April 2019 – On 10 April 2019, a bill for amendment of Bulgaria's Recovery and Resolution of Credit Institutions and Investment Firms Act (the "Bill") was passed on first reading by the Parliament. The purpose of the Bill is to align Bulgarian legislation with the provisions of Regulation (EU) No 806/2014 1, including regulating the role of the Single Resolution Board ("SRB") and the local resolution authorities, setting the stage for Bulgaria to join the EU Single Resolution Mechanism ("SRM") and the European Exchange Rate Mechanism ("ERM II").
Among its provisions, the Bill introduces the following important amendments to the existing legislative framework:
- Regulation of the powers of the national resolution authorities—the Bulgarian National Bank ("BNB") with regard to credit institutions, and the Financial Supervision Commission ("FSC") with regard to investment firms;
- The subsequent accession to the Single Resolution Fund ("SRF") following Bulgaria's accession to the SRM. As a result, BNB and FSC will be responsible to collect contributions from the credit institutions and investment firms 2 and their subsequent transfer to the SRF;
- The establishment of a bridge bank and an asset management company with resolution authority (the Bill describes their functions and the financing of their equity); and
- Entry into force of certain provisions concerning data exchange between the BNB and SRB, and between credit institutions and the SRB, when requested by the BNB in its capacity as a national resolution authority.
If approved in its current wording, the Bill would also introduce a new obligation for credit institutions licensed in Bulgaria to make annual contributions to the SRB's budget in accordance with Delegated Regulation (EU) 2017/2361 3. The Bill provides that the amount of the annual contribution is to be calculated by the SRB based on the total amount of annual contributions set to be collected for the relevant financial year in the budget of the SRB for the financial year and on the data provided by the European Central Bank for each entity liable for the contribution 4.
1 Regulation (EU) of the European Parliament and of the Council of 15 July 2014 establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms within the framework of a Single Resolution Mechanism and a Single Resolution Fund.
2 Contributions from credit institutions will be collected by BNB in the Resolution of Banks Fund (which would be moved from the Bulgarian Deposit Insurance Fund to the BNB), while contributions from investment firms will be collected in the Resolution of the Investment Firms Fund kept by the FSC.
3 Commission Delegated Regulation (EU) 2017/2361 of 14 September 2017 on the final system of contributions to the administrative expenditures of the Single Resolution Board (Commission Delegated Regulation (EU) 2017/2361).
4 The ECB provides the SRB with data regarding each entity liable for the contribution collected by the ECB during the year and to determine the supervisory fees in accordance with regulation (EU) No 1163/2014.
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