August 22 (SeeNews) - Bulgaria's central bank said on Friday it has asked the two biggest shareholders of the collapsed Corporate Commercial Bank [BUL:6C9] to come up by the end of August with concrete proposals for commitments for the bank's rescue.
The proposals should be in line with the effective national and EU legislation, the Bulgarian National Bank (BNB) said in a statement.
The statement was prompted by the ongoing public debate about the problems at the Corporate Commercial Bank (Corpbank) group, and attempts to hold BNB entirely responsible for them, it said.
In June, BNB placed Corpbank under three-month special supervision over risk of insolvency after the country's fourth largest lender was hit by a run on deposits. It also appointed conservators at the bank. A few days later, Corpbank subsidiary Victoria Commercial Bank was also placed under special supervision.
Corpbank's majority owner, Bromak, has so far notified no initiative to the supervising authorities regarding any support for Corpbank nor has it sought to discuss with the central bank the current financial state of the lender or the financial resource necessary for it to resume operations, BNB said.
The initially declared intentions of the bank's second largest shareholder - the State General Reserve Fund of the Sultanate of Oman - tied any discussions on rescue options for Corpbank to the existence of clarity on the state of the lender and significant liquidity support on BNB's part, something that is not possible under the effective legislation, the statement said.
Corpbank's third largest shareholder - VTB Bank, initially stated interest in considering possible options to support the lender but on June 24 publicly declared it no longer had such intentions, BNB said.
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. Last month, BNB said the supervision period may be extended, pending the completion of a comprehensive audit of the bank's assets by October 20.
Corpbank and Victoria Commercial Bank remain faced with an enormous liquidity shortfall to cover their exposure to depositors and other creditors, amounting to some 6.3 billion levs ($4.3 billion/3.2 billion euro) and 284 million levs, respectively, BNB said on Friday. For this reason, there are not grounds at present for them to exit the special supervision process under which they have been placed, the central bank noted, adding that the two banks would not be able to cope with another deposit run.
Earlier this month, BNB said the country's deposit insurance fund is over 1.6 billion levs short of the total amount needed to repay the guaranteed deposits in the two banks. Guaranteed deposits in Corpbank and Victoria Commercial Bank amount to some 3.7 billion levs and 55.1 million levs, respectively, BNB said at the time. Of these, the fund has resources to repay 2.1 billion levs, it added.
Bank deposits of up to 100,000 euro are guaranteed by law in the EU and the government should start repayments 20 days after the competent authorities determine that a bank has run into permanent payment difficulties. However, gaps in Bulgaria's legislation have made it impossible to start refunding guaranteed deposits or grant interim partial access to deposits, BNB has said.
With the National Assembly having been dissolved, it is currently impossible to either adopt the needed amendments to the national legislation to tackle the Corpbank crisis, or possibly allocate bail-out funds from the state budget.
On August 6, president Rosen Plevneliev dissolved the country's parliament and decreed a caretaker government headed by Georgi Bliznashki. A snap parliamentary vote will be held on October 5.
(1 euro=1.95583 Bulgarian levs)