Corrected: UPDATE 1-President tells Bulgarians after bank runs: "Your money is safe"

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29/06/2014 19:38

(Corrects first paragraph to read 'sought to assure' instead of 
'reassured') 
    * President says bank deposits safe, no need to panic 
    * Message follows runs on two commercial banks in a week 
    * Bulgaria says there is organised plot to destabilise banks 
    * Parliament to be dissolved on Aug. 6 before Oct. 5 vote 
 
    By Gareth Jones and Angel Krasimirov 
    SOFIA, June 29 (Reuters) - Bulgaria's president sought to 
assure citizens on Sunday that their savings were safe and fully 
guaranteed by the state, in a message backed by the central bank 
and main political parties following a run on two major banks. 
    The bank runs have stoked fears for the financial stability 
of the European Union's poorest member state and authorities are 
keen to show Bulgarians they are fully in control of the 
situation before banks reopen on Monday. 
    The central bank has said the runs on Corporate Commercial 
Bank (Corpbank)  6C9.BB  and First Investment Bank  5F4.BB  are 
part of a deliberate and systematic attempt to destabilise 
Bulgaria's banking system.  
    It has vowed to take all measures to protect citizens' 
savings. 
    "The money of citizens and companies invested in the banking 
institutions of Bulgaria are safe and guaranteed. The banks will 
continue to operate in a normal regime," Plevneliev told a news 
conference after more than four hours of talks with political 
party leaders, the finance minister and central bank chiefs. 
    The banking crisis has coincided with a period of political 
uncertainty. Prime Minister Plamen Oresharski's minority 
Socialist-led cabinet recently announced it would soon resign. 
    It has agreed to a snap parliamentary election on Oct. 5. 
    Plevneliev said he would dissolve parliament and appoint an 
interim government on Aug. 6, after Oresharski's resignation, to 
steer Bulgaria until the election. 
    Bulgaria has launched a criminal investigation to track down 
those it believes have deliberately caused the bank runs by 
sending emails and mobile telephone text messages randomly to 
customers, inciting fears about the safety of their deposits. 
     
    ARRESTS 
    Earlier on Sunday, the national security agency said it had 
so far detained five people suspected of involvement in the 
affair, though it later released one of them. 
    "We have enough resources and mechanisms to deal with any 
attempts at destabilisation. We stand behind every bank that is 
subject to attack," Plevneliev said. 
    "Bulgaria's banking system is stable, well-regulated and 
capitalised ... There is no banking crisis. There is a crisis of 
trust and a criminal attack. These need to be overcome and those 
responsible prosecuted to the fullest extent of the law." 
    Last weekend, the central bank took over Bulgaria's fourth 
largest lender, Corporate Commercial Bank (Corpbank)  6C9.BB , 
after customers, who were rattled by online and media reports of 
suspect deals involving the bank, rushed to withdraw their 
savings. The bank has denied any wrongdoing. 
    The run on Corpbank has shone a light on weak economic 
governance in Bulgaria. It joined the EU in 2007 but remains 
plagued by high-level graft which has prevented successive 
governments from enacting reforms to revive a sluggish economy. 
    Despite its political and economic problems, Bulgarian and 
international economists say the Balkan country of 7.5 million 
people is not in danger of an economic meltdown. 
    Bulgaria has one of the lowest levels of debt in the EU, its 
central bank is widely viewed as effective and well-run and the 
lev currency is tied to the euro via a currency board, which 
means it is shielded from turmoil in financial markets. 
    There is a broad national consensus in Bulgaria on the role 
of the board as a bulwark of stability. It was introduced in the 
mid-1990s after a financial crisis triggered hyper-inflation and 
wiped out many of the country's banks. 
    "The currency board is unshakable," Plevneliev said, adding 
it would remain until Bulgaria finally joins the eurozone. 
 
 (Additional reporting by Tsvetelia Tsolova; Editing by Sophie 
Hares) 
 ((gareth.jones@thomsonreuters.com)(+49 30  2888 5214)(Reuters 
Messaging: gareth.jones.thomsonreuters.com@reuters.net)) 
 
Keywords: BULGARIA CRISIS/