C-bank gov: FIBank story a scandal, not a crisis

The case with the local First Investment Bank (FIBank) is just a controversy and not a crisis, Ivan Iskrov, governor of the Bulgarian National Bank, said in response to current chatter that the lender may be in trouble.

The official said his impression that it is a scripted story is growing, hence his use of the term scandal.

Iskrov said he has had enough of FIBank bankruptcy rumors and of the alleged appointment of administrators.

In his view, the whole thing is apparently blowing over because the emptying of FIBank deposit accounts has abated by at least two thirds. There is lingering tension in only one region, Varna, said Iskrov.

The FIBank stock has rallied substantially but someone somewhere made some money out of the whole situation, said the central bank governor.

Iskrov was adamant that FIBank has no and has never had any problem with the banking regulator.

The bank is in a very good shape, with a high liquidity level and has been using its own funds to cover the deposit account withdrawals over the last couple of days, said the official, adding the lender has the full support of the central bank.

FIBank has so far had no reason to fall back on that support. The process is under supervision and is being co-ordinated with the government. The cabinet is also on board in respect to our intentions for full and unconditional support for the bank, said Iskrov.

Iskrov said he will insist that the prosecution and the special services get to the bottom of this.

The official stressed that the Bulgarian banking system is in an excellent shape and enjoys untarnished confidence.

In his view, credit growth will moderate to 40% in 2008. He said he expected inflation to slow to 7% this year, barring any crop losses or external shocks.

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