The European Commission is
opening infringement proceedings against the Republic of Bulgaria for
its failure to correctly transpose Articles 1(3) and 10(1) of Directive 94/19/EC
(the Deposit Guarantee Scheme Directive) as well as its failure to
comply with the principle of free movement of capital under Article 63
TFEU.
By opening these infringement
proceedings, the Commission is exercising its responsibility to monitor
compliance with EU law by Member States. The Commission expects that
depositors will be given immediate access to the amount of bank deposits
to which they are entitled.
The Commission is sending a
letter of formal notice to Bulgaria, the first formal stage in
infringement proceedings. Bulgaria has until 15 October to respond.
Failure to transpose the Deposit Guarantee Scheme Directive
The DGS Directive identifies three steps in the procedure to allow a deposit guarantee scheme to pay the claims of depositors:
1) The competent authority is satisfied that a deposit which is due and payable has not been paid by a credit institution.
2) Within five working days after this
conclusion, the competent authority must determine whether the credit
institution concerned appears to be unable for the time being, for
reasons which are directly related to its financial circumstances, to
repay deposits which are due and payable and to have no current prospect
of being able to do so.
3) The
deposit guarantee scheme must be in a position to pay duly verified
claims of depositors within 20 working days after the determination by
the competent authority.
Under Bulgarian law, the deposit
guarantee scheme is authorised to pay the claims of depositors against a
credit institution only if the central bank has revoked the banking
licence of the institution concerned. The DGS Directive contains no such
requirement. The unavailability of deposits is sufficient to activate
the deposit guarantee scheme.1 In the case in hand, the deposits have been unavailable for three months. Under general EU law principles, national authorities are required to apply the Directive in spite of contradicting provisions of national law.
Failure to comply with the principle of free movement of capital...
As regards the Treaty principle
of free movement of capital, the conservatorship imposed by the
Bulgarian authorities on the banks concerned appears to constitute a non-justified and disproportionate restriction to the free movement of capital.
The Commission notes in particular that the two banks have been put
into conservatorship with a complete suspension of payments and bank
activities even though the domestic law allows less intrusive measures,
permitting a choice between full and partial suspension of payments and
limitation of activities.
In addition, the Commission recalls
that EU law takes precedence over national law. The relevant provisions
of the DGS Directive, which are unconditional, sufficiently clear and
precise, may under certain conditions confer rights on individuals and
businesses. These rights can be enforced against the relevant bodies
before a national court in order to obtain payments in respect of
unavailable deposits according to Article 10(1) of the DGS Directive.
Background
The Bulgarian deposit guarantee
scheme is currently not paying out on claims by depositors of Corporate
Commercial Bank AD and Commercial Bank Victoria EAD within the timeline
foreseen in the DGS Directive.
Both banks have been closed
since the second half of June. Depositors have not had access to their
funds for three months. According to a decision by the Bulgarian
National Bank (BNB) on 16 September 2014, no decision will be taken
before end-November. Given the severe consequences for households and
companies alike, Commission services have been in close contact with the
Bulgarian authorities over the last couple of weeks in order to assist
the national authorities in finding an adequate solution. The current
situation may undermine public trust in the deposit guarantee scheme in
Bulgaria.
The objective of the DGS Directive (Directive 94/19/EC) is
to ensure a harmonised level of deposit protection by all recognised
DGSs, regardless of where the deposits are located in the Union.
Article 63 of the Treaty TFEU
prohibits restrictions on movement of capital and on payments between
Member States and between Member States and third countries.
For more information:
More details on the DGS Directive: