site.btaCentral Bank: Corpbank, Victoria Commercial Bank Continue to Experience Liquidity Problems, No Prerequisites to Discontinue Supervision

Sofia, August 22 (BTA) - The Bulgarian National Bank (BNB) said in a statement on Friday that Corporate Commercial Bank (Corpbank) and its subsidiary Victoria Commercial Bank (former Credit Agricole) continue to experience significant liquidity problems. Corpbank owes 6.3 billion leva in deposits and debt, while its subsidiary owes 284 million leva.

The supervision under which the two banks were placed in June can't be discontinued as they are unable to withstand another run on deposits.

Regarding a spate of public opinions about problems experienced by Corpbank Group and attempts to blame them on the central bank, BNB notes that the two banks were placed under special supervision due to two reasons unrelated to the central bank: a run on deposits and a subsequent request by the banks' managers
that the banks be placed under supervision.

The central bank recalls that a July 14 meeting under the President of leaders of parliamentary parties and
representatives of the government and the central bank rejected a bill to restructure Corpbank. The bill envisaged tools, laid out in a new EU bank recovery and resolution directive, and was endorsed by Brussels. The rejection of the bill made it impossible to reopen the two banks on July 21 despite earlier support declared by the leaders of the major political parties.

The central bank says that the full evaluation of the banks' assets will take longer as it will have to reflect current non-performing loans.

By September 15 2014, the banks administrators have to set up a group which will prepare loan files for audit and assist bank administrators with loan repayment. The asset evaluation is due to be completed by October 20, 2014.


Also, the central bank says that Corpbank's majority shareholder Bromak hasn't taken any steps to lend support to the bank.Initial declarations for support by Corpbank's second largest shareholder, the Sovereign Wealth Fund of the Sultanate of Oman,involved considerable liquidity aid by the central bank, which is impossible under the effective legislation. Corpbank's third largest shareholder VTB Capital backtracked on an earlier declaration to support the bank.

The central bank said it has sent letters to Corpbank's two largest shareholders and is expecting concrete commitments by the end of August in compliance with Bulgarian and EU legislation.

The central bank says it was impossible to provide state aid from the 3.3 billion leva, approved by Brussels, in support for Bulgarian banks, because under EU rules the bank should be solvent and economically viable.

Regarding urgent calls for immediate payback of guaranteed deposits, the central bank says that under Bulgarian laws guaranteed deposits are paid only after the bank's licence is withdrawn.