Reuters Insider - How bad is Bulgaria’s banking crisis?

First Investment Bank AD

30/06/2014 19:14

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 Source:             Thomson Reuters                                   
                                                                       
 Description:        Bulgaria's banking crisis has eased after the     
                     European Commission gave the country permission to 
                     provide state aid if needs be. But the EU's       
                     poorest country isn't stable yet.                 
 
 
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Transcript (May be auto-generated)

 The signs of another banking crisis in Europe made many nervous. But for now, 
Bulgaria seems to be under control. An early run at First Investment Bank on 
Monday quickly faded. Reassurances from the EU and IMF that they'd allow the 
government to step in if needs be seemed to do the trick. This is normal 
behavior. It's kind of herd mentality. People will get worried and it's like 
dominos. The banks aren't going to fail. Take it easy. All this business is 
artificially inspired. $560 million was withdrawn from First Investment Bank, 
the country's third biggest lender, on Friday and the central bank took control 
of Corpbank, the fourth biggest. The government said it was due to a criminal 
plot to destabilize the financial system, and four people were arrested for 
sending false texts and emails. Georgi Ganev is a Financial Analyst in Sofia: 
It's quite obvious that whatever people are lining up to withdraw is happening 
only in front of the offices of one single bank, and all the other banks that 
experienced some withdrawals on Friday are not experiencing anymore which means 
that the public has confidence in the banking system. But many Bulgarians don't 
have confidence in the fractious year-old government. Numerous protests have 
taken place in recent months and corruption allegations of bribe. The President 
has promised to dissolve Parliament in August to make way for a new government. 
A banking crisis, the last thing they need now. The EU has stepped in to help, 
pointing out its poorest member, also has one of the lowest public debt levels 
at 18% of national output. Two-thirds of its banks are also foreign-owned. A 
financial crisis 20 years ago made that possible. Fourteen banks collapsed - 
something Bulgarians haven't yet forgotten