FinMin Comments on Nationalization of Corporate Commercial Bank

The Finance Minister has commented on the decision of the Bulgarian National Bank (BNB) to place under conservatorship Corporate Commercial Bank (KTB) and Credit Agricole Bulgaria.

In an interview for mass-circulation daily Trud, Chobanov commented that the steps of BNB related to the banking group of Corporate Commercial Bank (KTB) were supposed to show that the state was capable of swift, decisive and timely intervention to bring systemic risk under control.

"The aim is to stabilize the banking group so that the depositors can get the full amount of their money back" he said.

The Finance Minister added that the state would only intervene into KTB through the Bulgarian Development Bank (BDB) and the Bulgarian Deposit Insurance Fund (BDIF) after the current shareholders had been given the opportunity to provide the necessary resources.

Chobanov specified that on July 21, when the offices of KTB and its subsidiary were scheduled to open, the people would have a choice between leaving their deposits at KTB, which could be state-owned by that time, or redirect them to another bank, including the Bulgarian Development Bank, which would start collecting deposits.

He claimed that it was not possible to say yet how much extra capital the two banks would need, adding that the amount was to be specified in 10 days, when the audit and the evaluation of assets and liabilities of the two financial institutions were to be ready.

He added that the government expected the resources of the BDIF, at BGN 1.8 B by end-2013, to suffice to cover the needs.

"The resources of the Bulgarian Development Bank under the various business credit lines remain inaccessible and even if the state capitalizes the BDB additionally in order to participate in the capital increase of KTB, this will not count as deficit," he added.

The Bulgarian National Bank (BNB) issued decisions to place under conservatorship the Corporate Commercial Bank (KTB) and its subsidiary Credit Agricole Bulgaria on June 20 and June 22, respectively.

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