Glossary of Terms

A

Assignee in bankruptcy, trustee

  • a person (in Bulgaria a physical person only) authorized to represent a bank in bankruptcy, to manage its affairs and to conduct activities for collecting its claims, discharging its debts to the creditors out of the collected funds, allocating the remainder of its assets among the shareholders and winding-up its activity.
B

Bank

Bank account, bank deposit

  • a sum of money that a customer has entrusted to a bank under certain interest rates and which the customer is solely entitled to dispose of.

Banking crisis

  •  loss of confidence in the banking system that leads to a run on banks, as individuals and companies withdraw their deposits.

Banking licence

  • a written permit for conducting banking operations, including publicly accepting of money on deposits, granted by the Central Bank or other authorised regulatory body.

Banking supervision

  •  oversight of banks’ performance exercised by the Central Bank or other authorised regulatory body in order to guarantee the stability of the banking system. On exercising its supervision the Central Bank may require all necessary documents as well as any information on banks’ activities to be submitted by banks and their shareholders and may conduct on-site inspections.

Banking system

  • the Central Bank together with all the banks and foreign bank branches operating in a country.

Banking system

  • the Central Bank together with all the banks and foreign bank branches operating in a country.

Banking system

  •  the Central Bank together with all the banks and foreign bank branches operating in a country.

Bankruptcy

  •  proceedings opened by the court in respect of a bank whose licence has been revoked due to insolvency. It is a legally declared inability of the bank to meet its financial obligations. Bankruptcy proceedings involve activities for collecting bank’s claims, discharging its debts to the creditors out of the collected funds, allocating the remainder of its assets among the shareholders and winding-up its activity.
C

Conservator

  • a person (in Bulgaria a physical person only) authorized to represent a bank under conservatorship, to manage its affairs and to conduct activities for improving its condition and preserving its assets.

Conservatorship

  • a procedure opened by the banking supervisory authority in respect of a bank for a certain period of time in order to improve its condition and preserve its assets, whereas the functions of its management are assumed by the appointed for this purpose conservator.

Credit institution

  •  an institution that publicly accepts money on deposits as well as other payable funds and uses these funds to grant loans for its own account, or an institution that issues electronic money.

Credit, loan

  • a sum of money, property or service granted by one party (physical person, company, organisation, government, etc.) to another for a given period of time, which is to be paid back under certain terms and conditions.

Creditor

  • a person (physical person, company, organisation, government, etc.) who has granted to another (debtor) a sum of money, property or service for a certain period of time, which is to be paid back under certain terms and conditions.
D

Demand deposit

Deposit associated with ‘money laundering’

  • a bank deposit arising out of or related to property derived from criminal activity or from an act of participation in such an activity; the deposit is not guaranteed if the offender has been convicted and the sentence is effective.

Deposit guarantee scheme/system

  •  a public or private system established to protect deposits in a member bank. Resources for repayment of guaranteed deposit amounts are ensured from premium contributions paid to the system by banks on a regular basis (ex-ante system) or due in the event of bankruptcy of a bank (ex-post system).

Deposit in favour of third party

  •  a bank deposit opened by one person in favour of other person(s) who are entitled to dispose of that deposit.

Depositor, deposit holder

  •  a person who has deposited (or in favour of whom has been deposited) funds on a bank account which that person is entitled to dispose of.
E

European Economic Area (EEA)

  •  established by an agreement between the European Union and three of the countries belonging to the European Free Trade Association, these are Norway, Iceland and Liechtenstein, in order to allow these countries to participate in the European Single Market after having transposed EU legislation.
F

Financial safety net

  •  a system for ensuring financial stability through the interaction of the institutions responsible for banking regulation and supervision, deposit guarantee and the lender of last resort.

Foreign bank/branch

  • a foreign-owned bank can conduct banking operations in a country in the following two forms of business: a subsidiary and a branch. In the first case the company is a separate entity registered under the local banking legislation, whereas in the second one – a continuation of the foreign company which is registered under the banking legislation of the foreign country.
G

Government securities

  • low-risk securities issued by a government; short- and long-term government debt.

Guaranteed deposit

  • a bank deposit that is guaranteed up to a certain amount (in Bulgaria – BGN 196,000, under certain conditions – up to BGN 250,000) in the event of fulfillment of any of the conditions of Art. 20 (1) of the LBDG.

Guaranteed deposit amount

  •  the maximum amount that can be repaid to a deposit holder with a bank in the event of of fulfillment of any of the conditions of Art. 20 (1) of the LBDG.
I

Insolvency

  • condition of a bank which is unable to meet its financial obligations or whose liabilities exceed its net assets.

Investment portfolio

  • a set of financial assets, e.g. stocks, bonds, treasury bills, deposits, insurance policies, investments in mutual and pension funds, real estates, etc. chosen by an individual or institutional investor in order to achieve diversification and to reduce the risk of a possible loss.
J

Joint deposit

  • a bank deposit held by two or more persons which they are entitled to dispose of jointly and individually.
L

Lender of last resort

  •  traditionally, an entity, government or central bank, that extends credit to an illiquid financial institution (please refer to Liquidity) to prevent its bankruptcy.

Liquidation

  •  proceedings opened by the court in respect of a bank whose banking licence has been revoked for reasons other than Insolvency. Liquidation proceedings involve actions for collecting bank’s claims, discharging its debts to the creditors out of the collected funds, allocating the remainder of its assets among the shareholders and winding-up its activity.

Liquidator

  • a person (in Bulgaria a physical person only) authorized to represent a bank in liquidation, to manage its affairs and to conduct activities for collecting its claims, discharging its debts to the creditors out of the collected funds, allocating the remainder of its assets among the shareholders and winding-up its activity.

Liquidity

  • the ability of a bank to quickly convert assets into cash without incurring a considerable loss.

Long-term deposit

M

Member state

Moral hazard

  •  a situation in which someone insured against risks will purposely engage in risky behavior, knowing that any costs incurred will be compensated by the insurer.
N

Non-guaranteed deposit

  •  (1) the amount held on a bank deposit in excess of the guaranteed limit (in Bulgaria – the amount above BGN 196,000), whose repayment is not guaranteed; (2) a bank deposit, whose repayment is not guaranteed according to the provisions of the law. Traditionally, the deposits of the following entities are excluded from guarantee: financial institutions, the government and the government institutions, municipalities; deposits associated with ‘money laundering’.
P

Premium contributions

  •  regular periodic payments that member banks make to the deposit guarantee institution in order to ensure resources for repayment of deposit guarantees.

Prescription period

  •  the period after whose expiration the obligation of one party to pay their debts to another lapses.

Primary dealer of government securities

  • a financial institution authorised to trade on the market of newly-issued government securities.
R

Repurchase agreement (repo)

  • an agreement to sell government securities and to buy them back on a specified date at a specified price.
S

Savings account, term deposit

  • a bank account opened for the purpose of accumulating funds over a certain period of time, from which money can be withdrawn or deposited by the deposit holder on a specified date; depending on its duration over time the deposit can be a short-term one (overnight; 2-, 7-, 14-day; 1-, 3-, 6, and 12-month deposit) or a long-term one (18-, 24-, 36-month deposit).

Short-term deposit

Solvency

  • the ability of a bank to meet its financial obligations and to maintain its net assets above its liabilities.

Subrogation

  • the legal right of a person to enter into the rights of, i.e. to substitute, the creditor in respect of their claim to the debtor after having paid the creditor; as for a deposit guarantee institution in particular, the right of the institution to claim compensation from a bank after having repaid the guaranteed deposit amounts to that bank’s depositors.

Systemic risk

  •  the risk that the failure of a bank to meet its required obligations when due will cause other banks to be unable to meet their obligations when due.
T

Third country

Trustee