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European Commission - Press release

State aid: Commission approves state aid measures for Bulgarian First Investment Bank

Brussels, 25 November 2014

The European Commission has found that liquidity measures granted by Bulgaria in favour of First Investment Bank (FIB) in Bulgaria were in line with EU state aid rules. The Commission concluded that the measures were necessary to preserve the financial stability of the Bulgarian economy and financial system. Furthermore, FIB's restructuring plan will ensure that the bank continues to be viable in the long-term without unduly distorting competition in the Single Market.

Commissioner in charge of competition policy Margrethe Vestager said: "I believe that today's decision will strengthen public confidence in First Investment Bank. The bank presented a sound restructuring plan and a list of commitments, which will restore its liquidity and ensure its long-term viability without unduly distorting competition."

Following a bank run in June 2014, Bulgaria granted liquidity support to FIB in the form of a state deposit of BGN 1,2 billion (€ 0,6 billion), as part of a Bulgarian liquidity scheme approved by the Commission. Due to Bulgarian Treasury constraints at the time, this deposit had a short maturity of five months expiring on 28 November 2014. Bulgaria has now applied for an extension of the state deposit of BGN 900 million (€ 460 million) by a maximum of 18 months (part of the deposit will be repaid within 12 months already).

The Commission found that the liquidity support for FIB was linked to the on-going market consequences of the liquidity crisis that occurred in Bulgaria in June and July 2014, and were not due to a structural problem of the bank. Full repayment of the deposit now could destabilise both the bank and the Bulgarian financial system. The Commission has therefore concluded that the extension until 28 May 2016 of liquidity support of BGN 900 million provided to FIB was in line with its Communication on State aid for banks as well as with the tightened requirements of the 2013 Banking Communication.

In line with the conditions to benefit from the Bulgarian liquidity scheme, FIB notified a restructuring plan on 12 November 2014. Under the plan FIB has committed to repay the liquidity on predefined dates. Moreover, the Bulgarian authorities provided a set of commitments to restore FIB's liquidity, improve its corporate governance structure and risk management policies. To limit any distortions of competition brought about by the aid Bulgaria has also committed to several behavioural constraints during the restructuring period, among others that FIB will not pay out dividends, will not engage in aggressive commercial practices nor undertake any acquisitions.

An independent trustee will monitor the implementation of the restructuring plan and provide regular reports to the Commission.


FIB is a Bulgarian universal bank that serves all segments of clients: retail, corporate and institutional, offering a wide range of products and financial services. FIB is the third-largest bank in terms of assets (after Unicredit Bulbank and DSK) operating in Bulgaria. As of 2013 the total balance sheet of the bank amounted to BGN 8.7 billion. The business of FIB is predominantly based in Bulgaria, and the bank has also a small presence in Cyprus and Albania. FIB’s financial services include retail and corporate banking, health insurance, capital and market.

The difficulties of FIB emerged in the context of a more general liquidity crisis in Bulgaria in June 2014. Initially, on Friday, 20 June 2014, the Bulgarian authorities had to temporarily close the Corporate Commercial Bank (KTB). However, due to continued attacks on the banking system, in the following days a bank run took place on FIB, triggered mainly by electronic media messages. FIB paid out a significant amount to depositors before closing temporarily in the early afternoon of Friday 27 June to replenish the liquidity in the branches and ATMs. Following the asset quality review performed on KTB the BNB decided to revoke KTB's license on 6 November 2014.

The non-confidential version of the decision will be made available under case number SA.39854 in the State Aid Register on the competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.


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