site.btaSofia Tell Brussels that Immediate Payout of Guaranteed Corpbank Deposits Will Torpedo Bank Recovery Efforts

Sofia, August 11 (BTA) - As hundreds of angry depositors in the troubled Corporate Commercial Bank (Corpbank) protested outside the central bank Monday with demands that their money be paid out with immediate effect, the Finance Minister and the central bank governor made public a letter they have sent to the European Commission explaining that immediate payout of the guaranteed deposits in Corpbank might torpedo the bank recovery efforts.    

The letter is dated August 1 and is addressed to Jonathan Faull, Director General of Directorate General Internal Market and Services in the European Commission. It comes in response to Faull's questions about the steps that Bulgaria has taken to deal with the situation at Corpbank.

Corpbank has suspended all operations since June due to lack of liquid assets and was placed under special supervision by the central bank to allow a thorough audit and possible restructuring.

In their joint letter to Faull, Finance Minister Roumen Porozhanov and central bank governor Ivan Iskrov say that if the Deposit Guarantee Fund goes ahead with the payout of guaranteed deposits (of up to 100,000 euro) from a bank under special supervision before an audit is completed and before the bank's insolvency is established, this bank may end up losing most of its depositors, which will make its recovery impossible.

They further say that the 5-day deadline for the competent authorities to determine that a credit institution has failed to repay deposits and start a rapid payout (as per Directive 2009/14/EC, is transposed in the national legislation as "five days from the establishment of insolvency of the bank and the revocation of its licence". 

According to Porozhanov and Iskrov, there is no option for depositors to be allowed partial access to their deposits because the national legislation does not allow that and doing otherwise will require legislative changes.