site.bta Central Bank to Corpbank Shareholders: "Finance Ministry Alone Can Be Approached for State Aid"

Central Bank to Corpbank Shareholders: "Finance Ministry Alone Can Be Approached
for State Aid"


Sofia, September 15 (BTA) - The acting Deputy Governor in charge
of the Banking Supervision Department of the Bulgarian National
Bank (BNB) Nelly Kordovska and Nina Stoyanova, BNB General
Counsel, have sent a letter to Peter Goldscheider, Managing
Partner at EPIC, the central bank said in a press release on
Monday.

The letter says that the BNB welcomes the efforts of EPIC, which
represents the principal shareholders in the Corporate
Commercial Bank (Corpbank) to assist in the recapitalization of
the bank and expresses readiness to participate, within its
competences, in the discussion on the restructuring and
rehabilitation of the Corpbank Group.

Tzvetan Vassilev's Sofia-based Bromak EOOD is the majority
shareholder in Corpbank, with a 50.7 per cent stake.
Luxembourg-registered Bulgarian Acquisition Co., controlled by
the State General Reserve Fund of Oman (SGRF), has 30.4 per
cent, and VTB Group, Russia's second-biggest lender, holds 9.9
per cent. EPIC (European Privatization and Investment
Corporation) is a Vienna-based a financial consultant
representing a consortium between SGRF, other unspecified
shareholders and potential investors.

Corpbank suspended all operations on June 21, 2014 after a run
by depositors left it illiquid and on the same day it was placed
by the BNB under special supervision for a maximum of six
months to allow a thorough audit and possible restructuring.
Vassilev and senior executives of the bank have been charged
with embezzling nearly 206 million leva from the bank between
December 2011 and June 2014. Vassilev is on Interpol's Red
Notice Wanted List and his whereabouts is unknown.

On September 10 EPIC wrote a letter to the BNB, proposing the
conclusion of a contract on non-disclosure of information
between EPIC, the Government and the BNB, on providing EPIC with
access to the nonpublic information about Corpbank, and on
holding talks with the Government and the BNB on drawing up a
plan for Corpbank's restructuring.

On Monday the central bank asked EPIC to provide more
information about the ideas to recapitalize Corpbank, including
the specific financial commitments that the persons represented
by EPIC are in a position to assume, as well as the manner and
legal means by which this could be done. The BNB officials
emphasize that a capital increase and, respectively, the
transfer of shares to a bank, has to comply with Bulgarian
legislation and the requirements of the Credit Institutions Act,
the Measures against Money Laundering Act, etc.

Considering EPIC's argument that State aid will represent a
decisive part of the decision on recapitalization, Monday's
letter expressly states that it is not the BNB but the Finance
Ministry that is the national authority competent to grant State
aid according to the State Aid Act. In this connection, the
letter recommends that EPIC urgently start negotiations with the
Finance Ministry so as to clarify the actual opportunities and
conditions for possible State support.

The BNB refers to Communication from the Commission on the
application, from 1 August 2013, of State aid rules to support
measures in favour of banks in the context of the financial
crisis (2013/C 216/01) as the act laying down clear rules for
the grant of State aid in EU Member States, which should be
taken into consideration. The central bank also specifies that
granting State aid is decided on a case by case basis and only
provided the receiving bank meets the conditions for this under
Bulgarian and EU legislation.

In case the Bulgarian Government refuses to grant State aid,
EPIC should inform the BNB how the liquidity needed for a
resumption of the operations of the two banks of the Corpbank
Group will be provided. The letter notes that at this point the
two banks continue to experience an enormous shortage of liquid
funds for payment of the liabilities to their depositors, which
amount to 6,227 million leva in Corpbank and 285 million leva in
Victoria Commercial Bank.

In connection with the heightened public interest, any
information in the course of the negotiations which does not
constitute a banking or official secret will be made public.

A copy of the BNB letter has been sent to Bulgaria's Prime
Minister and to the Minister of Finance, the press release says.