Law on the Recovery and Restructuring of Credit Institutions and Investment Intermediaries

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LAW on the Recovery and Restructuring of Credit Institutions and Investment Intermediaries Promulgated - Official Gazette, No. 62 of 14.08.2015, effective from 14.08.2015; amended, No. 59 of 29.07.2016; amended, No. 85 of 24.10.2017; amended and supplemented, No. 91 of 14.11.2017; amended, No. 97 of 05.12.2017, effective from 05.12.2017; amended and supplemented, No. 15 of 16.02.2018, effective from 16.02.2018; amended, No. 20 of 06.03.2018, effective from 06.03.2018; amended, No. 106 of 21.12.2018; amended and supplemented, No. 37 of 07.05.2019, effective from the day the decision of the European Central Bank on close cooperation under Article 7 of Regulation (EU) No 1024/2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions begins to apply; amended and supplemented, No. 12 of 12.02.2021, effective from 12.02.2021; amended and supplemented, No. 25 of 29.03.2022, as the amendments under the Supplementary Amendment to the Law on Financial Market Infrastructure enter into force from 29.03.2022, and the amendments under the Law on Payment Services enter into force from 08.07.2022; amended and supplemented, No. 8 of 25.01.2023; amended and supplemented, No. 85 of 10.10.2023, effective from 10.10.2023; amended, No. 13 of 13.02.2024, effective from the date specified in a Decision of the Council of the European Union on the adoption of the euro by the Republic of Bulgaria, adopted in accordance with Article 140(2) of the Treaty on the Functioning of the European Union, and a Council Regulation adopted in accordance with Article 140(3) of the Treaty on the Functioning of the European Union; amended, No. 70 of 20.08.2024, effective from the date determined in a Decision of the Council of the European Union on the adoption of the euro by the Republic of Bulgaria, adopted in accordance with Article 140(2) of the TFEU, and a Council Regulation adopted in accordance with Article 140(3) of the TFEU; ; amended and supplemented, No. 54 of 04.07.2025; amended and supplemented, No. 63 of 01.08.2025; amended and supplemented, No. 67 of 15.08.2025; supplemented, No. 25 of 10.03.2026

Chapter One GENERAL PROVISIONS

Subject Matter and Scope

Art. 1. (Amended - OG, No. 15 of 2018, effective from 16.02.2018; supplemented, No. 12 of 2021, effective from 12.02.2021; amended, No. 25 of 2022, effective from 29.03.2022; supplemented, No. 8 of 2023.) (1) (Supplemented - OG, No. 12 of 2021, effective from 12.02.2021.) This Law establishes the rules and procedures relating to the recovery and restructuring of the following entities:

1. credit institutions (banks) for which the Bulgarian National Bank (BNB) has issued a license to carry out banking activities;
2. (Amended - OG, No. 15 of 2018, effective from 16.02.2018.) investment intermediaries that have obtained a license to carry out activities from the Commission for Financial Supervision (the Commission) under Art. 6(2), items 3 and 6 and under Art. 6(3), item 1 of the Law on Markets in Financial Instruments;
3. (Amended - OG, No. 25 of 2022, effective from 29.03.2022.) financial institutions with their registered office in a Member State, when the financial institution is a subsidiary of a bank or investment intermediary licensed in the Republic of Bulgaria, or of an entity referred to in item 4 or 5, and falls within the scope of consolidated supervision over the parent undertaking in accordance with Arts. 6-17 of Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and amending Regulation (EU) No 648/2012 (OJ, L 176/1 of 27 June 2013), hereinafter referred to as Regulation (EU) No 575/2013;
4. financial holding companies, mixed financial holding companies and holding companies with mixed activities with their registered office in the Republic of Bulgaria;
5. EU parent financial holding companies and EU parent mixed financial holding companies, when they are subject to consolidated supervision by the BNB or by the Commission;
6. branches in the Republic of Bulgaria of credit institutions and investment intermediaries from third countries in accordance with the special conditions provided for in this Law;
7. branches in the Republic of Bulgaria of credit institutions and investment intermediaries with their registered office in other Member States - in the cases provided for in this Law. (2) (Amended - OG, No. 15 of 2018, effective from 16.02.2018.) When exercising its powers and applying the requirements of this Law with regard to a person referred to in paragraph 1, the BNB, respectively the Commission, shall take into account the nature of its business activity, shareholding structure, legal form, risk profile, size and legal status, its interconnectedness with other institutions or with the financial system as a whole, the scope and complexity of its activities, as well as whether it provides investment services or activities under Art. 6(2) of the Law on Markets in Financial Instruments. (3) (New - OG, No. 8 of 2023.) This Law shall not apply to persons who have obtained a license to carry out activities under Art. 14 of Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories (OJ, L 201/1 of 27 July 2012), hereinafter referred to as "Regulation (EU) No 648/2012".

Restructuring Authority for Credit Institutions

Art. 2. (Amended - OG, No. 37 of 2019, effective from the day the decision of the European Central Bank on close cooperation under Article 7 of Regulation (EU) No 1024/2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions begins to apply; supplemented, No. 12 of 2021, effective from 12.02.2021.) (1) (Amended - OG, No. 37 of 2019, effective from the day the decision of the European Central Bank on close cooperation under Article 7 of Regulation (EU) No 1024/2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions begins to apply.) The Bulgarian National Bank (BNB) shall be the restructuring authority with regard to the entities under Art. 1(1) which are subject to supervision or consolidated supervision by the BNB, and in performing its tasks and exercising its powers it shall apply Regulation (EU) No 806/2014 of the European Parliament and of the Council of 15 July 2014 establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of a Single Resolution Mechanism and a Single Resolution Fund and amending Regulation (EU) No 1093/2010 (OJ, L 225/1 of 30 July 2014), hereinafter referred to as "Regulation (EU) No 806/2014", and this Law. Decisions of the BNB as a restructuring authority shall be taken by the BNB Board of Governors, unless otherwise provided in this Law. (2) The BNB Board of Governors shall establish an independent structural unit to assist it in exercising the functions under paragraph 1, which shall be separate and independent from the structural units engaged in carrying out banking supervision tasks and other functions of the BNB. (3) The BNB Board of Governors shall adopt and publish on its website internal rules for the operation of the unit under paragraph 2, including regarding the protection of professional secrecy and the exchange of information with other structural units in the BNB and with other authorities. (4) The unit under paragraph 2 shall actively cooperate with the BNB Banking Supervision Directorate in the preparation, planning and implementation of resolution decisions, as well as with the Commission, when necessary. (5) (New - OG, No. 12 of 2021, effective from 12.02.2021.) The consultations between the restructuring authority under paragraph 1 and the competent authority, as provided for in this Law, shall be carried out through the exchange of information and opinions between the unit under paragraph 2 and the BNB Banking Supervision Directorate, unless expressly provided otherwise.

Implementation of Decisions of the Single Resolution Board by the Restructuring Authority for Credit Institutions

Art. 2a. (New - OG, No. 37 of 2019, effective from the day the decision of the European Central Bank on close cooperation under Article 7 of Regulation (EU) No 1024/2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions begins to apply.) The Bulgarian National Bank, as the restructuring authority, respectively the national resolution authority within the meaning of Regulation (EU) No 806/2014, shall perform tasks and adopt resolution decisions, complying with the guidelines and general instructions issued by the Single Resolution Board (SRB) to resolution authorities, and shall take the necessary actions to implement the decisions under Regulation (EU) No 806/2014.

Restructuring Authority for Investment Intermediaries

Art. 3. (Amended - OG, No. 37 of 2019, effective from the day the decision of the European Central Bank on close cooperation under Article 7 of Regulation (EU) No 1024/2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions begins to apply; amended and supplemented, No. 12 of 2021, effective from 12.02.2021.) (1) (Amended - OG, No. 37 of 2019, effective from the day the decision of the European Central Bank on close cooperation under Article 7 of Regulation (EU) No 1024/2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions begins to apply.) The Commission for Financial Supervision (CFS) shall be the restructuring authority with regard to the entities under Art. 1(1) which are subject to supervision by the CFS and are not credit institutions, and the entities which are subject to consolidated supervision by the CFS. In performing its tasks and exercising its powers with regard to the entities under Art. 1(1) which are not credit institutions and fall within the scope of consolidated supervision over the parent undertaking exercised by the European Central Bank (ECB) in accordance with Article 4(1)(j) of 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 287/63 of 29 October 2013), hereinafter referred to as "Regulation (EU) No 1024/2013", the CFS shall apply Regulation (EU) No 806/2014 and this Law. Decisions of the CFS as a restructuring authority shall be taken upon the proposal of the CFS member under Art. 3(5) of the Law on the Commission for Financial Supervision, unless otherwise provided in this Law. (2) The rules of procedure of the CFS shall establish an independent structural unit to assist the CFS and the CFS member under Art. 3(5) of the Law on the Commission for Financial Supervision in exercising their functions under paragraph 1, which shall be separate and independent from the functions related to the supervision of investment activities and from the other functions of the CFS. (3) (Amended - OG, No. 12 of 2021, effective from 12.02.2021.) The internal rules of the CFS shall establish rules for the operation of the unit under paragraph 2, including regarding the protection of professional secrecy and the exchange of information with other structural units in the CFS and with other authorities. The internal rules shall be published on the website of the CFS. (4) The unit under paragraph 2 shall actively cooperate with the CFS Investment Activity Supervision Directorate in the preparation, planning and implementation of resolution decisions, as well as with the BNB, when necessary. (5) (New - OG, No. 12 of 2021, effective from 12.02.2021.) The consultations between the restructuring authority under paragraph 1 and the competent authority, as provided for in this Law, shall be carried out through the exchange of information and opinions between the unit under paragraph 2 and the CFS Investment Activity Supervision Directorate, unless expressly provided otherwise.

Implementation of Decisions of the Single Resolution Board by the Restructuring Authority for Investment Intermediaries

Art. 3a. (New - OG, No. 37 of 2019, effective from the day the decision of the European Central Bank on close cooperation under Article 7 of Regulation (EU) No 1024/2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions begins to apply.) The Commission for Financial Supervision, as the restructuring authority, respectively the national resolution authority within the meaning of Regulation (EU) No 806/2014, with regard to the entities under Art. 1(1) which are not credit institutions and fall within the scope of consolidated supervision over the parent undertaking exercised by the ECB in accordance with Article 4(1)(j) of Regulation (EU) No 1024/2013, shall perform tasks and adopt resolution decisions, complying with the guidelines and general instructions issued by the SRB to resolution authorities, and shall take the necessary actions to implement the decisions under Regulation (EU) No 806/2014.

Information and Participation of the Minister of Finance

Art. 4. (1) The restructuring authority under Art. 2, respectively under Art. 3, shall immediately inform the Minister of Finance of its decisions to take resolution actions and to apply resolution tools in the cases provided for in this Law. (2) The decisions under paragraph 1 shall be subject to implementation after approval by the Minister of Finance in cases where:

1. they have or may lead to an adverse impact on public finances;
2. there is a reasonable likelihood that it will become necessary to use the state financial stabilization instruments under Chapter Fourteen, or
3. they are taken under conditions of a systemic crisis affecting several institutions or the entire financial sector. (3) In the cases under paragraph 2, the restructuring authority shall submit to the Minister of Finance the decision under Art. 114 and at least the following information:
4. the current financial condition of the institution;
5. the resolution plan of the institution;
6. other information relevant to the case at the discretion of the restructuring authority or upon request of the Minister of Finance. (4) In the cases under paragraph 2, the Minister of Finance may approve or reject the decision. If necessary, the restructuring authority may introduce amendments to the decision within the approval procedure.

Cooperation between Restructuring Authorities

Art. 5. (Amended - OG, No. 37 of 2019, effective from the day the decision of the European Central Bank on close cooperation under Article 7 of Regulation (EU) No 1024/2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions begins to apply.) (1) (Amended - OG, No. 37 of 2019, effective from 07.05.2019.) The Bulgarian National Bank and the Commission shall cooperate with the European Banking Authority (EBA) in fulfilling their obligations under this Law in accordance with Regulation (EU) No 1093/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Banking Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/78/EC (OJ, L 331/12 of 15 December 2010), hereinafter referred to as "Regulation (EU) No 1093/2010". They shall immediately provide the EBA with the information necessary for the performance of its obligations under Art. 35 of the same regulation. (2) (New - OG, No. 37 of 2019, effective from the day the decision of the European Central Bank on close cooperation under Article 7 of Regulation (EU) No 1024/2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions begins to apply.) The Bulgarian National Bank and the Commission, within the framework of the Single Resolution Mechanism under Regulation (EU) No 806/2014, shall cooperate with the SRB, the European Commission, the Council of the European Union, the ECB, national resolution authorities, and national competent authorities. (3) (Former paragraph 2 - OG, No. 37 of 2019, effective from the day the decision of the European Central Bank on close cooperation under Article 7 of Regulation (EU) No 1024/2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions begins to apply.) The Bulgarian National Bank, respectively the Commission, shall take decisions under this Law, taking into account their potential impact in all Member States where the institution or group operates, ensuring that decisions minimize adverse consequences for financial stability and negative economic and social consequences in those Member States. (4) (Former paragraph 3 - OG, No. 37 of 2019, effective from the day the decision of the European Central Bank on close cooperation under Article 7 of Regulation (EU) No 1024/2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions begins to apply.) The Bulgarian National Bank, the members of the Board of Governors and the staff of the BNB shall not be liable for damages arising from actions or omissions in the performance of their obligations under this Law, unless they have acted intentionally. (5) (Former paragraph 4 - OG, No. 37 of 2019, effective from the day the decision of the European Central Bank on close cooperation under Article 7 of Regulation (EU) No 1024/2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions begins to apply.) The Commission, its members and staff shall not be liable for damages arising from actions or omissions in the performance of their obligations under this Law, unless they have acted intentionally. (6) (Former paragraph 5 - OG, No. 37 of 2019, effective from the day the decision of the European Central Bank on close cooperation under Article 7 of Regulation (EU) No 1024/2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions begins to apply.) In the resolution of the companies under Art. 1(1), items 4 and 5, the BNB and the Commission shall coordinate, participating, when necessary, in consultations during the preparation and adoption of resolution plans and taking specific actions, exchanging information and coordinating their actions in planning the resolution regime.

Provision of Information via the European Single Access Point

Art. 5a. (New - OG, No. 25 of 2026.) (1) The Bulgarian National Bank and the Commission shall be data collection authorities within the meaning of Art. 2(2) of Regulation (EU) 2023/2859 of the European Parliament and of the Council of 13 December 2023 on the establishment of a European Single Access Point providing centralized access to publicly available information relevant to financial services, capital markets and sustainable development (OJ, L 2023/2859 of 20 December 2023), hereinafter referred to as "Regulation (EU) 2023/2859", with regard to the information disclosed under Art. 43(1) and Art. 72b(6), in accordance with their competence under this Law. (2) The Bulgarian National Bank, respectively the Commission, shall provide the information under Art. 46(8), Art. 52a(11), Art. 54(4), Art. 115(3) and Art. 147(1) via the European Single Access Point under Regulation (EU) 2023/2859 in a data extraction format, as defined in Art. 2(3) of the same regulation. (3) The information under paragraph 2 shall be accompanied by the following metadata:

1. the name of the entity to which the information relates;
2. the legal entity identification code of the entity to which the information relates, where applicable;
3. the type of information, as classified under Art. 7(4)(b) of Regulation (EU) 2023/2859;
4. a notation indicating whether the information contains personal data.

Chapter Two PREPARATION FOR RECOVERY AND RESTRUCTURING

Section I Recovery Planning

Recovery Plans

Art. 6. (Amended - OG, No. 15 of 2018, effective from 16.02.2018; amended, No. 12 of 2021, effective from 12.02.2021; supplemented, No. 63 of 2025.) (1) (Amended - OG, No. 15 of 2018, effective from 16.02.2018; amended, No. 12 of 2021, effective from 12.02.2021.) An institution that is not part of a group subject to consolidated supervision shall prepare and maintain a recovery plan containing actions and measures that the institution may take to restore its financial condition in the event of significant financial difficulties. The recovery plan shall be considered part of the governance rules within the meaning of Art. 14(3)(14) of the Law on Credit Institutions, respectively internal organization within the meaning of Art. 65 of the Law on Markets in Financial Instruments. (2) The institution under paragraph 1 shall review and update the recovery plan at least once a year or following a change in its legal form, governance or organizational structure, business activity or financial condition, which may materially affect the recovery plan or necessitate a change to it. (3) The relevant competent authority under the Law on Credit Institutions or the Law on Markets in Financial Instruments may request an institution to update its recovery plan more frequently than provided in paragraph 2. (4) The recovery plan shall not provide for access to or receipt of extraordinary public financial support. (5) (Supplemented - OG, No. 63 of 2025.) Where appropriate, the recovery plan may include an analysis of the bank's ability to apply for the use of central bank facilities under conditions specified in the plan, identifying the assets held by the bank expected to serve as collateral. (6) The recovery plan shall contain the information set out in Annex No. 1, unless simplified requirements apply to the institution under Art. 25. The competent authority may request the institution to include additional information in the recovery plan. (7) The recovery plan shall include actions and measures that the institution may take if the conditions for early intervention under Art. 44(1) are met. (8) The recovery plan shall provide for appropriate conditions and procedures for the timely implementation of recovery actions and measures, as well as for a wide range of options for selecting such actions and measures. The plans shall consider various scenarios of serious macroeconomic and financial shocks relevant to the institution, including events covering the entire system and shocks related to individual legal entities and groups. (9) The governing body of the institution shall approve the recovery plan, after which the plan shall be submitted to the relevant competent authority under the Law on Credit Institutions or the Law on Markets in Financial Instruments.

Assessment of Recovery Plans

Art. 7. (Amended - OG, No. 15 of 2018, effective from 16.02.2018.) (1) Within six months of the submission of the recovery plan under Art. 6 and 8 and after consultation with the competent authorities of the Member States where significant branches are located, insofar as this is relevant to the respective branch, the competent authority under the Law on Credit Institutions or the Law on Markets in Financial Instruments shall review the plan and assess its compliance with the requirements under Art. 6, taking into account the likelihood that:

1. the application of the actions and measures proposed in the plan will maintain or restore the viability and financial condition of the institution or the group, taking into account the actions and measures the institution has taken or plans to take;
2. the plan and the specific