The Bulgarian Deposit Insurance Fund (BDIF) has received a €300mn loan from the European Bank for Infrastructure and Development (EBRD).

The fund is an independent public institution and the sole deposit insurer in Bulgaria. The loan will contribute to replenishing the fund following a major bank failure in 2014 and will optimise its funding structure.

According to an EBRD statement, the loan is conditional on BDIF aligning to new legislation frameworks for deposit insurance and bank recovery and resolution, implemented in mid-2015 to transpose requirements of the respective EU directives. Reinforcing the deposit insurance system is expected to increase confidence in the Bulgarian banking sector and support the efficient functioning of the financial market.

Matteo Patrone, EBRD regional director for Romania and Bulgaria, says: “This loan is a landmark investment for the EBRD as it supports the development of the local banking market infrastructure. We are complementing the authorities’ efforts to strengthen stability of the financial sector and this transaction is testimony to the EBRD’s commitment to Bulgaria, its financial sector and savers in the country.”

The loan to BDIF will be guaranteed by the government of Bulgaria.