- Title: BULGARIA: Bulgarian depositors withdraw savings as crisis simmers
- Date: 30th June 2014
- Summary: SOFIA, BULGARIA (JUNE 30, 2014) (REUTERS) FIRST INVESTMENT BANK (FIBANK) HEADQUARTERS BANK LOGO VARIOUS OF PEOPLE QUEUING AT ENTRANCE STREET, DIFFERENT BRANCH OF FIBANK WITH PEOPLE QUEUEING OUTSIDE QUEUE (SOUNDBITE) (Bulgarian) FIBANK CLIENT, RUMEN VELEV, SAYING: "This is normal effect of people's thinking, kind of herd effect, people get worried and it goes like dominos, in reality there are no grounds for panic." (SOUNDBITE) (Bulgarian) LAWYER, IVAN EFREMOV, SAYING: "I think this is an artificially created panic and I hope the government and National Bank intervene properly to avoid any possibility of a real crisis. At the moment some people continue to withdraw." (SOUNDBITE) (Bulgarian) TAXI DRIVER, MITKO KAMENOV, SAYING: "The banks are not going to fail, take it easy, all this business is artificially created." GEORGI GANEV, FINANCIAL ANALYST, WORKING AT HIS DESK (SOUNDBITE) (English) FINANCIAL ANALYST, GEORGI GANEV, SAYING: "No, there is no banking crisis as of this moment in Bulgaria. 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 any more, which means that the public has confidence in the banking system. The only thing which is left, is to contain the withdrawals from this one bank which was specifically attacked on Thursday night. I believe this will happen in the next one or two days." VARIOUS OF WOMAN WITHDRAWING MONEY FROM FIBANK ATM VARIOUS BANKS WOMAN, MAN AND CHILD IN FRONT OF RAIFFEISEN BANK ATM
- Embargoed: 15th July 2014 13:00
- Keywords:
- Location: Bulgaria
- Country: Bulgaria
- Topics: Finance
- Reuters ID: LVABY9SLDWSXRU0FR5INAMGGSHAJ
- Story Text: Dozens of depositors withdrew savings from Bulgaria's third biggest bank on Monday (June 30) despite assurances from the government and the European Union that their money was safe after a similar run shut down another major lender last week.
Bulgarian authorities have arrested four people suspected of trying to destabilise the banking system in a concerted phone and Internet campaign during a crisis that has thrown a spotlight on weak economic governance in the EU's poorest state.
A credit line of 3.3 billion levs ($2.30 billion), requested by Bulgaria and approved on Monday by the European Commission, helped shares in No. 3 lender First Investment Bank rise 20 percent, reversing most losses from mass withdrawals on Friday (June 27).
The EU, International Monetary Fund and local economists, said the Bulgarian banking system was "well capitalised and has high levels of liquidity compared to its peers in other member states" of the 28-nation bloc.
Queues formed nevertheless outside branches of First Investment Bank, although they were smaller than on Friday.
At one branch there were about 30 people waiting to take out money, roughly half the numbers seen at midday on Friday. The lender says it has sufficient capital to meet clients' demand.
"This is normal effect of people's thinking, kind of herd effect, people get worried and it goes like dominos, in reality there are no grounds for panic," said Rumen Velev, the only person from the queue in front of a Fibank branch who agreed to speak on camera.
Others said they hoped authorities will prevent further spread of panic.
"I think this is an artificially created panic and I hope the government and National Bank intervene properly to avoid any possibility of a real crisis. At the moment some people continue to withdraw," said lawyer Ivan Efremov.
"The banks are not going to fail, take it easy, all this business is artificially created," added taxi driver, Mitko Kamenov.
About two thirds of Bulgaria's banks are now foreign-owned, in sharp contrast to the mid-1990s.
Despite its political and economic woes, the IMF and economists have praised the stability of Bulgaria's banking system and its solid state finances.
"No, there is no banking crisis as of this moment in Bulgaria," said Georgi Ganev, financial analyst at the Sofia-based Centre for Liberal Strategies.
"The only thing which is left, is to contain the withdrawals from this one bank which was specifically attacked on Thursday night. I believe this will happen in the next one or two days," he added.
Bulgaria has one of the lowest debt levels in the EU and the lev currency is tied to the euro via a currency board, approved of by a broad national consensus as a bulwark of stability in the 1990's financial crisis.
Although the cost of insuring Bulgarian government debt rose last week, the government managed to launch a 1.5 billion euro bond sale last Thursday (June 26). - Copyright Holder: REUTERS
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