Amendments to the Credit Institutions Act, sponsored by Budget and Finance Committee Chair Menda Stoyanova, have passed first reading.

The Budget and Finance Committee report indicates that the amendments aim at improving the regulatory framework of banking supervision. This will help fulfil the recommendations from the report of the Financial Sector Assessment Program and the Bulgarian National Bank’s commitments in response to the report. Regarding the licensing criteria, the amendments introduce an additional condition for providing data about the actual owner of a qualifying or larger share in a company subject to a licensing procedure. It is proposed to introduce an obligation for banks to provide to the Bulgarian National Bank information about any circumstances, which have become known to them, that facilitate a negative influence by the persons who directly or indirectly hold over 50 per cent of the capital.

In connection with the commitments undertaken by the Bulgarian National Bank to expand the range of persons whose exposures should be treated as exposures to connected parties, amendments are proposed to improve the regulation of risk coming from exposures to connected parties: bank administrators, shareholders with a qualifying or larger share, persons controlling the bank, bank subsidiaries and other persons connected with the bank.

Menda Stoyanova explained that the bill was the next step towards improving and enhancing the efficiency of the Bulgarian National Bank’s supervision on banking and financial institutions. The goal is to enhance the efficiency of the Bulgarian National Bank’s supervision, in order to avoid other cases like KTB, which shattered the country, she said. On the one hand, the revisions will increase the requirements for bank licensing, and on the other, expand and deepen the requirements for examining connected parties in bank lending, said Stoyanova. In her words, the amendments create legal conditions for the implementation of all recommendations and requirements of the European Banking Authority by the Bulgarian National Bank and the other Bulgarian banks.