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Overview BDIF is an independent public institution established in January 1999 under the Law on Bank Deposit Guaranty (LBDG). The Fund protects deposits of physical persons and legal entities with member banks and reimburses depositors for the insured deposit amount in the event of a member bank failure. Under the Law on Bank Bankruptcy (LBB) BDIF administers bank bankruptcy proceedings in view of securing fair satisfaction of creditors and ensuring transparency of proceedings. According to the Law on Credit Institutions the BDIF may participate in the capital increase of a credit institution placed under special supervision and in danger of becoming insolvent. BDIF is a major safety net player contributing to the stability of and confidence in the Bulgarian banking system by insuring depositors’ funds in banks and protecting creditors’ interests in bank bankruptcy proceedings.

Deposit Insurance  Membership Membership in the system of banks, registered under Bulgarian legislation, is mandatory. Local branches of foreign banks from the European Union and the European Economic Area do not participate since they are insured by their home country scheme. They may join the system only to supplement the guarantee provided by their home country scheme. Local branches of other foreign banks are obliged to participate provided they are not protected by their home country scheme. As of end-March 2013

BDIF insures BGN 52.49 billion (EUR 26.84 billion) in deposits with 26 member institutions.  Funding The system is industry-funded by member institutions paying entry and annual premium contributions to BDIF. Banks’ entry premiums amount to one per cent of the bank’s registered capital. Annual premiums paid by banks are 0.5% of the total amount of the previous year’s eligible deposits determined on an average daily basis. Annual premiums are due by 31 March in the current year.  Coverage Deposits of physical persons and legal entities in national and foreign currency are insured in full up to BGN 196,000 (EUR 100,100) per depositor per bank.  Investment BDIF may invest its funds in government securities, short-term deposits with banks and the Bulgarian National Bank (BNB). As of end-March 2013 BDIF investment portfolio equals BGN 1778.31 million (EUR 909.24 million). The target ratio of the fund, stipulated by the LBDG, is 5% of the eligible deposits in the banking system. In the event of shortfall of resources the BDIF may borrow from the market with a government guarantee.  Repayment of insured deposits Insured deposit amounts are repaid in national currency. Disbursement is done via a bank determined by BDIF Management Board and begins within 20 business days from the date of BNB revocation of a bank’s license. In wholly


exceptional circumstances this deadline may be extended by 10 business days. BDIF has successfully performed its insurance function in the three bank failures since its establishment ― Credit Bank (1999), Balkan Universal Bank (2000) and International Bank for Trade and Development (2005).

Bank Bankruptcy Under the Law on Bank Bankruptcy BDIF controls trustees’ exercise of power by appointing and removing them, determining their remuneration, approving the plan for the liquidation of the bankruptcy estate’s property, controlling expenses and transactions, performing off- and on-site inspections and by issuing instructions on their performance. Upon enactment of LBB, BDIF took control over four failed banks (1996-2000) and by August 2005 BDIF successfully completed their bankruptcy proceedings. The International Bank for Trade and Development was sold as a whole enterprise in July 2007.

Accountability BDIF is accountable to the Council of Ministers, BNB and the National Audit Office by presenting them its Annual Report. The National Audit Office audits BDIF activities.

Relationships BDIF has signed a Memorandum of Understanding with BNB and a Letter of Cooperation with the Association of Banks in Bulgaria (ABB). BDIF maintains wide international contacts and

receives and provides assistance on deposit insurance issues through bilateral cooperation. BDIF is a founding member of and an active participant in the activity of the International Association of Deposit Insurers and the European Forum of Deposit Insurers.

Management BDIF is governed by a Management Board, consisting of five members who are designated, as follows: the Chairman ― by the Council of Ministers; the Vice Chairman ― by BNB Governing Council; one member ― by ABB; two members ― jointly by BDIF Chairman and Vice Chairman.

Organisational structure BDIF main departments are: Bank Bankruptcy and Early Intervention, Risk Assessment and Analysis, Legal, Treasury, Finance and Accounting, HR and Administration, Corporate Communications and International Cooperation.

Challenges Ensuing from its mandate and its role as a major safety net player the following priorities lie before BDIF:  European issues  Alternative resolution methods  Potential risks management  Maintaining depositors’ confidence.

Contact info

27 Vladayska Street 1606 Sofia, Bulgaria T: +359 2 953 1217, 953 1318 F: +359 2 952 1100 E: contact@dif.bg W: www.dif.bg

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