site.btaMunicipal Bank Notifies Sofia's Local Government of Intention to Sever Relations

Sofia Municipality has received notice of termination of its contract with Municipal Bank, the municipal government's press office said Tuesday. It stated that all necessary measures will be taken to ensure payments after the notice period expires. Municipal Bank has been servicing the municipality's finances since 1996.

Two weeks ago, Sofia Mayor Vasil Terziev submitted a report to the Sofia Municipal Council proposing to terminate relations with Municipal Bank, and a proposal to seek another servicing bank by sending inquiries to the five largest banks in the country.

However, at a meeting of the Sofia Municipal Council's Standing Committee on Finance and Budget, Continue the Change - Democratic Bulgaria (CC-DB) municipal councillor Blagovesta Kenarova requested that the change of the servicing bank be postponed as it was "lacking basic financial justification and transparency”. There is no analysis or methodology for selecting a new bank, she argued. The mayor's proposal was postponed with the votes of Kenarova and municipal councillors from GERB, the Bulgarian Socialist Party and There Is Such a People.

Municipal Bank was in the focus of statements made to journalists by Sofia Mayor Vasil Terziev and Deputy Mayor for Finance Ivan Vasilev during last week's meeting of the Sofia Municipal Council, even though the report was not discussed by the full Council.

“Municipal Bank is anything but municipal. It has been private for quite some time,” Terziev said. “The purpose of the report on changing the bank was to ensure that Sofia's money is managed in the best possible way so that the public interest is protected. We were surprised when the report was 'stifled' while still in committee. To our great surprise, Blagovesta Kenarova from CC-DB sabotaged it,” Terziev said.

Deputy Mayor Vasilev explained at the time that the report explicitly stated that there would be a procedure for selecting a banking institution, in which commercial banks with which the Finance Ministry has contracts for payment services through the electronic budget payment system (SEBRA) would participate. “The banks we proposed in the report were identified by the Bulgarian National Bank as the five largest banks based on their total assets in each reporting period. In other words, these are not just any banks we decided we wanted to receive offers from,” Vasilev added.