Name of law Law amending and supplementing the law on credit institutions Named Bill a bill amending and supplementing the law on credit institutions date of acceptance 16/11/2010 number/year Official Gazette Decree No 313 94/2010

On the grounds of art. 98, paragraph 4 of the Constitution of the Republic of Bulgaria

I DECLARE:

To be published in the Official Gazette the law amending and supplementing the law on credit institutions, adopted by the National Assembly of the HLI 16 November 2010.

Issued in Sofia on 23 November 2010.

The President of the Republic: Georgi Parvanov

Stamped with the State seal.

Minister of Justice: Margarita Popova

LAW

amending and supplementing the law on credit institutions (official SG. 59 06; amend., 105/2006, no. 52, 59 and 109 from the 2007 No. 69 since 2008 and no. 23, 24, 44, 93 and 95 of 2009.)

§ 1. In art. 2, al. 2 is hereby amended as follows: 1. In paragraph 1 the words "perform money transfer services, and after 1 November 2009" and the hyphen after them are deleted.

2. In paragraph 2, the words "payment card" and the comma after them are deleted.

3. point 12 is replaced by the following: 12. acquisition of credit claims and another form of financing (factoring, forfeting and others); ".

§ 2. Art is created. 29 (b):

"Art. 29 (b). (1) the Conversion of the Bank through a merger is only allowed with another bank. Permit is issued only if the newly formed company received a license for the Bank.

(2) conversion of the Bank through a drip is allowed only if the receiving company's Bank. The Bank can infuse another bank, a payment institution, an investment firm or a financial institution.

(3) permission for the merger under para. 2 shall not be issued if the license of the receiving bank does not allows to carry out the activity of the company is vlivaŝoto.

(4) a permit shall not be issued to convert bank licensed by the Bulgarian National Bank, by changing the legal form or by transferring the entire estate of the sole owner.

(5) for authorisation to divide or separate host newly created companies, respectively, must possess the appropriate licence, if as a result of succession to them crossing the rights and obligations arising from the carrying out of activities for which a license is required.

§ 3. In art. 36, para. 2, paragraph 1, after the words "the commitments" add "within a reasonable period of time".

§ 4. In art. 39, para. 2, paragraph 4, the word "operational" is replaced by "operating".

§ 5. In art. 40, para. 2 item 4 shall be amended as follows:

4. allow and approve the use for supervisory purposes: a) an internal ratings-based approaches for measuring credit risk;

b) advanced measurement approaches for operational risk;

c) internal models for measuring market risk and counterparty risk; ".

§ 6. In art. the following 44 amendments:

1. Paragraph 6 is hereby repealed.

2. in the Al. 7, after the word "fix" is added "with regulation", and in the end, the words "and 6, as well as under art. 45, para. 6 "shall be deleted.

3. a para. 8:

(8) the exposure to another credit institution or investment firm or economically related parties, one of which is a credit institution or investment firm, shall not exceed the ratio referred to in paragraph 1. 5 under conditions laid down by Decree of the NATIONAL BANK. "

§ 7. In art. 45 para. 6 shall be amended as follows:

"(6) the total of the Bank's exposure to a person under paragraph 1. 1, which is not a credit institution or investment firm, may not exceed 10% of its own funds. The total size of all the Bank's exposures to formed the persons referred to in the first subparagraph may not exceed 20% of its own funds. "

§ 8. In art. 57 Al is created. 4:

"(4) in the case of fixed-term cash deposit with a fixed interest rate, the Bank can not decrease the interest rate up to expiry of the contract."

§ 9. In art. 58 create al. 3 and 4:

"(3) in the case of a change in the interest rate or fee, which leads to an increase in redemption payment on credit, which is not a user, the Bank shall notify the customer in an agreed manner between the parties before the entry into force of the change.

(4) where the change in the borrowing rate stems from a change to a specific reference rate, made available to the public through the use of appropriate means and the information for the new rate can be found at commercial premises and on the website of the creditor. 3 does not apply. "

§ 10. In art. 64 following amendments and supplements shall be made:

1. In paragraph 8. 1 (10) add "in their capacity as monetary authorities, where such information is necessary for the performance of their statutory functions, including for the conduct of monetary policy and related liquidity provision, the oversight of payment systems, clearing and settlement systems and for maintaining financial stability, including in the event of an emergency under art. 93, para. 1. "

2. a new paragraph. 2:

"(2) in the event of an emergency in accordance with art. 93, para. 1 the persons under art. 63, para. 3 can provide information, representing the professional secrecy, to the authorities of the Republic of Bulgaria and the other Member States, responsible for legislation on the supervision of credit and financial institutions, investment firms and insurers, where necessary for the performance of their functions. "

3. the Previous para. 2, 3, 4 and 5 shall become, respectively, al. 3, 4, 5 and 6.

§ 11. In art. 73, para. 1 item 8 is created:

"8. the systems of prevention against the risk of money laundering."

§ 12. Create art. 73A and 73B:


"Art. 73. (1) the banks build reliable, effective and complete strategies and processes on an ongoing basis for assessment and maintenance of the size, type and distribution of internal capital considered adequate to cover the nature and extent of the risks to which they are or might be exposed.

(2) the banks carry out regular internal review of the strategies and processes under para. 1 in order to ensure that they are comprehensive and proportionate to the nature, scale and complexity of the implementation of these activities.

Art. 73. (1) (b) Banks adopt and implement policies for the remuneration of persons who work for them.

(2) in respect of Admins and others, the exercise of the rights and obligations has a significant impact on the risk profile, the policy must be consistent with the business strategy and long-term objectives of the Bank. Remuneration policy should promote the sound management of risk and not predisposes to risk-taking that goes beyond the framework of the risk profile of the Bank.

(3) remuneration policy should be built on principles that ensure the compliance with the size, the internal organisation of the Bank, as well as the nature, scope and complexity of the activities of her activities. The principles and requirements for remuneration policy and its disclosure is regulated in Decree of the BNB.

§ 13. In art. 76 the following endorsements are added:

1. In paragraph 8. 7, paragraph 2, after the words "the Bank" is added "annual financial and".

2. in the Al. 8, first sentence, after the words "from the" add "under para. 7. "

§ 14. In art. 78, para. 2 Finally a comma and add "and for branches of credit institutions from third countries in which accounting framework is equivalent to the requirements of Council directive of 8 December 1986 on the annual accounts and consolidated accounts of banks and other financial institutions (86/635/EEC) and for which there is reciprocal treatment.

§ 15. Create art. 79A and 79 (b):

"Art. 79. In the performance of their duties under this law the BNB:

1. participate in the activities of the Committee of European banking supervisors (KEBNO);

2. follow the guidelines, recommendations, standards and other measures adopted by the KEBNO, except in cases where there are reasonable grounds for the failure to apply to them, which is obliged to expose.

Art. 79 (b). In the exercise of their supervisory functions to the Bank, licensed in the Republic of Bulgaria, which operates in one or more Member States, or to the Bank, licensed in another Member State carries on business through a branch in the Republic of Bulgaria, the BULGARIAN NATIONAL BANK shall take account of the potential impact of their decisions on the financial stability of these Member States, especially in emergency situations, based on the information available at the time. "

§ 16. Create art. 87A, 87B and 87 in:

"Art. 87. (1) the Bulgarian National Bank may ask the supervisor when there is one, or by the competent authority of the sending State, a specific branch of the Bank, licensed in a Member State which carries out activities in the Republic of Bulgaria, to be considered meaningful. The request shall state the reasons for the establishment of the branch for meaningful, as explicitly noted the following information:

1. If the market share of deposits in the relevant branch of the Bank exceeds 2 per cent in the Republic of Bulgaria;

2. the possible impact from the suspension or termination of the activities of the Bank on market liquidity, payment systems and clearing and settlement systems in the Republic of Bulgaria and

3. the amount and importance of the branch, taking into account the number of customers in the banking or financial system of the Republic of Bulgaria.

(2) the Bulgarian National Bank, jointly with the competent authority of the sending State and the supervisor, if there is one, shall decide on the designation of a branch as significant within two months of receipt of the request.

(3) If within the time limit referred to in paragraph 1. 2 a joint decision is not reached, BNB take own decision within a further period of two months. The Bulgarian National Bank shall provide the decision of the supervisor and the competent authority of the sending State.

(4) the decisions referred to in paragraph 1. 2 and 3 motivate, they shall indicate the opinions of the supervisor and the competent authority of the sending State.

(5) the designation of a branch as significant shall not affect the powers and functions of the NATIONAL BANK under this law.

Art. 87 (b) (1) the Bulgarian National Bank participate in deciding on the request of a competent authority of the host State for the establishment of a branch of a major bank when:

1. the Bank is licensed in the Republic of Bulgaria, or 2. The Bulgarian National Bank is consolidating supervisory authority in relation to that Bank.

(2) the decision on para. 1 shall be taken within two months of receipt of the request.

(3) where no joint decision is reached under paragraph 1. 1 within two months and the competent authority of the host Member State has taken the decision independently, it is mandatory for the Bulgarian National Bank.

(4) the Bulgarian National Bank shall provide to the competent authority of the host country in which the Bank, licensed in the Republic of Bulgaria, carries on business through a branch, defined as meaningful information under art. 95, para. 3, item 3 and 4 and collaborates with him in accordance with art. 92, para. 1, item 3.

(5) in the event of an emergency in a bank licensed in the Republic of Bulgaria with a significant branch, which potentially threaten financial stability in the Republic of Bulgaria or in the host Member State, the authorities shall notify BNB under art. 64, para. 1, item 10 and art. 64, para. 2.


(6) the designation of a branch as significant shall not affect the powers and functions of the NATIONAL BANK under this law.

Art. 87 in (1) When art. 92 (e) is not applicable and the BULGARIAN NATIONAL BANK oversee Bank with significant branches in other Member States, BNB shall establish and chair a College of supervisory authorities of these Member States in order to facilitate the cooperation under art. 87 and art. 87 (b), para. 4 and 5. The Supervisory Board is created and operates on the basis of written rules laid down by the BANK in consultation with the relevant competent authorities.

(2) the Bulgarian National Bank shall designate the competent authorities that will participate in each meeting or activity of the College, taking into account the importance of these bodies for the supervisory activity to be planned or coordinated, including the possible impact on financial stability in the Member States concerned in accordance with art. 79 (b), and obligations under art. 87 (b), para. 4 and 5.

(3) the Bulgarian National Bank shall provide in advance to all members of the Supervisory Board information on the organisation of the meeting, the main issues to be discussed, and the actions that will be taken into consideration. The Bulgarian National Bank shall provide in a timely manner to all members of the Supervisory Board and all the information on the decisions taken at these meetings, decisions and the measures taken.

(4) where it is not applicable to art. 92 and in the Republic of Bulgaria has established a significant branch, BNB participated in the Supervisory Board, chaired by the competent authority of the sending State. "

§ 17. In art. 92 following amendments and supplements shall be made:

1. The current text becomes paragraph 1 and in it:

a) point 2 is replaced by the following:

2. plan and coordinate the current supervisory activity in cooperation with the relevant competent authorities of the Member States; "

b) point 3 is replaced by the following:

3. plan and coordinate surveillance activities in cooperation with the relevant competent authorities, and, if necessary, and with central banks, in the preparation of the action in the event of an emergency situation, including adverse developments on the State of the banks or the financial markets, as if possible use established channels for relationship in crisis management. "

2. a para. 2:

"(2) the planning and coordination of supervisory activities in al. 1.3 includes measures under art. 95, para. 6, item 2, the drawing up of joint assessments, the implementation of contingency plans and informing the public. "

§ 18. Create art. 92 a-92 is:

"Art. 92. (1) where the parent credit institution from the European Union and its subsidiaries or the subsidiaries of the parent financial holding company in the European Union – subject to supervision by the NATIONAL BANK, have applied for authorization under art. 40, para. 2, item 4, BNB, jointly with other competent authorities within 6 months of receipt of the application, take a general decision to refuse or grant of the authorization and shall determine the terms and conditions under which it is issued.

(2) the application shall be submitted to the BANK, which shall provide a copy thereof to the other competent authorities.

(3) If within the time limit referred to in paragraph 1. 1 joint decision is not reached, BNB shall take decision independently.

(4) the decisions referred to in paragraph 1. 1 and 3 motivate, indicating the views of other competent authorities, expressed in the 6-month period under paragraph 1. 1. decisions shall be made available to the applicant, the decision on para. 3 – and of other competent authorities.

Art. 92 (b) (1) upon receipt of a request by a competent authority of a Member State in relation to him, upon application for authorisation under art. 40, para. 2, item 4, submitted by the parent credit institution from the European Union and its subsidiaries, one of which is a credit institution, licensed in the Republic of Bulgaria, or jointly by the subsidiaries of the parent financial holding company in the European Union, one of which is a credit institution, licensed in the Republic of Bulgaria, the BULGARIAN NATIONAL BANK participates in making a joint decision to refuse or grant of the authorization and in the determination of terms and conditions under which it is issued.

(2) where no joint decision is reached under paragraph 1. 1 in 6 months and the consolidating supervisor has taken the decision independently, it is mandatory for the Bulgarian National Bank.

Art. 92. (1) where it is consolidating supervisor, subject to the application of art. 73 a, art. 79, para. 2 and 3 and in the application of the measure in respect of an infringement under art. 103, para. 1, item 11 together with BNB other competent authorities responsible for the supervision of subsidiaries of the parent credit institution or an EU parent financial holding company of the European Union, a joint decision taken for determining the adequacy of the consolidated own funds of the parent company in respect of its financial position and risk profile, and for the establishment of an additional capital requirement under art. 103, para. 2, item 5 as for each company within the group or Bank and financial holding company on a consolidated basis.

(2) the decision shall be taken within four months from the date on which the BANK has granted to the other competent authorities a report containing the risk assessment of the group in accordance with art. 73 a, art. 79, para. 2 and 3 and in the application of the measure in respect of an infringement under art. 103, para. 1, item 11. In making the decision shall take into account the risk assessment of subsidiaries performed by other competent authorities.


(3) If within the time limit referred to in paragraph 1. 2 a joint decision is not reached, the BANK takes a decision on the application of self-consolidated basis of art. 73 a, art. 79, para. 2 and 3, of the measure in respect of an infringement under art. 103, para. 1, item 11, and of a measure under art. 103, para. 2, item 5, taking into account the risk assessment of subsidiaries performed by other competent authorities. Before taking a decision, the BNB self own initiative or at the request of any of the other competent authorities consulted KEBNO, taking into account its recommendation and the reasons for any significant departure from her.

(4) the decisions referred to in paragraph 1. 1 and 3 motivate and provide the parent credit institution of the European Union, and under para. 3 – and of other competent authorities. In the grounds of the decision on para. 3 indicate the opinions of the other competent authorities expressed during the period referred to in paragraph 1. 2.

(5) the decisions referred to in paragraph 1. 1 and 3 are reviewed annually or in case of extraordinary circumstances, when one of the other competent authorities submit a reasoned written request to BANK for the updating of the decision on the application of the measure referred to in art. 103, para. 2, item 5. In the event of such a request may reconsider decisions under para. 1 and 3 only with the participation of competent authority requesting.

Art. 92. (1) where a bank licensed in the Republic of Bulgaria, is a subsidiary of the parent credit institution or an EU parent financial holding company of the European Union, the BANK participates in making a joint decision on the determination of the adequacy of the consolidated own funds of the parent company in respect of its financial position and risk profile, and for the establishment of an additional capital requirement as to any company within the banking group or the financial holding company and on a consolidated basis.

(2) where no joint decision is reached under paragraph 1. 1, may ask for the consolidating supervisor shall consult with the KEBNO.

(3) If no joint decision is reached, BNB shall take decision independently on the application of art. 73 a, art. 79, para. 2 and 3, the application of the measure in respect of an infringement under art. 103, para. 1, item 11, and of a measure under art. 103, para. 2, t. 5 relative to the Bank, taking into account the opinion of the supervisor and the recommendation of the KEBNO when it's requested.

(4) the decisions referred to in paragraph 1. 1 and 3 are reviewed annually. In the event of an emergency may make a reasoned request for a review of the decision under paragraph 1. 1 or the informal decision of the supervisor for the updating of the decision for the application of the measure referred to in art. 136, para. 2 of Directive 2006/48/EC.

Art. 92 (e) (1) the Bulgarian National Bank, where consolidating supervisory authority, creates the supervisory colleges of competent authorities to facilitate the performance of the functions of art. 92, 92A, 92 and in art. 93 and provides an appropriate level of coordination and cooperation with the relevant competent authorities of third countries, where appropriate, subject to the requirements of confidentiality pursuant to para. 5 and of European Union law.

(2) the supervisory colleges provide proper arrangements for the implementation of the following goals and objectives:

1. the exchange of information;

2. agreement on assigning tasks and delegate powers on a voluntary basis, where appropriate;

3. determination of inspection plan based on the risk assessment of the group in accordance with art. 79, para. 2 and 3 and article. 103, para. 1, item 11;

4. increasing the effectiveness of supervision by removing unnecessary duplication of supervisory requirements, including in relation to requests for information under art. 93, para. 2 and art. 95, para. (2);

5. the consistent application of the measures provided for in Directive 2006/48/EC, the requirements for prudential supervision in respect of all companies in the group, without prejudice to the possibilities and the discretion conferred by the law of the European Union;

6. application of art. 92, para. 1, paragraph 3, taking into account the activities of other forums that can be created in this area.

(3) the Bulgarian National Bank cooperates with the other competent authorities involved in the supervisory Association. The measures provided for in art. 63, 64 and 65 requirements do not hinder the exchange of confidential information.

(4) for the establishment and activities of supervisory colleges BNB after consultation with the other competent authorities shall conclude written agreements with them under art. 94.

(5) the supervisory colleges can participate the competent authorities responsible for the supervision of subsidiaries of the parent credit institution or an EU parent financial holding company of the European Union, the competent authorities of the host Member State in which they are established significant branches, and when appropriate, and central banks, as well as the competent authorities of third countries, subject to the confidentiality requirements which, according to all the competent authorities involved are equivalent to the requirements under Chapter 1, section 2, of Directive 2006/48/EC.

(6) the Bulgarian National Bank will preside over meetings of the Supervisory Board and shall designate the competent authorities that will participate in each meeting or activity of the College, taking into account the importance of these bodies of the supervisory activity to be planned or coordinated, including the possible impact on financial stability in the Member States concerned in accordance with art. 79 (b), and obligations under art. 87 (b), para. 3 and 4.


(7) the Bulgarian National Bank shall provide in advance to all members of the Supervisory Board information on the organisation of the meeting, the main issues to be discussed, and the actions that will be taken into consideration. The Bulgarian National Bank shall provide in a timely manner to all members of the Supervisory Board and all the information on the decisions taken at these meetings, decisions and the measures taken.

(8) the Bulgarian National Bank shall inform the KEBNO on the activities of supervisory colleges, including in emergency situations, and shall provide it with all information essential for the purposes of supervisory convergence.

(9) the establishment and the activities of the Supervisory Board shall not affect the powers of the NATIONAL BANK under this law.

Art. 92. The Bulgarian National Bank takes part in the Supervisory Board, organised by the consolidating supervisor, when carried out supervision on an individual basis on the Bank, which is a subsidiary of the parent credit institution or an EU parent financial holding company of the European Union. In these cases, the BNB has the rights and obligations of the competent authority, arising from art. 92 (e). "

§ 19. In art. 93 para. 1 shall be amended as follows:

' (1) in the event of an emergency situation, including adverse developments in financial markets, which potentially jeopardises the liquidity or financial stability in the Republic of Bulgaria or in another Member State where they are licensed by the Group companies or established significant branches, BNB, when consolidating supervisor, shall immediately inform the authorities under art. 64, para. 1, item 10 and art. 64, para. 2 in the respective Member States and provides them with all the information which is essential for the exercise of their functions. "

§ 20. In art. 103, para. 2, item 5, finally put a semicolon and a second sentence: "when the Bank does not comply with the requirements under art. 73, para. 1 and art. 73A or in a review and evaluation of art. 79, para. 2 is found that does not provide a sound management and coverage of risks, the BANK imposes an additional capital requirement above the minimum required, if, as a result of the informal application of other measures is not expected within a reasonable period of time the Bank to improve the rules, procedures, mechanisms and strategies. "

§ 21. In the additional provisions the following amendments and additions:

1. § 1, para. 1:

a) in item 5:

AA) the text before paragraph (a) shall be replaced by the following:

"5." economic related parties "are two or more persons are carriers of a common risk, as are financial (business) bound in such a way that if one of them has financial problems, including funding or repayment of obligations, there are likely other or all the others also experience difficulties in the financing of the business or in the performance of his duties. So are two or more persons related by one or several of the following ways: ";

BB) (b) shall be repealed;

(b)) is created so 31:

"31." Consolidating supervisory authority "means the competent authority responsible for exercising supervision on a consolidated basis of parent credit institution on the European Union and on the credit institution, a financial holding company controlled by the mother from the European Union."

2. In § 4 everywhere abbreviations "EEC" and "EU" are replaced with "" and "", after the words "the reorganisation and winding-up of credit institutions" and "the Union" shall be deleted and the comma, and add "and directive 2009/111/EC of the European Parliament and of the Council of 16 September 2009 amending directives 2006/48/EC, 2006/49/EC and 2007/64/EC as regards banks affiliated to central institutions , certain own funds items, large exposures, supervisory arrangements, and crisis management (OJ, L 302/97 of 17 November 2009) ".

Transitional and final provisions

§ 22. Until 31 December 2012, the time limit under art. 92 in, al. 2 is 6 months.

§ 23. The law shall enter into force on 31 December 2010.

The law was adopted by 41-Otto National Assembly on 16 November 2010 and is stamped with the official seal of the National Assembly.

President of the National Assembly Tsetska Tsacheva:

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