Opinion of the European Central Bank of 9 November 2018 on national legislation to be adopted for the purpose of establishing close cooperation between the European Central Bank and Българска народна банка (Bulgarian National Bank) (CON/2018/49)
Date: 2018-11-09
Institutions: European Central Bank
Subjects: Bulgaria, EU banking union, banking supervision, central bank, credit institution, exchange of information, financial stability, national law

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK  

of 9 November 2018  

on national legislation to be adopted for the purpose of establishing close cooperation between 

the European Central Bank and the Bulgarian National Bank 

(CON/2018/49) 

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 Minister 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  Regulation  (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 

2  

3  

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). 

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).  
Decision ECB/2014/5 of the European Central Bank of 31 January 2014 on the close cooperation with the national 
competent authorities of participating Member States whose currency is not the euro (OJ L 198, 5.7.2014, p. 7). 

 
 
 
 
                                                 
 
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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 institutions 4 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  acts  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  to  ensure  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 supplements the Law on BNB by introducing 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 supervision 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 clarify 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  Union  law.  In 

addition  the  draft  law  provides  that  once  close  cooperation  is  established,  the  rules  on  the 

4  
5  
6  

Published in Darjaven Vestnik No 59, 21 July 2006. 
Published in Darjaven Vestnik No 46, 10 June 1997. See Article 4(2). 

See Article 20(3) of the Law on BNB. 

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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 Regulation. 

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 transitional and final provisions 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  assessments  that  are  required  for 

participation in the Single 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 penalty provisions of the Law on credit institutions 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  credit  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 Republic 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  Regulation.  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/2014/5,  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 Article 44 of the Law on BNB. 

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3. 

Observations regarding close 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 credit 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 Bulgaria 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  on  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 Treaty 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 entities 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  adopts  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 of 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. 

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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 fees 

Regarding the possibility for BNB to collect annual fees from supervised entities, notably in relation 

to banking supervision, it is understood that this provision 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  understands  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  those  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 assessments necessary to establish close 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 

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