Wednesday

10th Aug 2022

Bulgaria jittery after bank run 'plot'

  • Sofia: Early elections will take place on 5 October (Photo: dimnikolov)

Bulgaria, already grappling with a severe political crisis, is now trying to deal with what the government has called an organised attempt to destabilise its financial system.

On Friday (27 June), Bulgarians lined up for hours to withdraw their money after receiving text messages, emails and alerts on social media that their deposits were not safe at the First Investment Bank, the country’s third biggest lender.

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In response, President Rossen Plevneliev on Sunday held an emergency meeting with political party leaders and Ivan Iskrov, governor of the central bank.

After the five-hour meeting he emerged to say that the monetary board is unshakable, that companies’ and citizens’ money is safe and that Iskrov will “secure all necessary means and actions to guarantee banks’ stability”.

"There is no cause or reason to give way to panic. There is no banking crisis, there is a crisis of trust and there is a criminal attack,” said the president.

He also took the opportunity to call early elections on 5 October with the parliament to be dissolved on 6 August, after the EU vote in May severely weakened the governing Socialist party.

Bulgarians were not entirely reassured after the president’s words however. The queues in front of the First Investment Bank on Monday (30 June), although smaller than on Friday, were still numbering around 100 people.

Interior minister Tsvetlin Iovchev said electronic communication was an apparent tool in a misinformation campaign that is meant to shake the country.

Seven men have been arrested so far on suspicion of spreading “false, ill-intended information against Bulgarian banks to destabilise the banking system”, according to the State Agency of National Security.

The European Commission has also stepped in, announcing Monday that it has approved a credit line for the banks to the tune of 3.3 billion leva (around €1.7 billion). On Friday alone, the First Investment bank paid out more than €410 million to the people lining up in front of its offices.

All this follows similar events at the Corporate Commercial bank after it was hit over a week ago by a rush to withdraw deposits, prompted by negative reports in local media. The country’s fourth largest lender has now been temporarily taken over by the central bank.

The media that spread what the government called “rumors and malicious public statements" are owned by Delyam Peevksi, a media mogul and MP of the Turkish Minority Party.

His appointment last year as the head of the State Agency of National Security outraged tens of thousands of Bulgarians and sparked the biggest protests since the fall of communism.

The government rescinded the appointment but it never fully recovered from the political crisis resulting from the protests.

There has been speculation that the attack on Corporate Commercial Bank was provoked by tension between Peevski and the owner of the bank, Tzvetan Vasilev.

Bulgaria’s president said the country’s currency will continue to remain pegged against the euro despite the upsets.

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