ETHICAL CODE

OF ТНЕ ASSOCIATION OF BANKS IN BULGARIA

The present document is an act of free will and its purpose is to establish in written form ethical principles for Bulgarian commercial banks including branches of foreign banks. It aims to promote mutual understanding, fair and free competition among banks, to create most favourable environment for defending the rights and legal interests of clients, to encourage the development of the banking system and its good reputation.

Banks agree to be guided by the principles of correctness, fairness and good faith in their relationships, in the relationships with their clients and the public in general. Banks shall adhere to the principles of honour and mutual respect in interbank communication as well as in communication with clients. Banks shall observe undeniably contractual obligations, ensure the adequacy of mutually exchangeable information and shall not реrfоrm actions, which could have negative effects on other banks or their products. Banks shall try to stay socially responsible and comply with public interests in their practice.

The Board of Directors of the Association of Banks in Bulgaria will evaluate any non-observance of the principles of the Ethical Code. The respective bank and the other members of the Association will be informed due time on the problem and the position taken in conformity with the statute of the organization.

The Ethical Code comprises the following sections:

I. Interbank communication.
II. Bank-clients relations.
III. Settlement of disputes.
IV. Bank - Public Relations.
V. Banking regulation.

I. Interbank communication
Ethical behaviour in interbank communication demands that banks meet the following requirements:
1. Banks shall adhere to the principle of fair and loyal competition in business relations by using only lawful and ethical means.
2. Interbank relationships shall be based on accessibility, mutuality and confidence through the exchange of current and truthful information.
3. Banks shall not use in advertising incorrect or misleading information regarding their operation or the one of their competitors.
4. Banks shall not apply an advertising approach contrary to good banking practice and harmful to the interests of banks in interbank communication or in their relationship with customers.
5. Banks shall not allow any possibilities for discrediting another bank or banks, as well as their products or services, by either claiming or spreading misinformation, using а form, which could result in distrusting the banking system or presenting exaggerated facts.
6. Banks shall not attribute untruthful merits to their services or products in comparison with the ones of their competitors nor shall blemish them in advertising or by any other means.
7. Banks shall not intend causing damage to competitors by offering clients unreal interest rates (of no economic ground) for bank products or services in order to attract them, nor by presenting clients with benefits and privileges of no direct relation to banking.
8. Banks shall cooperate in exchanging personnel information and shall not restrict their employees from being employed by other banks.
9. Banks shall not intend to attract as their employees all or а predominant number of employees from one department in another bank in order to seriously impair its functioning
II. Bank-clients relations
Ethical behaviour in bank - clients relations demands that banks meet the following requirements:
1. The bank shall follow the principle of mutual fairness and confidence in relationships with clients.
2. In conducting transactions or operations bank employees shall comply with clients' interests and right in conformity with the laws, internal bank regulations and the present code.
3. The bank shall check the identity of the customer prior to the signing of а contract about bank products or services and will not go into contractual terms or perform transactions with anonymous or fictitious persons or if there is any suspicion of money laundering or funding terrorist acts as well as in all other cases when it is required by law.
4. Bank employees cannot directly or indirectly compromise the trust between the customer and the bank through their activity or inactivity.
5. Bank employees, in the capacity of officials or not, on behalf of themselves or the bank can not accept nor provoke а client or third party into giving any material or non-material benefits, with а view to perform or restrain from performing official actions, even when the acceptance would not be interpreted as а crime.
6. The bank shall not impede the right of the client to choose between banks, bank products or services by any means unless the client has entered into а written personal engagement with the bank or law requires it.
7. The bank shall guarantee the client's right to change banks or types of products, or services, if there are not contractual restrictions to this right due to service characteristics.
8. Relationships between the bank and the customer shall be regulated in а clear and understandable written form; the terms should stipulate the rights and obligations of both parties.
9. The bank shall ensure the availability of complete and truthful information on the main products or services offered, service charges, interest rates and the way they are calculated as well as additional terms determining the use of а respective product or service. The information given should be freely available in а simple and clear written form in each branch or office of the bank where these products or services are offered.
10. Information on additional services and other conditions should be available upon the customer's request.
11. Written conditions and terms of bank products and services should be formulated in а clear style, excluding misleading terms and expressions and avoiding foreign words; an adequate and balanced description of bank-client relationship should be given alongside.
12. If contractual clauses include financial, accounting, technical, foreign language or other terms, these should be given а clear and understandable explanation within the contract.
13. The bank should exhibit sample documents, necessary to open an account and perform transactions in а freely accessible place in the halls where customers are served and bank employees shall give instructions on filling in documents upon the client's request.
14. The bank shall stipulate procedures to inform clients on any changes of terms, conditions, product and service charges and commissions.
15. The bank shall acquaint the client with the informing procedure on possible changes in terms and conditions, service charges and commissions on products and services, which are within the bank's unilateral authority by virtue of law or the contract with the customer.
16. Тhе bank shall advise the clients regarding the specificity of the case. Тhе bank shall submit adequate, highly professional information on the risks and specificity of а bank product or service.
17. Тhе bank shall strictly observe the principle of confidentiality for information that is considered а bank or business secrecy, as well as data identifying the economic status of the client or personal data, acquired in communicating with the customer, unless it is stipulated by the law.
18. The bank shall ensure that information containing а bank secrecy is internally accessible only for bank employees directly requiring it.
19. Тhе bank shall disclose to third parties customer-related information only upon а written client's consent or when it is stipulated by law.
20. Тhе bank shall not use in advertising the reputation, names or photos of their clients unless upon а written consent.
21. Тhе bank shall not use а client's name, addresses, telephone numbers and other ways of contact for surveys or other marketing activities to be carried out, unless upon а written customer' s consent.
III. Settlement of disputes.
Ethical behaviour in settling disputes demands that banks meet the following requirements:
1. Тhе bank shall aim to resolve conflicts with clients to а mutual benefit, avoiding arguments, which are not related to the common bank activities.
2. The bank shall establish internal procedures or rules to process customers' claims. These shall include reasonable and the shortest possible deadlines for considering complaints and replying the claimant. Тhе bank shall ensure that all employees dealing with customers are acquainted with the above internal procedures or rules.
3. Тhе bank shall ensure that bank procedures or rules on settling disputes are available to clients.
4. When requested by the customer, the bank shall submit further information, clarification or specification through the employees of а respective branch or bank office and following the procedures and rules prescribed in section 32.
IV. Bank - Public Relations
Ethical behaviour in bank - public relations demands that banks meet the following requirements:
1. Тhе bank shall adequately inform the public on banking activities and ensure the availability of truthful information on products and services offered.
2. The bank shall not make public statements or carry out other actions that could result in discrediting the banking system.
3. The bank shall observe law requirements and the principle of transparency if providing financial support to political movements, parties or other similar political organizations.
V. Banking regulation
Ethical behaviour regarding banking regulation demands that banks meet the following requirements:
1. The bank shall operate in conformity with the legislation, internal rules and procedures as well as all the other bank acts, professional behaviour and the terms concluded in contracts with customers. The bank shall ensure that all bank employees related in their work to the above mentioned acts and procedures are aware of and strictly adhere to them.
2. The bank shall manage and control internal bank operations with full responsibility and take adequate measures not to allow the occurrence of errors or fraud and to have well-trained and properly recruited personnel, which is adequately controlled and managed.
3. The bank shall ensure that all its employees are acquainted with the present Code and all subsequent amendments in due time.

The Ethical Code was adopted on April 6, 2004 by the General Assembly of the Association of Banks in Bulgaria on the grounds of art. 24, section 14 of the Statute. The members of the Association of Banks in Bulgaria agree to observe the requirements of the Ethical Code in accordance with art. 18, section 1 of the organization's statute. The Ethical Code is available for all the members of the Association of Banks in Bulgaria, which will contribute in promoting and observing it. Amendments and supplements shall be made by the General assembly of the Association of Banks in Bulgaria in the order, stipulated its statute.