site.btaDepositors in Victoria Commercial Bank, Subsidiary of Troubled Corporate Commercial Bank, to Have Access to Their Money as of December 12; Banking System is Stable - Central Bank Governor

Depositors in Victoria Commercial Bank, Subsidiary of Troubled Corporate Commercial Bank, to Have Access to Their Money as of  December 12; Banking System is Stable - Central Bank Governor


Sofia, December 5 (BTA) - The Victoria Commercial Bank, a
subsidiary of the troubled Corporate Commercial Bank whose
license was withdrawn after having been placed under special
supervision, will open on December 12 and the depositors in it
will have access to all their money, Bulgarian National Bank
(BNB, the central bank) Governor Ivan Iskrov said Friday in a
speech on the occasion of December 6, the professional day of
bankers in Bulgaria.

Iskrov said that the passing year proved one of the most
difficult for the Bulgarian banking system since the big banking
crisis of 1996-97 due to the weak economic growth which
hindered a tangible improvement of the quality of banking
assets, and the run on deposits in some banks in the middle of
the year. The year will be remembered for the discovery of huge
misuse of depositor money and corrupt practices in the
management of the fourth biggest bank in this country, the
Corporate Commercial Bank (Corpbank), Iskrov said.

On June 20, 2014, Corpbank suspended all operations after a run
by depositors left it illiquid, and on the same day the central
bank placed it under special supervision to allow a thorough
audit and possible restructuring. In November, the Governing
Board of the Bulgarian National Bank withdrew the banking
licence of Corpbank. Payout of guaranteed deposits in Corpbank
started on December 4.

According to Iskrov, the Corpbank case eventually ended with
effective application of the legal standards and payout of the
guaranteed deposits in the bank. The BNB Governor admitted that
the depositors in the troubled bank were prevented from
accessing their money too long but said that the absence of a
big portion of the documents in Corpbank and of legal options
for quick restructuring of the bank required the performance of
a huge review and analysis of the state of the bank. Iskrov
noted that Corpbank remained an isolated case and did not affect
the functioning of the remaining part of the banking sector.

He said that despite the irresponsible pubic speaking against
banks and the BNB, household deposits continued to increase, by
2,800 million leva (7.8 per cent) year-on-year by October, which
he said is proof of the restored trust in the system.

Excepting Corpbank and Victoria bank, the banking system ends
the year with excellent indicators, Iskrov said. As at
September, the total capital adequacy ratio was 22.16 per cent,
and the Tier I Capital ratio was 19.91 per cent (against EU
requirements of 8 per cent and 6 per cent respectively). The
ratio between liquid assets and aggregate liabilities in the
banking system was 29.75 per cent as at October.

The share of unserviced loans overdue more than 90 days
continued to steady in 2014, the BNB Governor said. The balance
sheet value of such loans amounted to 10.62 per cent for the
entire system.

The banking system continues to generate profits and is expected
to end 2014 with a positive financial result of about 700
million leva.

EU's Bank Recovery and Resolution Directive enters force in
2015, Iskrov said, noting that it will be transposed in the
Bulgarian legislation by amending the Credit Institutions Act,
the Bank Bankruptcy Act and the Bulgarian National Bank Act.
2015 will also see an ever bigger presence in the banking
practice of the single European rules for banking supervision.
The BNB will actively cooperate with the Single Supervisory
Mechanism which was launched in November, Iskrov said.

The BNB head said that the central bank will launch a review of
the quality of the assets of all banks operating in Bulgaria. He
said this would be a key requirement if the government starts
talks on joining the Single Supervisory Mechanism. The review
will be conducted with the aid of an independent external
advisor and could start not later than the end of next year. The
commercial banks will be familiarized with the methodology
review early enough so that each can budget the respective
costs, Iskrov said.

Commenting the verbal attacks against the BNB, Iskrov said that
details start to emerge about who paid for these attacks and
whose money was spent for this. If someone thought that they
would be able to force a strong institution such as the central
bank to bypass the law and obey personal or collective
interests, they are apparently mistaken, Iskrov said.