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How bad is Bulgaria's banking crisis?

Monday, June 30, 2014 - 01:53

Bulgaria's banking crisis has eased after the European Commission gave the country permission to provide state aid if needs be. But as Sonia Legg reports the poorest country in the EU isn't stable yet.

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The signs of another banking crisis in Europe made many nervous But for now Bulgaria's seems to be under control. An early run at First Investment Bank on Monday quickly faded. Reassurances from the EU and IMF that they'd allow the government to step in if needs be seemed to do the trick. (SOUNDBITE) (Bulgarian) FIBANK CUSTOMER, RUMEN VELEV, SAYING: "This is normal behaviour - this kind of herd mentality - people get worried and it's like dominos." (SOUNDBITE)(Bulgarian) TAXI DRIVER, MITKO KAMENOV, SAYING: "The banks aren't going to fail, take it easy, all this business is artificially inspired." $560m was withdrawn from First Investment Bank, the country's third biggest lender, on Friday and the central bank took control of Corpbank - the fourth biggest. The government said it was due to a criminal plot to destabilise the financial system. And four people were arrested for sending false texts and emails. Georgi Ganev is an financial analyst in Sofia (SOUNDBITE) (English) FINANCIAL ANALYST, GEORGI GANEV, SAYING: "No, there is no banking crisis as of this moment in Bulgaria. It's quite obvious that whatever people are lining up to withdraw is happening only in front of the offices of one single bank and all the other banks that experienced some withdrawals on Friday are not experiencing any more, which means that the public has confidence in the banking system." But many Bulgarians don't have confidence in the fractious year-old government. Numerous protests have taken place in recent months and corruption allegations are rife. The president has promised to dissolve parliament in August to make way for a new government. A banking crisis the last thing they need now. The EU has stepped in to help, pointing out its poorest member also has one of the lowest public debt levels - at 18% of national output. Two thirds of its banks are also foreign-owned. A financial crisis 20 years ago made that possible - 14 banks collapsed. Something Bulgarians haven't forgotten yet.

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How bad is Bulgaria's banking crisis?

Monday, June 30, 2014 - 01:53