Bulgaria's Ombudsman Accuses Central Bank of Inaction over Corpbank

Finance | August 25, 2014, Monday // 11:16|  views

Bulgaria's National Ombudsman Konstantin Penchev, photo by BGNES

Bulgaria's National Ombudsman Konstantin Penchev has accused the Bulgarian National Bank (BNB) of inaction in the case of troubled Commercial Corporate Bank (KTB).

KTB and its subsidiary Victoria Commercial Bank have been under special supervision by BNB since June 20, 2014 and June 22, 2014, respectively, due to a massive withdrawal of deposits.

"The Bulgarian National Bank (BNB) is in a state of total passivity on the case of Commercial Corporate Bank (KTB)," Penchev said in a Monday interview for TV7, adding that the inaction could be explained with total incompetence or deliberate behavior.

"Unfortunately, we are going nowhere with KTB's case. BNB keeps explaining that nothing can be done. This is not true. I keep insisting that the case of KTB should have been resolved already," Penchev stated.

He said that BNB had two options, including saying that KTB was incapable of paying its customers, in which case BNB was under obligation to revoke its license, or place it under special supervision (conservatorship), adding that the monitoring regime did not mean keeping the bank locked up for six months.

"Some operations should have been permitted. BNB is simply unwilling to accept the slightest responsibility. BNB is in a state of total passivity. It keeps doing nothing and I cannot figure out why," Penchev emphasized.

On Friday, BNB came up with a media statement on KTB saying that two of its biggest shareholders, 'Bromak' EOOD, owned by Tsvetan Vassilev, and and the State General Reserve Fund (SGRF) of Oman, had been invited to come up with proposals for commitment by end of August in compliance with the effective Bulgarian and EU legislation.

BNB informed that the conservators were still working in the evaluation of KTB assets, as instructed by the BNB, including recovering and completing credit files, identifying and describing loan collateral, etc.

BNB underscored that no legally substantiated and binding decisions could be taken about the future of the KTB group before the conclusion of the assessment of the quality of assets and KTB's capital adequacy, adding that the document was due by October 20, 2014.

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Tags: Konstantin Penchev, Corporate Commercial Bank, KTB, Tsvetan Vasilev, Bulgarian National Bank, Victoria Bank, conservatorship, special supervision, bank run


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