SOFIA, Bulgaria (AP) ― Bulgaria sought to stabilize its banks with rescue money on Monday after what the government called a criminal plot to undermine them with rumors triggered runs on deposits.
Police arrested five people on Sunday for allegedly using text messages, emails and phone calls “to spread false information that caused detriment to commercial banks and destabilized the banking system.” Two of them were charged on Monday and could face two years of prison.
The rumors of liquidity shortfalls had caused widespread concern and two banks were hit by runs on deposits in recent days despite authorities’ insistence there was no reason to worry. The government decided this weekend to offer a 3.3 billion-leva ($2.25 billion) emergency credit line to the banks to stabilize them.
Shares in the banks soared Monday after the European Commission, the EU executive, cleared the move.
President Rosen Plevneliev, who convened party leaders at an emergency meeting on Sunday, said “there is no banking crisis but a crisis in confidence and criminal attacks.”
“We have sufficient reserves, means and tools to deal with any attempt at destabilization, and we stand behind each bank that becomes the target of an attack.” he said.
