Bulgaria makes first arrests over bank runs

Sat Jun 28, 2014 2:33pm EDT

Related Topics

* First two arrests reported after second bank run in a week

* Bulgaria says there is organised attempt to destabilise banks

* Central bank urges political parties to act responsibly

By Gareth Jones

SOFIA, June 28 (Reuters) - Bulgarian authorities said on Saturday they had detained two men suspected of involvement in what they have described as an organised attempt to destabilise the country's financial system by encouraging citizens to withdraw bank deposits.

The national security agency said authorities had detained one man in the capital Sofia and a second in the Danube city of Ruse on suspicion of spreading false information about Bulgarian commercial banks.

They are the first arrests since Bulgaria launched a criminal investigation on Friday following a run on a second commercial bank in the space of a week. The interior ministry said criminals were using the internet and mobile phones to send messages urging citizens to pull their savings from banks.

Last weekend, the central bank took over Bulgaria's fourth largest lender, Corporate Commercial Bank (Corpbank), after customers rattled by reports of shady deals involving the bank rushed to withdraw their savings.

In the past two days, Bulgaria's third largest lender, First Investment Bank, has also seen large-scale cash withdrawals, prompting the central bank to warn of a systematic assault on the banking system. It has vowed to use all tools needed to protect citizens' savings.

The national security agency said in its statement that a 45-year-old man detained in Ruse had published malicious information about a large Bulgarian bank on his Facebook page and on a video posted on YouTube.

The agency said he had also called for the scrapping of the currency board, which pegs the lev currency to the euro and is seen as the bulwark of Bulgaria's economic stability since its introduction in the mid-1990s after a financial crisis triggered hyper-inflation and wiped out many of the country's banks.

"TIME FOR SOLIDARITY"

The man arrested in Sofia had spread false informaation about Bulgarian banks for personal gain, the agency said. It provided no further information.

The central bank on Saturday reiterated its call to all state bodies and political parties to help restore public confidence in the banking system and to avoid making comments that could fan citizens' concerns about their savings.

"We appeal to politicians and to citizens to assess in a sober and reasonable way every word they utter on the issue of the banks. This is a time for ... solidarity, national consensus and unity for the good of all Bulgarian citizens," it said.

On Friday, the leaders of Bulgaria's main political parties agreed to hold a snap parliamentary election on October 5 and pledged support for the central bank's efforts to calm the situation. But that has not stopped them trading accusations of complicity in weakening the financial system over recent days.

Opposition leader Boiko Borisov, whose centre-right party is tipped to win the election, called on Saturday for the immediate resignation of the prime minister, finance and interior ministers over their handling of the crisis - a demand the ruling Socialists said stoked public uncertainty. (Additional reporting by Angel Krasimirov; editing by Ralph Boulton)

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