site.bta Finance Minister Porozhanov: "Payment of Guaranteed Portion of Deposits with Corpbank to Start in Early November"

Finance Minister Porozhanov: "Payment of Guaranteed Portion of Deposits with Corpbank to Start in Early November"


Sofia, October 15 (BTA) - "In early November, no matter what,
after the assessment of Corporate Commercial Bank (Corpbank) is
ready and a decision is taken on its future, the guaranteed
portion of deposits will start to be paid," Bulgarian Finance
Minister Roumen Porozhanov told a news conference here on
Wednesday.

Corpbank suspended all operations on June 20 after a run by
depositors left it illiquid, and on the same day the Bulgarian
National Bank placed it under special supervision for a maximum
of six months to allow a thorough audit and possible
restructuring.

The Bulgarian Deposit Insurance Fund is 1,600 million leva short
of the amount needed to pay the guaranteed deposits. There are
two options to make up the difference: a State-guaranteed bond
issue to provide the Fund with liquidity, or liquidity support
from the State. "In both cases, the Government needs a
legislative sanction because this cannot be done otherwise,"
Porozhanov commented,

A new bank deposit guarantee bill is being drafted and will be
circulated for coordination by October 30, the Finance Minister
said. The draft legislation is expected to be laid before the
Council of Ministers for approval in early November and then
submitted to the National Assembly for priority consideration.
The new law is supposed to eliminate the non-conformities of the
Bulgarian legal framework with EU law.

Earlier in the day, the Cabinet approved Bulgaria's position in
response to a September 26, 2014 letter of formal notice from
the Secretariat-General of the European Commission opening an
infringement procedure over Bulgaria's failure to correctly
transpose provisions of the Deposit Guarantee Scheme Directive
and to comply with the principle of free movement of capital.
The Bulgarian authorities commit themselves to a revision of the
legal framework regarding the special supervision measures and
to taking measures to ensure without delay depositors' access to
the guaranteed deposits with the banks which are currently
placed under special supervision.

The assessment of Corpbank's financial standing, which is being
prepared by the central bank and the auditors, is expected to be
released on October 20. "Depending on the assessment, the
actions under the law will have to be taken," Porozhanov said.
"In case of a dramatic insolvency, it is clear what will happen,
but there is no unanimity about the other options, including
restructuring," he noted.

He noted that he has had a "futile debate" with the central bank
regarding who should draw up a restructuring plan, who should
consider it if it is submitted by shareholders, investors or
investors hired by shareholders, whether an independent
financial consultant should be hired to assess the viability of
the restructuring plan, and who should prepare it at all if
there is no such plan. According to the Finance Ministry, this
lies within the competence of the central bank.

Replying to a question, Porozhanov recalled that a month ago the
Vienna-based financial consultant EPIC (European Privatization
and Investment Corporation) stepped forward and expressed an
intention to develop a programme for Corpbank's recapitalization
and restructuring. "The central bank should say what happened
during those four weeks," the Minister said.