in case of a robbery because even the bank does not have information about the objects and money which they keep in the safety vaults. That's known only by the people who have hired them and use them. For that reason in cases of robberies of public safety vaults (at that not only in Bulgaria) arguments between the respective bank and its clients usually arise. In order to avoid them the executives of most credit institutions have decided to gradually close down the safety vaults in their branches. That opens up an opportunity for the development of specialized firms, offering services as 24-hour public safety vaults. But that poses yet another problem. Presently, there is not a law regulating the specialized operation of public round-the-clock safety vaults. The question is if it is not good to licence them as well and place them under special supervision, because they will be companies engaged with deals in citizens' money. And such activities are as a rule subject to supervision by a state authority. However, they will also have to wait for Ordinance No I-171. And Bulgaria's forthcoming EU membership will inevitably make necessary new amendments into it.

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