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Bulgaria's Investbank says addressing capital shortfalls found by ECB

Author Mario Tanev
Bulgaria's Investbank says addressing capital shortfalls found by ECB Photo: Investbank / All rights reserved.

SOFIA (Bulgaria), July 29 (SeeNews) - Bulgaria's Investbank said that it has already taken measures to address the 51.8 million euro ($57.6 million) capital shortfall found by a comprehensive assessment carried out by the European Central Bank (ECB).

"As of June 2019, Investbank JSC has already taken specific measures in regard to the individual credit review findings of AQR and has reclassified the problem exposures," the bank said in a statement on Friday.

Risk-weighted assets are optimised as well, the lender added.

Investbank also said that it intends to continue to follow a moderately conservative risk policy by diversifying and restructuring its assets. The lender will capitalise its financial result and will abstain from dividend distribution.

Earlier on Friday, the ECB said that it found capital shortfalls in two of the six Bulgarian lenders checked - Investbank and First Investment Bank (Fibank). The ECB found a shortfall of 262.9 million euro at First Investment Bank (Fibank) and 51.8 million euro at Investbank.

"First Investment Bank AD, on the other hand, fell below the 8% CET1 ratio threshold for both the AQR and the stress test’s baseline scenario, as well as falling below the 5.5% CET1 ratio threshold used in the stress test’s adverse scenario. Meanwhile, Investbank AD fell below both the 8% CET1 ratio threshold used in the stress test’s baseline scenario and the 5.5% CET1 ratio threshold used in the stress test’s adverse scenario," the ECB said.

Fibank said on Friday that as of June 30 it has secured 130 million euro of the additional capital buffer from pre-provisioning its first-half net profit, of 65 million euro, loan provisions in the amount of 37 million euro as a result of the adoption of IFRS 9, and loan payments and additional collateral provided for exposures with asset quality review adjustments, in the amount of 28 million euro.

"Fibank will address the remaining amount of 133 million euro with its operating profit, de-risking of its corporate portfolio, and any other eligible measures," the lender said.

The four other lenders checked - UniCredit Bulbank, DSK Bank, United Bulgarian Bank (UBB) and Central Cooperative Bank (CCB) [BUL:4CF], do not face any capital shortfalls, according to the ECB assessment.

As at 8:45 CET on Monday, CCB's shares traded 3.47% higher at 1.64 levs, while Fibank shares were 1.27% up at 3.20 levs.

($ = 0.8992 euro)

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