site.btaCentral Bank Governor: Corpbank's Bailout Will Be More Expensive than Its Bankruptcy

Central Bank Governor: Corpbank's Bailout
Will Be More Expensive
than Its Bankruptcy


Sofia, October 31 (BTA) - A proposal by a consortium for the
bailout of Corporate Commercial Bank will involve more public
funds than declaring the bank bankrupt in line with Bulgarian
legislation. This emerged from a statement Friday by Bulgarian
National Bank Governor Ivan Iskrov in Parliament. Iskrov was
invited to
give his opinion about the fate of the bank and brief the MPs
about the contents of the letter by the investors. The
consortium includes the EPIC financial consultant, the Sovereign
Wealth Fund of the Sultanate of Oman and GEMCORP financial
company.

Iskrov said that based on the auditors' assessment Corpbank's
capital will be in the negative by very large amounts and the
central bank has to revoke its licence and petition the court to
declare it bankrupt.

Under the Credit Institutions Act, deposits should start to be
paid within 20 days declaring the bank's bankruptcy. Iskrov told
MPs that the leadership of the bank had expected the
legislature to pronounce on whether legislation should be
changed.

The central bank governor said the investors had requested that
the letter be kept confidential and thanked ad hoc budget
committee chair Menda Stoyanova for the invitation to make
public the investors' proposals.

"We don't question the Sovereign Wealth Fund of Oman, but we
haven't scrutinized EPIC and GEMCORP and we don't know their
real owners," said Iskrov. He said that the central bank will
take time to examine these companies because in order to be
incorporated as shareholders they have to meet the requirements
of the Credit Institutions Act.

The investors have asked for a state aid of 2.3 billion leva to
increase the bank's capital and set up a joint company with the
government with an equal 50-50 participation. The investors will
participate with assets received from majority shareholder
Bromak, while the government has to pour cash. The consortium
had also demanded that access to deposits is limited until the
bank is recovered.

Iskrov said that any further delay of the decision on Corpbank's
fate will only allow more setoff and assignment transactions to
the detriment of the Bulgarian Deposit Insurance Fund. No
transfers can be made from the date when the bank is declared
insolvent, said Iskrov.

The central bank governor said that these proposals can no
longer be kept secret, as for four months people have been
waiting for their money. He added that under the effective EU
legislation which has precedence it is almost impossible to bail
out a bank with a negative capital. PK/PP