Bulgaria set to dissolve parliament amid concerns over its banking system

Bulgaria’s President Rosen Plevneliev has announced he will dissolve parliament and appoint an interim government, amid concerns over the country’s banking system.

Rosen Plevneliev’s comments came after crisis talks with leaders of the main political parties.

Earlier today, five people were arrested on suspicion of plotting to destabilize Bulgaria’s banks.

They are suspected of spreading false information, prompting runs on two of Bulgaria’s biggest banks.

On Sunday, President Rosen Plevneliev confirmed that the current parliament would be dissolved on August 6, paving the way for early elections on October 5.

The president also said he would name a caretaker cabinet in August.

The country’s Socialist-led minority government of PM Plamen Oresharski has been in power for barely a year, and the main parties had already agreed to hold early elections.

Referring to the concerns about the banking sector, President Rosen Plevneliev said: “The money of the citizens and the companies invested in the banking institutions in Bulgaria is secure and guaranteed. The banks will continue working in a normal manner.”

Bulgaria’s central bank earlier said there had been a systematic attempt to undermine the country’s banking system.

Last week, it took over Corporate Commercial Bank, Bulgaria’s fourth-largest lender, following a run on deposits.

Speculation that the run could spread hit bank share prices towards the end of the week.

On Friday, depositors rushed to withdraw savings from First Investment Bank, the country third-largest lender. The bank was forced to close until Monday after depositors withdrew 800 million lev ($525 million) in a matter of hours.

Shares in First Investment Bank plunged 23% as a result.