Deposit Guarantee and Investor Compensation*
1. Who guarantees bank deposits?
The Deposit Insurance Fund (DIF) is created in January 1999 aiming at providing guarantee to deposits in banks as in this way it maintains the credibility in the banking system and supports the economic growth and the general macroeconomic stability in the country. The Fund guarantees the deposits on banks’ accounts of any type in BGN and foreign currency to Bulgarian and foreign physical persons and legal persons. Exceptions are made for definite legal persons in accordance with the Law on Bank Deposit Guaranty.
The maximum amount of the guarantee on deposits to a client in a certain bank is up to 196 000 BGN or their equivalency if the deposit is in foreign currency. It is important to know that at this amount the accrued interest at the date of the BNB decision for revoking the license for the bank activity is also included.
Additional guarantee up to 250 000 BGN for a period of 3 months is provided for certain types of deposits that are result of transactions with immovable property, payments due to marriage or divorce, dismissal, disability or death, insurance or social insurance payments, payments for damages due to crimes or repeal of a verdict.
2. Who guarantees the investments of banks’ clients in financial instruments?
The investments of the clients of banks acting as investment intermediaries in financial instruments, e.g. securities, derivatives and others as described in the Law on Markets in Financial Instruments are guaranteed by the Investor Compensation Fund (ICF) as in the Law on Public Offering of Securities exceptions for some legal persons are foreseen. The compensation is paid in case of a failure of investment intermediary if it is unable to pay out its duties to the client. The maximum amount of compensation that is provided by the Investor Compensation Fund is 90% of the amount of the clients’ financial assets held by a certain bank but not more than 40 000 BGN.