Eurobank Bulgaria AD PLAN
IN ACCORDANCE WITH ARTICLE 28 (2) OF REGULATION (EU) 2016/1011 OF THE EUROPIAN PARLIAMENT AND OF THE COUNCIL ON INDICES USED AS BENCHMARKS IN FINANCIAL INSTRUMENTS AND FINANCIAL CONTRACTS OR TO MEASURE THE PERFORMANCE OF THE INVESTMENT FUNDS SETTING OUT THE ACTIONS TO BE TAKEN IN THE EVENT THAT A BENCHMARK MATERIALLY CHANGES OR CEASES TO BE PROVIDED
https://eur-lex.europa.eu/legal-content/BG/TXT/HTML/?uri=CELEX:32016R1011.
In accordance with article 28 (2) of Regulation (EU) 2016/1011, supervised entities that use a benchmark shall produce and maintain robust written plans setting out the actions to be taken in the event that a benchmark materially changes or ceases to be provided. Where feasible and appropriate, such plans shall nominate one or several alternative benchmarks that could be referenced to substitute the benchmarks no longer provided, indicating why such benchmarks would be suitable alternatives.
In the event of a material change or cessation of a benchmark used by Eurobank Bulgaria AD (the Bank), the Bank shall take the following steps:
I. Determine the impact of such event and assess the consequences thereof, including among others, analysis of the existing documentation and products in order to identify the impact on the client contracts;
II. Assessment of any potential hedging mismatches;
III. Consider creating internal Working Group, if necessary. The overall purpose of the Working Group would be to determine the measures and actions to be taken in the event that a certain benchmark used by the Bank materially changes or ceases to be provided.
IV. Based on the performed analysis, the Bank shall take the following actions in order to determine the most
appropriate substitute to replace the referenced benchmark:
1. With respect to loan agreements with consumers:
The Bank will determine the most appropriate substitute of the changed/ceased benchmark, or changed/ceased idices/indicators used as a reference rate in the loan agreement, applying the
following order as follows:
1.1. For loan agreements denominated in Euro (EUR)
1.1.1. In the event of cessation/material change of a benchmark interest rate under Regulation (EU) 2016/1011 in EUR, that is in use by the Bank as a reference rate,The Bank endorses the Reference interest rate PRIME EUR of Eurobank Bulgaria. The body of the Bank responsible for the initial determination and subsequent changes in the value of the PRIME EUR is the Assets and Liabilities Committee (ALCO) in accordance with “Methodology for reference interest rate PRIME EUR for loan products of Eurobank Bulgaria AD”, published on the Bank’s website – www.postbank.bg (“the Methodology”). The Methodology shall be applicable to the respective client agreement from the moment of substitution of the benchmark no longer provided /materially changed.
- In case during the term of the respective loan agreement, there is ground for a change in the value of PRIME EUR in accordance with the Methodology, the new actual value of PRIME EUR, along with the date on which it is published, is announced on the internet site of the Bank on the web address www.postbank.bg. Notification for the change in the value of PRIME EUR is also made available on avisible place in the Bank’s offices, indicating the date of publication of the new value of PRIME EUR.
- With each publication of a new actual value of the PRIME EUR, the Bank updates accordingly the annual interest rate applicable to the respective loan agreement. The new value of PRIME EUR is
effectively applied in the determination of the interest rate under the loan agreement as of the date following the first monthly loan installment maturity date after the publication date of the new PRIME
EUR value.
- The Reference interest rate PRIME EUR is endorsed by the Bank as a main substitute in case of a material change or cessation of a referenced benchmark in EUR because of its transparent
methodology, which is based on market indicators for the Bulgarian banking system published by Bulgarian National Bank (BNB). PRIME EUR meets the requirements and is used as a reference interest rate within the meaning of the Consumer Credits Related to Immovable Property Act and the Consumer Loans Act.
1.1.2. In the event that the Bulgarian National Bank (BNB) ceases publishing or significantly changes the components used to calculate the value of the PRIME reference interest rates, including PRIME EUR, making it impossible for the Bank to continue determining them according to the applicable methodology, the Bank shall adopt the 6M EURIBOR (six-month EURIBOR) interest index as the primary substitute. The 6M EURIBOR interest index is calculated by the European Money Markets Institute (EMMI), as the benchmark administrator. It is published on the website www.emmi-benchmarks.eu, as well as in the Reuters and Bloomberg information systems.
The update of the reference interest rate on loan agreements based on the 6M EURIBOR is carried out by the bank twice a year, according to the 6M EURIBOR values published on January 15 and July 15 of the respective year in the Reuters and Bloomberg information systems. If no such value is published for the respective date, the last value of the 6-month EURIBOR published before that date shall apply. The new 6M EURIBOR value will affect the amount of the monthly installments due under the loan agreement, in accordance with its terms, as of the date following the first monthly loan installment maturity date after the date of the update.
1.2. For loan agreements denominated in Swiss Francs (CHF)
In the event of cessation/material change of SARON Compound Rate (for the respective period) r, the Bank endorses as a replacement rate SAR Swiss Average Rate (for the respective tenor).The indices SAR Swiss Average Rate (average rates in swiss francs by tenors) represent weighted average indicesof repo transactions and quotations in swiss francs for the respective tenor from overnight to 12 months. The indices SAR Swiss Average Rate are administrated by SIX Index AG and reference rate values are published on https://indexdata.six group.com/swiss_reference_rates/other_terms.html. The indices SAR Swiss Average Rate (for the respective tenor) are endorsed by the Bank as substitute in the event of cessation/material change of SARON Compound Rate as they are compliant with Regulation (EU) 2016/1011 and are registered in the ESMA registry.
After implementing the transition from SARON Compound Rate to SAR Swiss Avcerage Rate (for the respective tenor), consequent updates of the value of SAR Swiss Avcerage Rate will be processed upon updating the applicabe interest rate to the loan, as per the contractual clauses in the respective loan agreement.
1.3. In the event of inability to apply the nominated substitutes for the respective currencies in 1.1. and 1.2. above at the moment of the material change/cessation of the benchmark used as a reference rate in the client agreement, or if the loan agreement is denominated in currency, different from the respective currencies in 1.1. and 1.2. above, the Bank shall endorse as a substitute another valid, internationally recognized benchmark, which complies with the requirements of Regulation (EU) 2016/1011, or another index meeting the requirements for the reference interest rates within the meaning of the Consumer Credits Related to Immovable Property Act and the Consumer Loans Act.
2. With respect to loan agreements with non-consumers
The Bank will determine the most appropriate substitute to the changed/ceased benchmark, used as an interest base, or, respectively, as a loan reference rate, as follows:
2.1. For loan agreements denominated in Euro (EUR)
2.1.1. In the event of cessation/material change of a EUR benchmark rate, the Bank endorses as a primary replacement rate the Compounded ESTR Average Rate (Compounded euro short-term
average rate) for the respective tenor (1 month, 3 months, 6 months, 12 months), which is calculated by the European Central Bank (ECB) and is published on its website:
https://data.ecb.europa.eu/data/data-categories/financial-markets-and-interest-rates/euro-money-market/compounded-euro-short-term-rates-and-index. The Compound ESTR Average Rate (for the
respective tenor) shall be applicable to the respective client agreement from the moment ofsubstitution of the benchmark no longer provided /materially changed. - The interest rate indices
Compounded ESTR Average Rate (for the respective tenor) have been approved by the Bank as the primary substit ute in case of discontinuation or significant change of the euro benchmark rate, as they comply with Regulation (EU) 2016/1011 and are recommended as an alternative by the Working Group on euro risk-free rates, which consists of the ECB, the European Securities and Markets
Authority (ESMA), the European Commission, and the Belgian Financial Services and Markets Authority. Compounded ESTR Average Rates are based on historical values of ESTR (euro short-term
rate), which reflect overnight wholesale funding transactions in euro conducted by banks in the eurozone. The Compounded ESTR Average Rate (for the respective tenor) is calculated on a compound basis to capture the cumulative effect of investing over the specified period. This ensures that the Compounded ESTR Average Rate indices reflect market interest rates in an impartial manner and serve as stable and transparent reference rates for financial contracts and instruments.
- If, as a result of the change in the value of the Compounded ESTR Average Rate (for the respective tenor), the sum of the contractual interest spread and the acting Compounded ESTR Average Rate leveled with the conversion component for equivalence under item V. below, is lower than the Floor of the interest rate, specified in the respective loan agreement, then the annual interest rate due shall be equal to the Floor.
- In case the particular loan agreement specifies a minimum value of the Interest Base, the agreed minimum value continues to be applied accordingly over the new Interest Base, namely, over the
Compounded ESTR Average Rate plus the applicable conversion component for equivalence as per item V. below.
- After replacing the euro benchmark with the Compounded ESTR Average (for the respective tenor), any subsequent change in the value of the substitute will be applied to the value of the annual interest rate on the loan, in accordance with the contractual clauses in the respective credit agreement.
2.1.2. In the event that the Bulgarian National Bank (BNB) ceases publishing or significantly changes the components used to calculate the PRIME reference interest rate, or PRIME EURO, making it
impossible for the Bank to continue determining them according to the relevant Methodology, the Bank approves EURIBOR (six-month EURIBOR) interest rate index as the primary substitute.
The 6M EURIBOR interest rate index is calculated by the European Money Markets Institute (EMMI), as the benchmark administrator and is published on the website www.emmi-benchmarks.eu, as well as in the Reuters and Bloomberg information systems.
The update of the reference interest rate on loan agreements based on the 6M EURIBOR is carried outby the bank twice a year, according to the 6M EURIBOR values published on January 15 and July 15 of the respective year in the Reuters and Bloomberg information systems. If no such value is published for the respective date, the last value of the 6-month EURIBOR published before that date shall apply. The new 6M EURIBOR value will affect the amount of the monthly installments due under the loan agreement, in accordance with its terms, as of the date following the first monthly loan installment maturity date after the date of the update.
2.2. For loan agreements denominated in United States Dollars (USD)
The Bank endorses the Compound SOFR Average index (for the respective tenor) as a substitute in case of discontinuation or significant change of CME Term SOFR, as it is an index based on actual market transactions using the daily SOFR (Secured Overnight Financing Rate). It is calculated on a compound basis to reflect the cumulative effect of investing over the specified period, complies with Regulation (EU) 2016/1011, and is endorsed by the Alternative Reference Rates Committee (ARRC). The Compound SOFR Average indices (for the respective tenor) are published by the Federal Reserve Bank of New York (https://www.newyorkfed.org/markets/reference-rates/sofr-averages-and-index).
2.3. In the event of inability to apply the nominated substitutes for the respective currencies above at the moment of the material change/cessation of the benchmark/index used as a reference rate in the client agreement, or if the loan agreement is denominated in a currency, different from the respective currencies in 2.1. and 2.2. above, the Bank may endorse as a substitute another valid, internationally recognized benchmark, which complies with the requirements of Regulation (EU) 2016/1011, or another index meeting the requirements for the applicable law.
3. For the purposes of determining an appropriate substitute of a benchmark that is materially changed/no longer provided, Eurobank Bulgaria AD shall take into account the following additional factors (without limitations):
3.1. Compliance with regulatory requirements (including the Regulation (EU) 2016/1011, the implementing regulations of the European Commission, the Credit Institutions Act, the Consumer
Credits Related to Immovable Property Act and the Consumer Loans Act).
3.2. Instructions, guidance or solutions from relevant national or European institutions (European Central Bank, European Commission, Bulgarian National Bank, International Swaps and Derivatives
Association (ISDA), European Securities and Markets Authority (ESMA), the Working Group on Euro Risk-free Rates, the Alternative Reference Rate Committee, National Working Group on Swiss Franc Reference Rates or other);
3.3. Other accepted local market practices;
V. As per the applicable legislation and/or guidances of the competent national or European authorities and/or institutions, the Bank may specify a conversion component for ensuring equivalence, which is applied at the moment of substitution of the changed/ceased benchmark to the particular contractual variable annual interest until the maturity of the agreement. The value of the component for equivalence is determined on the date of substitution with aim that the substitution itself shall not adversely affect the value (on the same date) of the total variable interest rate applicable for the
particular agreement.
The present Plan is approved by the Assets and Liabilities Committee of the Bank on 18.06.2018 withamendmets and additions from 16.09.2021 and from 18.12.2025 and is published on the Bank’s web site www.postbank.bg and is available in the Bank’s offices