SOFIA (Bulgaria), June 20 (SeeNews) – Bulgaria's central bank said on Friday it placed Corporate Commercial Bank [BUL:6C9], the fourth biggest lender in the country, under special supervision over risk of insolvency.
Earlier on Friday the management of Corporate Commercial Bank (Corpbank) notified the central bank that it has run out of liquidity and has suspended payments and all banking operations, the Bulgarian National Bank said in a statement published in its website.
Following a decision by the central bank's management, Corpbank was placed under special supervision and two conservators were appointed at the lender, the central bank added.
The rights of Corpbank's shareholders have been withdrawn.
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.
VTB has declared its interest in holding talks with the central bank to support the troubled lender, the central bank also said in its statement.
"The bank is not bankrupt," the central bank governor Ivan Iskrov told a news conference later on Friday. The idea is to remediate it, cut its capital if deemed necessary, and then possibly hold talks with potential buyers, he added.
The central bank has suspended for a three-month period all banking operations at Corpbank, Iskrov said. The voting rights of the banks' shareholders, who hold a stake of over 10% in Corpbank, have also been suspended for a three-month period.
Following a notification by Corpbank on Friday morning that it has asked the country's central bank to place it under special supervision, the Sofia stock exchange suspended trading of equities issued by the lender, the bourse said in a statement.
Corpbank's assets totalled 7.3 billion levs ($5.1 billion/3.7 billion euro) at the end of March, according to central bank data.
Commenting on the central bank's decision, the economy ministry said it is not expected to affect the companies of which the ministry is in charge.
There is no immediate danger that the operations of the ministry and these companies will be blocked, or that they will be unable to service their financial obligations to their partners and contractors, the ministry said in a press release.
According to official data released in 2013, the bulk of the cash assets of Bulgaria's state-owned companies, including the country’s biggest state-owned energy firms, had been deposited with Corpbank. Allegations circulated widely in local media hold that the substantial financial resources that the state has deposited with Corpbank has made it possible for Vasilev and Peevski, an MP from the ethnic Turks’ Movement for Rights and Freedoms, to directly and indirectly acquire and finance a large group of media as well as significant business assets, thus expanding their economic and public clout.
Last week, however, local media reported that Peevski and Vasilev's partnership is falling apart, jeopardizing the stability of the country's financial system. Reacting to the reports, the central bank said on Tuesday that the country's banking system, including Corpbank, is highly liquid and capitalized.
(1 euro=1.95583 Bulgarian levs)