SOFIA (Bulgaria), November 5 (SeeNews) – The Bulgarian central bank said on Wednesday a letter it received from a man who claims to represent a group of unnamed investors interested in restructuring troubled Corporate Commercial Bank [BUL:6C9] and its affiliate Victoria Commercial Bank could not be regarded as serious.
In late June the Bulgarian National Bank (BNB) placed Corporate Commercial Bank (Corpbank) and its affiliate Victoria Commercial Bank under conservatorship and suspended all payments. In September, the central bank extended the special supervision of Corpbank until November 20, saying this was the cut-off point for taking a final decision on its fate.
"[...] the letter does not constitute legally-binding information on the powers of the sender and the investors which he claims to represent," the central bank said in a statement.
It contains no guaranties whatsoever that the unnamed potential investors meet the legally-prescribed requirements for being a shareholder in a credit institution, nor that they have the capacity to implement the proposed "formula for increasing the capital to up to 5.2 billion levs ($3.3 billion/2.7 billion euro)", BNB added.
The sender of the letter is a man named Nikola Sukmandjiev.
Audit reports submitted to BNB earlier last month revealed Corpbank would need to write off 4.22 billion levs from total assets of 6.66 billion levs. The reports, prepared by three audit firms between August 5 and October 10, covered key balance sheet items and bank guarantees issued to clients of the bank. They revealed Corpbank's capital dropped to 198 million levs at the end of September from 521 million levs three months earlier while only 13% of its credits had valid collateral.
While deposits at Corpbank remain frozen, the central bank has allowed the lender to resume certain banking activities so that borrowers can repay their credits.
Bromak, owned by Bulgarian businessman Tsvetan Vasilev, holds 50.66% of the voting rights of Corporate Commercial Bank (Corpbank), and the Omani fund, through its subsidiary Bulgarian Acquisition Company II, Luxembourg, holds 30.354% of the voting rights, according to the bank’s latest financial report. A unit of Russia's VTB owned 9.07% of the bank at end-June.
At the end of last month, the Omani fund, a minority shareholder in Corpbank through one of its subsidiaries, submitted alongside its consortium partners - Vienna-based consulting firm EPIC and Gemcorp, an offer for the restructuring of the troubled lender. The consortium partners said in a letter they expect from the Bulgarian government to provide up to 2.3 billion levs as a cash injection to Corpbank while they themselves would provide the required top-up in assets and cash to fill the agreed shortfall.
The consortium also proposed that an acquisition vehicle, which would be 50% owned by the investment consortium and 50% by the Bulgarian government, will acquire all new shares to be issued by Corpbank, eventually obtaining control over 100% of the lender following its recapitalisation. The investors also said that they will seek to expedite the planned recapitalisation of Corpbank by arranging for the raising of funds by a special purpose entity. An ad hoc parliamentary committee on the case of the troubled lender, however, decided to reject the proposal.
(1 euro = 1.95583 Bulgarian levs)