Forbes: KTB Crisis 'Looks Like a Game of Bulgarian Musical Chairs'

The present deadlock at Bulgaria's Corporate Commercial Bank is a result of the combination of "weak Bulgarian institutions and frankly unbelievable Bulgarian politics", Forbes magazine wrote Saturday.

In her article titled "Bulgarian Stalemate" Frances Coppola, who has published a number of texts on the troubled Bulgarian fourth-largest lender, she adds hands of the central bank BNB are relatively tied if compared to regulators of the euro area.

Bulgaria's "currency peg to the Euro is even more restrictive than membership of the Euro would be" and does not allow for the provision of copious liquidity to banks, a move which could have stopped the run on Corpbank, the text notes.

Neither is it simple to declare insolvent and close KTB, as such a step would be against Bulgarian laws, it adds after a short summary about the bank's problems, with depositors unable to have access to their money four months after the central bank place it under conservatorship.

Coppola also mentions the audit report at KTB, a summary of which was made public by the BNB earlier this week and adds "there is no doubt whatsoever that KTB is bust."

It is unclear why the BNB has not revoked the license of KTB, a step required before it starts covering deposits, the author notes, hypothesizing the delay might be somehow related to the Vienna-based fund EPIC, representing KTB's shareholders and "a consortium of three investors" saying they can offer a plan to rescue the bank.

The article goes on with the notion that questions emerge as one delves into the shareholders EPIC is claiming to represent.

Coppola wonders why one of the shareholders, VTB Capital, which is part of "a Russian bank currently subject to US and EU sanctions", could have changed its mind after initially refusing to help in the rescue of KTB.

On the other hand Bromak EOOD, the company of major Corpbank's major shareholder Tsvetan Vasilev, "is clearly a major player" in the initiative, the text argues.

Coppola summarizes saying that "as usual, it is the innocent people caught up in the game who are being hurt. The depositors, denied access to their money. The employees whose wages are not being paid and who do not know what will happen to their jobs. And the people of Bulgaria."

She compares the case with the Portuguese Banco Espirito Santo, closed and restructured this summer while KTB "has been left in limbo".

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