LM Legal Services Blog

Companies in Bulgaria drain their bank accounts while Bulgarian banks fight for the savings of individual clients and increase the interest rates to compensate. According to analysts this is due to the lack of fresh money. In the last months the Bulgarian banks have cut financing of companies to minimum – only 240 million levs for the whole of January – thus forcing companies to withdraw their money. The other reason is tax preferences which made companies pay their tax in advance.

Some bankers do not agree with this explanation and think that companies just transfer their money from one account into another and explain this with the slow down of economy and the drop in the volume of export. These make many companies freeze their projects for enlargement and renovation. In this way they release money into their current accounts. According to some bankers some companies even put their money into personal accounts to take the benefit of the high interest rates.  The annual interest for personal accounts is 2% higher than the ones for companies and when it is a matter of 10-15 million levs this is a significant difference.

Only in January the recession and the optimisation of liquidity of the banks have led to the withdrawal of 550 million levs from the company’s current accounts and more than 170 million levs from the savings accounts. At the same time the total amount of the money in personal fixed term savings accounts has increased by 708.4 million levs. This contradicts the real abilities of households to save money. In the last year the personal savings in Bulgarian banks did not exceed 230 million levs. Svetoslav Gavriysky, the executive director of Allianz Bank, however thinks that from an accountancy point of view this is a very complicated combination and the withdrawal of money from the company’s current accounts is due to the lack of fresh credits.

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