Shareholders will now have the right to protection against the revocation of a banking license
The Ministry of Finance has urgently drafted amendments to the Bank Insolvency Act to deal with cases in which the state was convicted of revoking the licenses of two bankrupt banks – the International Bank for Trade and Development in 2005 and the Corporate Commercial Bank (KTB). in 2014.
The main legal change provides that shareholders can appeal against the revocation of a bank’s license.
Two days ago, the European Court of Human Rights ruled that the shareholders of KTB, led by Tsvetan Vasilev, were deprived of the right to appeal the revocation of the bank’s license. This deprived the bank’s shareholders of due process and violated the right to property.
The court in Strasbourg believes that there is a problem in the legislation in Bulgaria, which has not provided for any other forms of judicial appeal and protection in such cases.
In 2016, the European Court of Human Rights ruled in the same way in the case “International Bank for Trade and Development AD and others v. Bulgaria”.
In fact, in its reasons for the draft law, the MoF mainly examines the case of the bankruptcy and the revocation of the MBTR license. In the case, the court in Strasbourg found a violation of the Convention for the Protection of Human Rights and Fundamental Freedoms due to the lack of procedural representation of the bank in the bankruptcy proceedings – it was represented by conservators appointed by the BNB. Thus, the bank’s shareholders and management lose control over the institution’s actions, and if a court appeal is conducted for the revoked license, it is conducted by the conservators, i.e. from the same institution that revoked the work permit.
Although the decision of the European Court of Human Rights in the case of the MBTR is from 2016, the MoF bill does not appear until after the KTB decision of 30 August 2022. The public consultation is due to end by 1 October 2022.
The text also proposes the cancellation of the possibility of the Minister of Finance proposing to the Bank Deposit Guarantee Fund to release the trustee of a bankrupt bank when the trustee does not fulfill his obligations or his actions endanger the interests of creditors. This authority of the Minister of Finance was written into the law in 2015, but according to the Ministry of Finance, it is not sufficiently secured because the Minister does not have a mechanism to monitor how the syndic performs its duties.