Banking in Bulgaria for American Expats WARNING!
Last activity 13 June 2021 by mutley
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Head's UP---A primer on Banking in Bulgaria,
Likely you will be a stranger in a strange land.
The following is not a criticism of the wonderful people who were under Communist dominance. You will meet many delightful people in your experience. Customs are different in each country and American Expats must understand that Bulgaria is an adolescent in a maturing country. Bulgarians still experience holdover from the Communist mentality who control most business as monopolistic.
So, it is different and my comments are to share the ways to make your life enjoyable without having to experience a misconception which could be costly for the uninitiated or inexperienced traveler.
If you retire to Bg and wish a long term visa you must have your retirement distributions deposited in a Bulgarian bank in Leva. For SSA it is simple, SSA will send the deposit to a Bg Bank.. There is an application process through the US Embassy in Athens. It does take a few months to accomplish. Of course there are multiple forms. It is best that after you open your account that you complete all information for the bank to sign, AC IBAN, SWIFT etc. Bankers are annoyed with service requests that they must sign and often transpose the numbers needed. Yes, that is true! A little advance work is worth the desired result. They are not annoyed that you must fill out and sign multiple forms. I use a language translator that allows me to take a picture of the form and translate it to English. NEVER sign a form without having an understandable translation.
Banking is not like in the United States---It is Third World and has a lot of challenges. In many banks you will see 8 out of 10 people sitting and doing nothing but collecting a minimum wage.
1. There is no FDIC---as recently as in the last 10 years a major bank failed and depositors lost their money. Instead of a Bulgarian Bank, use an American Bank in Bulgaria. There are not many. Keep the majority of your money out of Bulgaria as the banking system is deeply mistrusted and for good reason.
2. Only keep the minimum deposits to meet the residency requirements---not much! About $8,000 meets the requires annual living requirement.
3. To open an account in your individual name, many banks require a E200 fee for a background check that takes up to two weeks.
4. Any deposit exceeding E5,000 or Lev 10,000 must be reported to the taxing authorities. So don't do it or you will go through months of audit.
5. You will need to document the source of your deposits.
6. Banks are very slow for service. Like many in a monopolistic system they set the rules. The number one rule is "provide skimpy customer service." Still using Covid as an excuse many banks only allow one person inside at a time. This may be true even where there are 4-5 staff well spaced.
7. Most staff spend their time on their cell phone. 4 sit around and one handles customers. No staffer ever assists another staffer. When a staffer needs help they must call a help line---often 20 minutes wait for a Tech when it would be simple for the manager to assist. Likely too busy on the cell phone.
8. A simple deposit can usually be accomplished in about 20 minutes---after waiting up to two hours outside. Do not show any frustration or it will take longer. A withdrawal is normally about the same with multiple disclosures and forms to sign. Most ATM's limit a cash withdrawal of 40o leva per time (not per day,) That translates to about $235 and goes a long way here.
9. Sending a wire is at least a half day event. You will need to sign multiple forms, multiple times. I sent a wire to the USA recently and counted 14 separate forms. They each needed an original signature on the front and the back. Whenever you sign you must also print your FULL name. You will also need to sign the computer signature reader for each one.
10. As a rule bring your passport unless you have a Bulgarian ID, Insist that they enter your Bg. ID into the system as they are reluctant to make anything easy. You will need your passport to enter your ID. They can still say "No Passport-Go away!"
11. Any receipt of money requires a declaration of the source. Often not just declaration but proof of the source.
12. Always have your ABA, Account Number and Swift code from your US Bank. Always have the IBAN from your Bg Bank and it's Swift code.
Bulgaria is long on detailed irrelevant regulation's and very short on service. Be prepared! Do not ever show frustration as you will regret it. Best to show up at 15 minutes prior to the bank opening---usually 0900. Some banks close for lunch, some banks allow staff to take a break for up to an hour even when people are waiting. No notice and no one will fill in---too busy on their cell phones. I have been at the window when the clerk just got up and left for an hour and 15 minutes. I asked the manager what was happening and he said "Lunch?" Rarely do they bring in a shift reliever even though several are sitting around.
Now that you know how banking in Bulgaria is, consider a debit card to a US bank that does not charge Foreign Transition Fees or commission fees for Leva. Avoid Eurobank ATM Kiosks. They charge up to 20% in fees and commissions. Read the entire disclosure on the ATM at each step.
BulBank and Post Bank seem to operate on the legit! It is a different system than Americans are used to. REMEMBER---NO FDIC! Consider a well established bank outside of Bg. A few wire fees could save your entire nest egg. Also consider maintaining a US address for your stock accounts as many Brokers will not provide services outside of the US for money laundering concerns.
So, also explore auto registration, Visa D applications, and in particular the challenges in placing utilities in your name. Those services make Banks look pristine for service. It can take up to two years for EVN to place electricity meters after payment and application. It can take a full day to register your car and likely 2 days. Again---the doors can be shut and locked at any minute on the whim of a clerk. Make a plan by talking and gaining as much knowledge as possible prior to attempting any of the aforementioned transactions.
After living here for 5 years I have concluded that the national pastime for workers "serfs outside the castle" is to do as little as possible, deny any responsibility or extend any effort. Once you understand that and take matters into your own hands you will have less frustration and a quicker resolution. Outside of work these same recalcitrant employees can be delightful people.
Very interesting post from @JOHNAVANN... but...
FDIC (Federal Deposit Insurance Company) is America's "deposit protection scheme", which covers "$250,000 per depositor per insured bank".
And, as you'd expect, the EU (and hence Bulgaria) does, of course, have something similar! Mandated by Directive 2014/49/EU, you can read all about it on the ec.europa.eu website under Deposit Guarantee Scheme (DGS).
"Deposit guarantee schemes (DGS) reimburse a limited amount to compensate depositors whose bank has failed. A fundamental principle underlying DGS is that they are funded entirely by banks, and that no taxpayer funds are used."
Under EU rules, the banks "protect depositors' savings by guaranteeing deposits of up to €100,000".
I would say one of its biggest tests was the Cyprus economic crisis of 2012-2013 which required a 10 billion euros IMF/ECB bailout, and resulted in the closing of Laiki Bank, and a "bail in" (seizing of deposits) at the Bank of Cyprus. But, as far as I am aware, even though several banks got into trouble at this time, all deposits under the 100,000 euros limit were, in fact, protected.
More generally, I see no reason to avoid a Bulgarian bank and its associated debit card. In fact, it will always be cheaper to have a Leva local account with a debit card, given that you will be withdrawing leva cash from ATMs, and paying leva to Lidl for your groceries. And, similarly, after Bulgaria's transition to the Euro (2014, I think) you would be much better off with a Euro account (but could be anywhere in Europe, not just Bulgaria) than a USD account.
OK... now I've had a closer read, and I think this could be a "YMMV" type situation, as certainly I have had no issues at all with my Bulgarian banking. Perhaps this might have been true 20 years ago, soon after the fall of communism, but these days the service might not be American-style, but it's not bad at all. Certainly, it's pretty harsh to describe them as "third world"! (I suppose it could be specific to FATCA and Americans, and it's set customer service back 20 years for them - but then it's not the BG banks' fault for trying to comply with it!)
So, here's a different perspective:
1. FDIC equivalent (EU Deposit Guarantee Scheme) exists, as per my other post, protecting your money up to 100,000 euros.
2. This would be sensible, if there really was no deposit protection. But as there is, you can safely keep up to 100,000 euros in your account. But, of course, it's probably sensible to put most of it into something that generates a return, rather than leaving it in a low- or no-interest checking account.
3. No background check was required, I opened an account in 30 minutes with my passport (or passport + residence permit).
4. Hmmm... I didn't check this, but I think my bank asks for more info when it's over 10,000 euros (20,000 leva). It's a formality, it doesn't seem to impact operation of the account at all.
5. Well, with KYC ("Know Your Customer") and AML ("Anti Money Laundering") provisions, this is standard everywhere, not just Bulgaria. But it's a formality, and rarely causes any issues. Usually, you just declare the source (savings, house sale, investments, salary) and they accept it. Rarely, they come back and ask for some kind of proof (and usually proof is easy to provide).
6. Not my experience at all! My bank (Bulbank, Fibank) branches in Plovdiv are very nice, comparable to bank branches in the UK and Germany and Spain... and service is fairly prompt and friendly (and with a take-your-number machine, electronic display boards, and nice seats so waiting is comfortable and organized).
7. As per 6, not my experience at all! Like all banks everywhere, change is coming because of online banking, so banks are closing branches and having fewer staff. So the ones that are left don't have time to sit around on their mobiles!
8. A simple cash deposit (or cash withdrawal) can be done at a machine in a couple of minutes, or, inside at a cashier window in 5-10 minutes. But I'm a humble guy depositing/withdrawing (usually) 500-1000 leva. If you're trying to deposit/withdraw $50,000 then, sure, it's gonna be a hassle. :-) However, I have withdrawn a couple of larger amounts (10,000-30,000 euros), and, in this case, I go to the branch and sign the request form (10 minutes), and make an appointment... and then come back in 2 days to pick it up (20 minutes). This way I can specify that they give me the money in 500 (or 200) euro notes, so I don't need a suitcase. :-)
9. I haven't been to my branch to send a wire transfer, so I don't know how long it takes. From my experience doing other things, I'd say max 30-45 minutes rather than half a day! Besides, I use my online banking (Bulbank especially good, but Fibank OK too) so I can make transfers online in 5 minutes!
10. Yes, I agree, it's sensible to have your passport and your BG ID. But they usually go by my BG ID only.
11. Yes, this is KYC/AML again, and typical of any bank. In practice, it's rarely an issue.
12. Yes, I agree, always have your bank account info. Otherwise, your money will go astray. If you do it online, it's much easier as you can set up the accounts once, and then simply repeat the transfer as required.
13. Local (Leva) account with associated debit card will always be significantly cheaper for payments and cash withdrawals, than using a foreign account in a different currency (such as USD).
14. These days, online banking is the way to go! At home, you are guaranteed service with a smile. :-) I think I have made just 2 visits to my Bulbank branch this year, and none to Fibank. Digital banking is easier and quicker, and there are relatively few issues that necessitate a physical bank visit.
15. Consider one of the new "challenger" or "all-digital" banks or banking-like services. In the UK, we have Monzo and Starling, and I believe they both support creating accounts in different currencies. Revolut and Wise (was TransferWise) both support multiple currencies, debit cards, and very low-cost currency exchange and international money transfer.
Excellent informative response. Interesting that five years ago I opened a personal account with only a passport. This year I had to pay E 200 for a new account at a new bank. I opened more bank accounts as my deposits to Bulgaria grew. Perhaps that is why I could have been required to pay the background check. Perhaps I am unlucky or this could be a new requirement.
In every case that I have asked for a deposit or withdrawal of over E5,000 or 10,000 Lev I was told that it would be reported to the banking and taxing authorities. So I kept some funds back. Ask all of the rules first, not last before opening an account. I would think all banks have the same rules. Yes I sent a wire last week and it took half a day.
Americans will become dismayed abut the distrust of the banking system, the lack of checks being accepted. Perhaps as I am American that is the reason for the background checks.
Bulgaria is on a checkless system and driving to a cashless economy just like Vietnam leapfrogged the wired telephone system and became wireless.
Bg wants online payments. On line is easy---very easy.
Things change as Bulgaria emerges from a third world country to a developing country. Likely it will take at least another 10-20 years to become developing country. Mafia Warlords still control the government and many of the municipalities. Just look at what is happening with a stalled national election. When you look at local elections one person can hold office for decades.
It is not really bad as the Mafia Warlords keep civil crime at a minimum.
Bulgaria is nowhere close to being a developed country. Many city villages collect taxes which are allocated by Mafia Warlords to improve their own roads that help their own properties and stifle competition. There is no voice at a city counsel as it is still an oligopoly in many areas. That does not mean that it is a bad place to live, I love to live here. It means that caveat emptor and investigate before you invest. Know your area, the politics the leaders etc.
This is not a condemnation. It is a warning to Americans that this is "Not your Daddy's Democracy and don't expect it to be so!"
As for other cultures and economies this is not meant for you----it is meant to inform Americans that the world id different and not in America's mold. Get over it!
My responses are dedicated to American potential expats. I suspect that Eu transplants have a much easier time.
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