The European Commission has agreed to extend a credit line of
1.7 billion euros to bolster Bulgarian banks.

Authorities in Sofia believe two of the country’s major lenders have come under a systematic speculative attack.

Last week the government took over the Corporate Commercial Bank after customers rushed to withdraw deposits.

Speculation that other banks would follow ran riot , which resulted in a run on the First Investment Bank, the country’s third largest lender, on Friday.

The European Commission said the Bulgarian banking system is fundamentally “well capitalised with high levels of liquidity” and the decision has been taken to safeguard the system.

Bulgarian President Rosen Plevneliev sought to reassure investors saying: “The money of individuals and businesses in Bulgaria’s banks is secure. Banks will continue to operate normally.”

Authorities made five arrests over the weekend of those suspected of being involved in the plot to undermine Bulgaria’s financial system.