site.btaParliamentary Ad Hoc Committee Proposes Scrapping Rule for Automatic Bankruptcy of Bank over Lack of Capital Adequacy

ESD 19:58:00 29-10-2014
LN1957ES.117
134 POLITICS - ECONOMY - CORPBANK - PARLIAMENT

Parliamentary Ad Hoc Committee Proposes
Scrapping Rule for Automatic Bankruptcy of Bank over Lack of
Capital Adequacy


Sofia, October 29 (BTA) - Late on Wednesday, Parliament's ad hoc
committee for budget and finance adopted a decision of four
items which proposes to scrap the rule for automatic bankruptcy
of a bank over lack of capital adequacy.

The decision was adopted by a majority without the votes of the
Bulgarian Socialist Party.

It was made in an attempt to deal with the situation in the
troubled Corporate Commercial Bank which has been under special
supervision since June 2014.

The decision tells the government to do, jointly with the
central bank and the Financial Supervision Commission, an
analysis of the legislation and propose to the legislature
amendments to the legislation to ensure efficient banking
supervision.

The second item of the decision says that Parliament will have
until November 6 to adopt legislative changes to allow the
payout of guaranteed deposits as per the EU legislation.

Under the third item, Parliament will prepare by November 6
revisions to the Lending Institutions Act to require of the
central bank to take action for strengthening banks when their
own capital becomes negative.

The last item recommends that the central bank contracts an
international company to trace the real shareholders and
administrators of Corpbank, and any connected persons so as to
more effectively protect the interests of depositors.

The Socialists were against the decision and the Reformist Bloc
were opposed to the third item.

The chairperson of the ad hoc committee, Menda Stoyanova (GERB)
explained for BTA that the decision will give the central bank
some more time to hold talks with a consortium which has offered
to help bail out the bank.

Corpbank's conservators have until October 31 to present to the
central bank the final financial reports. Under the effective
legislation, the bank should be declared insolvent as soon as
the auditors submit a report showing lack of capital adequacy.
After this is done, the central bank is legally bound to revoke
Corpbank's license, after which the Bulgarian Deposit Insurance
Fund (BDIF) will start paying out guaranteed deposits of up to
100,000 euro within 20 work days.

The ad hoc committee also approved in principle a bill of
amendments to the Banks Act moved by MPs Yordan Tsonev and
Delyan Peevski (Movement for Rights and Freedoms, MRF).

The proposed bill provides for full publicity of everything that
has happened within Corpbank, the words of the MRF deputies. It
also suggests that a foreign investigating company is hired to
check the capital flows, assets, transfers before and after the
placement of the bank under conservatorship. This is expected to
make it clear who has and is disposing with the assets. When
the facts are publicized, the involved politicians will also
become known, he noted.

Corpbank was placed under conservatorship on June 20, 2014,
after it suspended all operations as a run by depositors left
it illiquid.

On October 27, BNB submitted to Parliament a report on the
situation in Corpbank. The bank has been found to have a capital
hole of 4,222 million leva. LN/

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