The new text of BNB Ordinance No. 21 on the Minimum Required Reserves Maintained with the Bulgarian National Bank by Banks was published in the State Gazette and comes into effect on 4 January 2016, replacing the legacy version of the document from 1998 and introducing the following significant amendments:
- definition of excess reserves held by banks with BNB as reserve assets that exceed the minimum required reserves with more than 5%, calculated on average daily basis during the respective month;
- possibility for BNB to apply negative interest rate on excess reserves when the interest rate on the deposit facility of the European Central Bank is negative, while zero interest rate remains applicable to excess reserves when the interest rate on the deposit facility of ECB is positive or zero.
Additionally, another ordinance was adopted by BNB, which introduces changes to the penalty interest rates that may be applied in case of non-compliance with the minimum reserve requirements of BNB.
Impact on investors: The new BNB regulations are a response to the negative-interest-rates trends in the Eurozone, taking into consideration the increasing market liquidity and protecting the local financial market from the possible disadvantageous effects of continued liquidity inflow to Bulgaria as well as facilitating the domestic market's discipline and stability. Client accounts with UniCredit Bulbank will not be impacted by these changes for the time being. UniCredit Bulbank is currently reviewing the new regulations and will advise its clients accordingly should there be any change in the bank’s interest rate policy.