SOFIA (Bulgaria), June 23 (SeeNews) – Bulgaria's government will inject capital into local Corporate Commercial Bank [BUL:6C9] in an attempt to rescue the troubled lender, the central bank said over the weekend.
On Friday the central bank placed Corporate Commercial Bank (Corpbank), the fourth biggest lender in the country, under special supervision over risk of insolvency.
The Bulgarian National Bank also placed Corpbank's subsidiary Victoria Commercial Bank, formerly Credit Agricole Bulgaria, under special supervision for three months, the central bank said in a press release on Sunday.
The capital of the banking group’s shareholders will be written off and their rights will be withdrawn, the central bank also said. The central bank has appointed two conservators at each of the two banks to evaluate their assets and liabilities within a ten-day period.
On Monday finance minister Petar Chobanov said that the government will step in only if the current shareholders fail to come up with the resource needed to support the group.
Local company Bromak, owned by businessman Tsvetan Vasilev, holds 50.66% of the voting rights of Corpbank and the State General Reserve Fund of the Sultanate of Oman, through its subsidiary Bulgarian Acquisition Company II, Luxembourg, holds 30.354% of the voting rights. A unit of Russia's VTB acquired 9.9% of Corpbank in 2013.
Chobanov added that talks are already underway with VTB and the Omani fund.
Speaking at a news conference on Friday, central bank governor Ivan Iskrov stressed that Corpbank is not bankrupt. The idea is to remediate it, cut its capital if deemed necessary, and then possibly hold talks with potential buyers, he added.
Corpbank and Victoria Commercial Bank will reopen on July 21, the central bank said on Sunday.
Lack of liquidity at the Corpbank banking group is an isolated case in the banking system and has no relation to the operations of the rest of the banking sector, it noted noted.
In a separate press release issued over the weekend, deputy prime minister Daniela Bobeva said that the deposits of majority state-owned enterprises kept with Corpbank amount to some 130 million levs ($90.1 million/66.5 million euro) to date, as no single state-owned company holds over 25% of its assets in the bank.
Corpbank's assets totaled 7.3 billion levs at the end of March, according to central bank data.
(1 euro = 1.95583 Bulgarian levs)