EN ECB -PUBLIC  
 
OPINION OF THE EUROPEAN CENTRAL BANK  
of 9 November  2018   
on national legislation to be adopted for  the purpose  of establish ing close cooperation  between 
the E uropean Central Bank and the Bulgarian National Bank  
(CON/20 18/49) 
 
Introduction and legal basis  
On 18 July 2018 the European Central Bank (ECB) received a first request from the Minister of Finance 
for an opinion on a draft law  amending the Law on credit institutions, the Law on the Bulgarian National 
Bank and the Law on recovery and resolution.  On 11 October 2018, the ECB received a second request 
from the Minist er of Finance for an opinion on a revised draft law amending the Law on credit institutions 
and the Law on the Bulgarian National Bank (hereinafter the ‘draft law’) . 
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 third and sixth indents  of Article  2(1) of Council Decision 
98/415/EC1, as the draft law relates to Българска народна банка (Bulgarian National Bank (BNB)) , 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 opinion.  
 
1. Purpose of the draft law 
1.1 Introduction  
The draft law has been prepared in the broader context of the request filed on 18 July 2018 by the 
Republic of Bulgaria to establish close cooperation between the ECB  and BNB,  in line with the 
existing procedures  established under Article 7 of Council Regulat ion (EU) No 1024/20132 
(hereinafter the ‘SSM Regulation’) and under Decision ECB/2014/5 of the European Central Bank  
on close cooperation3. In this respect , the draft law  introduces  changes to national legislation to 
comply with the prerequisites for the establishment of close cooperation between the ECB and the 
national competent authority (NCA) of a Member State whose currency is not the euro, in order to 
allow  the ECB to carry out its tasks concerning the prudential supervision of credit institutions 
established in that Member State.  
                                                 
1 
 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) . 
2  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).  
3  Decision ECB/2014/5 of the European Central Bank of 31 January 2014 on the close cooperation with the national 
competent authorities of participat ing Member States whose currency is not the euro (OJ L 198, 5.7.2014, p. 7).  
ECB -PUBLIC  
2 1.2 Role of the ECB and BNB once close cooperation is established  
The draft law  introduces a new Chapter 11a into the Law on credit institutions4 in order to ensure  
that BNB will  abide by guidelines or requests issued by the ECB,  and will take the necessary 
measures to implement the ECB’s legal acts adopted pursuant to the SSM Regulation, including by 
issuing the necessary administrative acts . The draft law  further specifies that BNB will issue 
individual administrative act s only upon a request of the ECB , and in full compliance with such 
request , for the exercise of supervisory tasks with respect to significant credit institutions and in the 
context of common procedures, while for the exercise of supervisory tasks with respect to less 
significant credit institutions BNB will issue such administrative acts in compliance with ECB 
requests to the extent that the ECB has made such requests . The draft law requires BNB to notify 
the ECB of such administrative acts without undue delay.  
The draft law  also refers to the exercise of macroprudential tasks under Article 5 of the SSM 
Regulation, and specifies that BNB will comply with ECB requests for the application of higher 
requirements for capital buffers or the application of more stringent  measures aimed at addressing 
systemic or macroprudential risks.  
1.3 Exchange of confidential information  
The draft law  introduces amendments to both the Law on credit institutions and the Law on BNB5 
that aim t o ensur e that, for the purposes of the exchange of information within the framework of 
close cooperation established with the ECB under the SSM Regulation, BNB will provide the ECB 
with all necessary information for the performance of the ECB's tasks under the SSM Regulation , 
including information that is covered by bank and professional secrecy.  
1.4 Supervisory fees  
The draft law  supplement s the Law on BNB by introduc ing the obligation for BNB to collect annual 
fees in order to cover  its own administrative expenses related to the supervision and resolution of 
credit institutions  in accordance with a BNB ordinance . 
1.5 BNB governance  
The draft law  replaces the current provision  in the Law on BNB that  provides for  the Deputy 
Governor of BNB in charge of banking supervision to exercise supervis ion in accordance with  the 
rules provided for by law and the regulations for its enactment6, with a provision that supervision 
over the banking system will be exercised by the Deputy Governor under the terms and conditions 
of close cooperation with the ECB. The draft law amends  the provisions in the Law on BNB 
concerning the BNB Governing Council’s powers to clarif y that the following  powers , in respect of 
credit institutions,  will be carried out in accordance with the close cooperation established with the 
ECB under Article 7 of the SSM Regulation: (i) to grant, refuse and withdraw the licences of credit 
institutions; (ii) to apply supervisory measures and early intervention measures ; (iii) to  grant 
approval, permission and consent in the cases provided for under national  and Un ion law. In 
addition the draft law  provides that once close cooperation is established , the rules on the 
                                                 
4  Published in Darjaven Vestnik  No 59, 21 July 2006.  
5  Published in Darjaven Vestnik  No 46, 10 June 1997. See Article 4(2).  
6  See Article 20(3) of the Law on BNB.  
ECB -PUBLIC  
3 independence of BNB, the Governor and the members of the BNB Governing Council7 do not 
apply to the ECB in carrying out its tasks pursuant to the SSM R egulation.  
1.6 Provision of information for the purpose of conducting comprehensive assessment  of credit 
institutions established in the Republic of Bulgaria  
The draft law introduces a new paragraph 13a to the t ransitional and f inal provision s of the Law on 
credit institutions that creates an obligation for credit institutions  established in the Republic of 
Bulgaria to provide the ECB , and any third parties that carry out activities on behalf of the ECB,  
with all necessary information in connection with ECB ass essments that are required for 
participation in the S ingle Supervisory Mechanism . In particular, credit institutions will be obliged to 
provide information to the ECB and to allow the ECB to access their accounting registers and 
systems. Credit institutions will also be obliged to allow the ECB to access their premises , and 
those of consolidated entities,  to conduct on- site examinations.  
1.7 Fines and penalties  
The draft law provides that the administrative penalt y provisions of the Law on credit institutio ns will 
apply in respect of requests issued by the ECB for the imposition of pecuniary sanctions or fines in 
the context of close cooperation.  
1.8 Termination of close cooperation  
The draft law provides that the close cooperation provisions of the Law on c redit institutions will 
cease to apply (1) from the date of termination of close cooperation pursuant to Article 7 of the 
SSM Regulation or (2) from the date on which the derogation pursuant to Article 139 of the Treaty  
is abrogated in respect of the Repub lic of Bulgaria in accordance with Article 140(2) of the Treaty . 
 
2. General observations  
2.1 The ECB welcomes the draft law  as part of the  process leading to the establishment of close 
cooperation between the ECB and BNB pursuant to Article 7 of the SSM Regulati on. The ECB 
notes that the request and adoption of this opinion are necessary on the basis of Article 2 and 
Article 3(2)(b) of Decision ECB/2014/5.  
2.2 It is highlighted that, pursuant to Article 7(2)  of the SSM Regulation and Article 3(2)(b) of Decision  
ECB/2 014/5 , the scope of this  opinion pertains to the national legislation to be adopted by the 
Republic of Bulgaria to ensure that legal acts adopted by the ECB pursuant to the SSM Regulation 
are binding and enforceable in the Republic of Bulgaria and that BNB  is obliged to adopt any 
measure requested by the ECB in relation to the supervised entities in accordance with Article 7(4) 
of the SSM Regulation.  
2.3 This opinion is without prejudice to the assessment to be conducted by the ECB in accordance with 
Article 4 of Decision ECB/2014/5, which will include a broader assessment of the relevant national 
legislation, also taking into account the practical implementation of such legislation.  
 
                                                 
7  See Articl e 44 of the Law on BNB.  
ECB -PUBLIC  
4 3. Observations  regarding c lose cooperation between ECB and BNB  
3.1 Establishment and termination of close cooperation  
3.1.1  The ECB welcomes the introduction of a new Chapter 11a into the Law on c redit institutions, aimed 
at addressing in a cohesive  manner several aspects related to the establishment and operation of 
close cooperation with the ECB . In particular, it is understood that the new Chapter 11a 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 the Republic of Bul garia will take place 
under the framework provided for in the SSM Regulation.  
3.1.2  The ECB also welcomes that the application of the new Chapter 11a will be linked to the duration 
of the close cooperation between the ECB and BNB, starting from the date o n which close 
cooperation will begin as indicated in the ECB decision establishing close cooperation, until 
termination of close cooperation either under Article 7 of the SSM Regulation or from the date on 
which the derogation pursuant to Article 139 of the Treat y is abrogated in respect of the Republic of 
Bulgaria in accordance with Article 140(2) of the Treaty . This approach will facilitate  the transition 
from one system to the other  and will ensure clarity with respect to the applicable legal framework 
before, during and after close cooperation.  
3.2 Role of the ECB and BNB once close cooperation is established  
3.2.1  In order to ensure that supervised entities and groups established in a Member State in close 
cooperation will be in a position comparable to supervised entit ies and groups established in euro 
area Member States , Article 7 of the SSM Regulation sets as a precondition for the establishment 
of close cooperation that the requesting Member State ensures  that its NCA abides  by any 
guidelines or requests issued by the ECB and that it adopt s the relevant national legislation to 
ensure that its NCA will be obliged to adopt any measure in relation to credit institutions requested 
by the ECB. This requirement is further specified under Article 3(2)( a) of the Decision ECB/ 2014/5 , 
which provides that the relevant national legislation has to ensure that acts adopted by the ECB 
under the SSM Regulation are binding and enforceable.  
3.2.2  Against this background, the ECB welcomes the provisions of the draft law that  ensure that  BNB 
will abide by guidelines or requests issued by the ECB, and will take the necessary measures , 
including issuing individual administrative acts,  to implement the ECB’s legal acts adopted pursuant 
to the SSM Regulation. In particular, the ECB understands  that the provisions  of the draft law  aim 
to ensure compliance with the abovementioned requirements and that the ECB is able to exercise 
its supervisory tasks under the framework of close cooperation.  
3.2.3  In addition, the ECB welcomes the clarification in the draft law on the exercise of supervisory tasks 
in respect o f significant and less significant credit institutions, especially that BNB will act only upon 
the ECB’s  request for the supervision of significant credit institutions and in the context of common 
procedures.  
3.3 BNB governance  
The provisions of the draft law relating to the governance of BNB enhance clarity and ensure 
consistency in BNB ’s governance, by providing that BNB’s supervisory tasks will be performed 
under the framework of the established close cooperation with the ECB.  
ECB -PUBLIC  
5 3.4 Exchange of information  
The ECB welcomes the provisions of the draft law relating to the exchange of information under the 
framework established by the SSM Regulation which will ensure that no uncertainty will arise as to 
the regime applicable to the exchange of information in the context of close cooperation.  
3.5 Supervisory f ees 
Regarding the possibility for BNB to collect annual fees from supervised entities , notably in relation 
to banking supervision , it is understood that this provis ion of the draft law falls under the scope of 
Article 30(5) of the SSM Regulation, namely the right of NCAs to levy fees in accordance with 
national law , to the extent that supervisory tasks have not been conferred on the ECB, or in respect 
of costs of cooperating with and assisting the ECB and acting on its instructions.  
3.6 Provision of information for the purpose of conducting comprehensive assessment  of credit 
institutions established in the Republic of Bulgaria  
3.6.1  The ECB underst ands that the draft law aims to ensure compliance with the undertaking of the 
Republic of Bulgaria to provide the ECB with all information on credit institutions established in that 
Member State that the ECB may require for the purpose of carrying out a comprehensive 
assessment of thos e credit institutions , in line with Article 7(2)(b) of the SSM Regulation. In 
particular, it is understood that the consulting authority  is fulfilling  this undertaking by imposing 
obligations  directly upon credit institutions . 
3.6.2  Nonetheless, it is stressed  that this approach should not  be read as affecting the position of the 
ECB in relation to Bulgarian credit institutions  or as conferring powers on  the ECB which may go 
beyond what is provided for under the SSM Regulation.  As mentioned above, even after the 
establishment of close cooperation,  BNB will remain the authority responsible for adopting 
decisions addressed to Bulgarian credit institutions . It is understood that this will also be the case 
for the purpose of the assessment s necessary to establish clos e cooperation, in line with the  Treaty  
and the SSM Regulation.  
 
This opinion will be published on the ECB’s website.  
 
 
Done at Frankfurt am Main, 9 November  2018.  
 
[signed]  
 
The President of the ECB  
Mario DRAGHI