EN ECB -PUBLIC  
 
OPINION OF THE EUROPEAN CENTRAL BANK  
of 22 December  2020  
on the interaction between the European Central Bank and the Bulgarian National Bank within the 
framework of close cooperation  in the Single Supervisory Mechanism  
(CON/20 20/36) 
 
Introduction and legal basis  
On 10 December  2020 the European Central Bank (ECB) received a request from the Bulgarian Minister 
of Finance for an opinion on a draft law amending the Law on credit institutions  (hereinafter the ‘draft 
law’)1. 
The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the 
Functioning of the European Union and the sixth  indent of Article 2(1) of Council Decision 98/415/EC2, as 
the draft law relates to rules applicable to financial institutions insofar as they materially influence the 
stability of financial institutions and markets and the ECB ’s tasks concerning the prudential supervision of 
credit institutions pursuant to Article 127(6) of the Treaty . In accordance with the first sentence of 
Article  17.5 of the Rules of Procedure of the European Central Bank, the Governing Council has adopted 
this opi nion.  
 
1. Purpose of the draft law  
As explained in the consultation letter , the draft law aims to ensure the smooth interaction between 
the ECB and Българска народна банка (BNB, Bulgarian National Bank ) within the framework of 
close cooperation in the Single Supervisory Mechanism (SSM) . The draft law  proposes t o amend 
the Law on credit institutions3 in respect of, inter alia , the following  matters . 
1.1 Right to be heard  in supervisory procedures  and notification of BNB decisions  
The draft law proposes to explicitly provide that credit institutions will have the right to be heard on 
draft BNB decision s implementing ECB instructions in relation to significant institutions4 and on 
draft BNB decisions in relation to less significant credit institutions5. The hearing period provided 
for is 14 days from the date of notification , except  in cases of the issue or revocation of  a credit 
institution ’s licence, the acquisition of a q ualifying holding,  or in special circumstances, the period 
will be three working days. These deadlines can be disapplied in circumstances  where an urgent 
decision appears necessary in order to prevent significant damage to the financial system6. The 
                                                 
1  Закон за изменение и допълнение на Закона за кредитните институции . 
2 
 Council Decision 98/415/EC of 29 June 1998 on the consultation of the European Central Bank by national 
authorities regarding draft legislative provisions ( OJ L 189, 3.7.1998, p. 42) . 
3  Law on credit institutions (Закон за кредитните институции, обн. ДВ, бр. 59 от 21. 07.2006 г.).  
4  Proposed new Article 121b(6) of the Law on credit institutions.  
5  Proposed new Article 151a(1) of the Law on credit institutions.  
6  Proposed new Article 121b(7) and Article 151a(2) of the Law on credit institutions.  
ECB -PUBLIC  
2 draft law provides further that a BNB decision  may be notified to its addressees  by email or by fax, 
if the addressees  have provided these details to BNB7. 
1.2 Decisions  with conditions and obligations  
The draft law provides that BNB decisions adopted to implement  ECB instructions and which grant  
authorisations, approvals or rights , may define conditions , upon fulfilment of which the decision  will 
come into effect, and may also impose additional  obligations and make recommendations8. 
1.3 Duty to provide information  
The draft law provides that credit institutions and, where  applicable,  financial holding companies, 
mixed financial holding companies and their shareholders or partners , shall be under a duty to 
provide BNB with all necessary documents, information and assistance  required for banking 
supervision purposes and refrain from any actions that could hinder banking supervision9. 
1.4 Deadlines for the exercise of specific supervisory powers  
The draft law provides that BNB shall perform its assessment and decide within one month of the 
receipt of notification  from the credit institution (i) whether to approve or reject  any proposed 
amendments to a credit institution’s statute10 and (ii) whether to object to the proposed  
appointment of an independent auditor11. 
1.5 Administrative penalties  
The draft law provides that persons who obstruct BNB, the Deputy Governor who heads  the 
Banking Supervision Department or employees duly authorised by them from exercising their 
supervisory powers  shall be subject to an administrative penalty12. 
 
2. Observations  
2.1 Close cooperation between t he ECB and BNB started on 1 October 202013. The ECB welcomes 
the proposed amendments , which aim to align the national legal  framework on the right to be heard 
with the legal framework  of the SSM,  as well as  the clarification that BNB decisions implementing 
ECB instructions may be subject to conditions  and obligations and may include recommendations.  
The ECB also welcomes the extension of certain deadlines, which would facilitate the cooperation 
between the ECB and BNB in the adoption of the respective decisions in relation to significant 
credit institutions14. 
2.2 As previously noted, the ECB understands that the provisions  under the draft law will be read in 
accordance with the other provisions of the Law on credit institutions, so that the exercise of 
prudential supervision over credit institutions established in Bulgaria  will take place under the 
                                                 
7  Proposed amended Article 151(7) of the Law on cr edit institutions.   
8  Proposed  amended Article 121b(4) of the Law on credit institutions.  
9  Proposed new Article 80(8) of the Law on credit institutions.   
10  Proposed amended Article 71(5) of the Law on credit in stitutions .  
11  Proposed amended Article 76(6) of the Law on credit institutions.   
12  Proposed new Article 152(9) of the Law on credit institutions.  
13  Decision (EU) 2020/1015 of the European Central Bank of 24 June 2020 on the establishment of close cooperation 
between the European Central Bank and Българска народна банка (Bulgarian National Bank) (ECB/2020/30) (OJ L 
224I, 13.7.2020, p. 1).  
14  See paragr aphs 2.3 to 2.5 of this opinion.  
ECB -PUBLIC  
3 framework provided for in Council Regulation (EU) No 1024/20131516. 
2.3 The draft law  extends the deadline for the supervisory approval  of proposed amendments to the 
statute  of a credit institution.  The extension of the deadline – from ten calendar days to one month  
from the date of notification of the proposed changes  – is welcomed by the ECB , as it provides  the 
competent authority  with more time to perform its assessment and carry out its decision -making 
process es. Under the draft law,  the issuance of a supervisory decision is required in the case of  
both a positive and of a negative assessment  of the proposed amendments . However, 
consideration could be given to whether that  requirement for explicit approval (in the form of a 
supervisory decision) could instead be formulated as an ex-ante notification requirement with the 
possibility for the competent authority to object  within a specified timeframe,  so that  if it does not do 
so (meaning that the assessment is positive) , the proposed amendments are deemed to be 
approved.  This would seem to be appropriate,  as otherwise the requirement under national law  to 
issue a specific supervisory decision in the case of a positive assessment  could increase the time 
required for decision- making in the context of close cooperation.  
2.4 Under Article 76(4) of the Law on Credit Institutions each bank shall coordinate its choice of 
auditors with BNB  in advance of the auditors’ appointment . BNB may object to the choice of 
auditors within a specific deadline , and if it doesn’t object  the proposal for the choice of auditors is 
deemed to have been agreed with BNB . The extension of the  deadline for objection from 
14 calendar days to one month from the date of notification of the request is welcomed,  as it 
provides  the competent authority  with more time to perform its assessment and carry out its 
decision -making process es.  
2.5 As regards  the one month deadlines provided for  in the draft law , the ECB notes that the Bulgarian 
authorities may consider exploring the possibility of whether the period of one month could  either  
be stipulated as a minimum timeframe or be further extended – if and where  deemed appropriate 
given the regulatory framework  – to take into account the specificities of close cooperation in view 
of the time needed  for collaboration between the ECB and BNB in the decision -making process . 
 
This opinion will be published on EUR -Lex. 
 
 
Done at Frankfurt am Main, 22 December  2020.  
 
[signed]  
 
The President of the ECB  
Christine  LAGARDE  
                                                 
15  Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the European Central Bank 
concerning policies relating to the prudential supervision of credit institutions (OJ L 287, 29.10.2013, p. 63).  
16  Paragraph 4.4 of Opinion CON/2020/10. All ECB opinions are published on EUR -Lex.