The Bulgarian Corporate Commercial Bank ("CCB")’s insolvency has resulted in a variety of changes to the Bulgarian banking legislation. Lifting of bank secrecy in cases of bank insolvency is the newest addition to the pile of governmental attempts at accountability and transparency stemming from the CCB affair.
The collapse of the CCB, the 4th largest bank in Bulgaria, has caused revision of several Bulgarian legal acts (e.g. the Credit Institutions Act ("CIA"), the Bank Insolvency Act ("BIA")). On 3 July 2015, the Parliament unanimously passed amendments to the CIA allowing for lifting of bank secrecy in cases of bank insolvency. The new regime also applies to pending bank insolvency proceedings opened prior to the adoption of the amendments.
The changes in the CIA focus on the information which must be disclosed by the trustee of an insolvent bank. This information must be released within 6 months of the court decision opening the bank insolvency proceedings being registered with the Commercial Register. In particular, the trustee must announce:
- the individuals and the legal entities (incl. their deposits) to whom preferential interest terms have been granted in deviation from the terms already announced by the bank, if such individuals and legal entities entered into other agreements using their deposits after the bank was put under special supervision;
- the individuals and the legal entities (incl. their loans and deposits) to whom preferential interest terms have been granted in deviation from the terms already announced by the bank within a period of 2 years prior to the date on which the bank became insolvent;
- the individuals and the legal entities that have informed the bank for transferring their receivables or have exercised a right of set-off after the bank was put under special supervision;
- lending transactions:
- which are unsecured or the value of the security agreed upon is lower than the utilized loan;
- where the securities agreed upon have not been duly created;
- where, after the creation of the securities, the rights of the pledgee over the securities have not been duly protected, including when the registration of a "special pledge" has not been renewed after its expiry, the pledge has not been delivered to the pledgee, or the pledge is missing as at the date of announcement by the trustee;
- where property originating from the bank has been provided by any borrower to other persons, and the amount of any of the property transactions exceeds BGN 50,000 (approx. EUR 25,000);
- where loans have been renegotiated with respect to the performance terms, the security amount and its type, when not specified in the agreements;
- political parties' deposits and loans, the deposits and loans of persons occupying high state positions (e.g. the President, members of the Parliament and the Government etc.) and their spouses and children under the age of 18, the deposits and loans of members of the supervisory and management body of the bank and the deposits and loans of legal entities in which persons occupying high state positions or their spouses and children under the age of 18 own shares;
- consultancy agreements, lease agreements and other agreements (with or without consideration) entered into between the bank and persons occupying high state positions and their spouses and children under the age of 18, between the bank and the members of the supervisory and management body of the bank, and between the bank and legal entities in which persons occupying high state positions or their spouses and children under the age of 18 own shares.
The information under items (iv) to (vi) applies to a period of 5 years prior to the date of revoking the bank's license in insolvency proceedings.