The European Commission has approved a liquidity support scheme for Bulgarian banks as being compatible with EU state aid rules.

In its assessment, it concluded that the state aid implied by the liquidity measure is proportionate and commensurate with the need to ensure sufficient liquidity in the banking sector in the particular circumstances.

Commission Vice-President in charge of competition policy, Joaquín Almunia, in charge of competition policy welcomed this measure to stabilise the Bulgarian banking system.

On 29 June 2014, Bulgaria asked the Commission to authorise the provision of a credit line of 3.3 bn BGN to be provided by Bulgaria to the banking system in order to respond to speculative attacks that occurred over the past week.

The scheme provides the necessary and proportionate liquidity in the wake of external, non-bank related events.

Last week, it transpired that certain individuals have been targeting Corporate Commercial Bank and First Investment Bank, urging customers to withdraw their deposits.

This created concerns about the liquidity of the banks in question and risked spilling over to some other institutions, despite the fact that the Bulgarian banking system is well capitalised and has high levels of liquidity compared to its peers in other Member States.

For precautionary reasons, Bulgaria has taken this measure to further increase the liquidity and safeguard its financial system.