site.btaAd Hoc Committee of Inquiry into Corpbank Failure Gives Hearing to Central Bank Governor

Ad Hoc Committee of Inquiry into Corpbank Failure Gives Hearing to Central Bank Governor

Sofia, March 24 (BTA) - "Almost all [guaranteed] deposits with
Corpbank have been repaid as of today's date, and there are no
tensions in the Bulgarian banking system which operates calmly,"
Bulgarian National Bank (BNB) Governor Ivan Iskrov said during
a hearing at the first meeting of a parliamentary Ad Hoc
Committee of Inquiry here on Tuesday.

The Committee was elected on March 11 and was given three months
to check the facts and circumstances related to the actions of
State bodies and institutions which were supposed to exercise
control and counter Corpbank's siphoning between 2009 and 2014.

Iskrov recalled the actions taken by the central bank after
placing Corpbank under special supervision on June 20, 2014 and
until now and explained the principles on which the BNB performs
its banking supervision function.

"A large part of the materials demanded by the Ad Hoc Committee
cannot be provided because they have been delivered to the
prosecution service, they are covered by bank secrecy and
already by the secrecy of investigation as well," the Governor
added.

He pointed out that this Ad Hoc Committee of inquiry into the
facts surrounding Corpbank is somewhat belated. "We asked for
legal amendments far earlier, they are happening now, but with a
delay of five or six months," Iskrov observed.

"For the purposes of supervision, each bank presents activity
reports that are prepared by the bank's managers, they are
mainly to blame for what happened to Corpbank," the Governor
said. "The BNB also conducts on-site inspections, prepares
reports and issues recommendations if deviations are found.
Banking supervision is entirely within the powers of one of the
central bank's deputy governors," he stressed.

"The only document that is considered by the BNB Governing
Council is the report on the state of the banking system. It
focuses on the comprehensive picture," Iskrov explained, adding
that these reports have never mentioned Corpbank as a bank with
any problem during the last ten years.

The Governor insisted that the central bank made everything
possible for the reopening of Corpbank on July 21, 2014. "We
sought a European solution, with plans and schemes, but,
regrettably, the political forces did not reach a consensus," he
said. Once a special law was not adopted, the BNB continued to
act under the legislation in force, and the bank's licence was
ultimately withdrawn.

Iskrov noted that if Corpbank held performing loans, the
assessment of the bank's state would not have warranted its
delicensing. "In practice, however, Corpbank held assets which
had been acquired by other entities not supervised by the bank
through special-purpose investment companies, holdings and
'front men'," the Governor said.

On June 20, 2014, Corpbank (Bulgaria's fourth biggest lender)
suspended all operations after a panic run by depositors left it
illiquid. The BNB Governing Council withdrew Corpbank's banking
licence on November 5, 2014, and the bank's bankruptcy was
petitioned on November 7. The Bulgarian Deposit Insurance Fund
started repayment of the guaranteed deposits with Corpbank on
December 5.

On June 16, 2014, Tsvetan Gounev was charged with malfeasance in
office consisting in his failure, in his capacity as BNB Deputy
Governor in charge of the Banking Supervision Department, to
apply supervisory measures in respect of Corpbank for breaches
and irregularities in its operation. Four Corpbank officers have
been charged with malfeasant embezzlement of 205,887,223 leva
from Corpbank between the end of 2011 and June 20, 2014, which
allegedly benefited the bank' majority owner, Tsvetan Vassilev.