Bulgaria makes arrests over banking plot

People queue in front of a branch of Bulgaria's First Investment Bank in Sofia on June 27, 2014 There have been runs on two of Bulgaria's biggest banks in the past week

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Bulgarian authorities have arrested three more people on suspicion of plotting to destabilise the country's banking system.

Five people have now been arrested, after two were detained on Saturday.

They are suspected of spreading false information about the health of Bulgaria's banks, prompting runs on two of the country's biggest banks.

Bulgaria's central bank has said there has 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 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 800m lev (£328m) in a matter of hours.

Shares in the bank plunged 23% as a result.

This prompted the central bank to urge all state institutions to work together to protect financial stability and take legal action against those spreading "untrue and ill-intentioned rumours" about the health of Bulgaria's banks.

In reality, commentators say the banking system is relatively safe.

"The banking system is stable... and the credit rating of the country remains high despite the current panic," said Petar Ganev of the Institute for Market Economics in Sofia.

"Bulgarian banks maintain liquidity, which is higher even than European banks."

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