SOFIA: Bulgaria is ready to inject capital into Corporate Commercial Bank (Corpbank) and enforce losses on shareholders, the central bank said yesterday, after a run on the country’s No. 4 lender prompted the central bank to take it over on Friday.
The central bank said the government was also prepared to inject capital into a subsidiary that Corpbank recently acquired. The subsidiary, formerly the local division of Credit Agricole, has also been taken over by the central bank. The central bank said it would ask independent auditors to provide a full assessment of Corpbank group’s assets and liabilities within 10 days.
Corpbank and its subsidiary would reopen on July 21, the central bank added in a statement.
The central bank said on Friday that it would take control of Corpbank for three months. It pleaded with depositors — many of them queuing up outside Corpbank branches — not to panic.
The run on Corpbank was an ugly reminder for Bulgarians of a domestic financial crisis in 1996-1997 that bankrupted 14 banks and forced the introduction of a currency board regime, which pegs the local lev currency to the euro.
“Actions will be undertaken to write off the capital of the shareholders of the (Corpbank) banking group and revoke their rights in accordance with the procedures stipulated by law,” the central bank said. The leading shareholders in Sofia-listed Corpbank are Bulgarian businessman Tsvetan Vassilev, with just over half the company; Oman’s sovereign wealth fund, with around 30 percent; and Russia’s VTB Asset Management, with nearly 10 percent.
Capital for Corpbank and its unit would be provided by the state-run Bulgarian Development Bank and the country’s Deposit Insurance Fund. Reuters
