Sofia/Brussels - The European Commission said on Monday it had approved a Bulgarian request to extend a credit line of 3.3 billion levs ($2.30 billion) in support of banks that have come under speculative attack.
Rumours of liquidity shortfalls this month have caused panic and runs on deposits at major Bulgarian banks despite the authorities' insistence that there was no reason for depositors to worry.
The EU Commission, the 28-nation bloc's antitrust authority, said Bulgaria's loan doesn't violate state aid rules and “provides the necessary and proportionate liquidity” to restore trust in the banks.
“The Commission concluded that the state aid implied by the provision of the credit line is proportionate and commensurate with the need to ensure sufficient liquidity in the banking system in the particular circumstances,” the EU executive said in a statement.
The statement said Bulgaria's banking system was “well capitalised and has high levels of liquidity compared to its peers in other member states”.
The Commission says the rumours hit the banks “despite the fact that the Bulgarian banking system is well capitalised.”
For precautionary reasons, Bulgaria has taken this measure to further increase the liquidity and safeguard its financial system”.
Bulgaria's fourth-largest lender, Corpbank, has been put under special central bank supervision after suffering a run.
The move follows runs by jittery depositors on two major Bulgarian commercial banks in the space of a week. - Reuters and Sapa-AP