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.
Shares in the banks soared after the European Commission, the EU executive, approved a 3.3 billion-leva ($2.25 billion) emergency credit line the Bulgarian government is offering its banks to stabilize them.
Some Bulgarians continued to withdraw money from the country’s third-largest bank. But the queues outside the offices of First Investment Bank were visibly smaller than on Friday, when the bank had to close early after people had rushed to withdraw deposits.
On Friday, rumors of liquidity shortfalls caused panic and runs on deposits at First Investment Bank despite the authorities’ insistence that there was no reason to worry. Bulgaria’s fourth-largest lender, Corpbank, had already been put under special central bank supervision after suffering a run a week ago.
Eventually, police arrested five people for alleged “actions undermining the banking system.” Police said that the detainees used text messages, e-mails and phone calls to people across the country, “to spread false information that caused detriment to commercial banks and destabilized the banking system.”