2014: The Attack on Bulgaria's Corpbank Leaves Everyone a Loser

Opinions | December 25, 2014, Thursday // 13:33|  views

Angry depositors quequing at KTB's headquarters in Sofia to vent their anger at a flawed deposits reimbursement procedure. Photo by BGNES

Novinite's team is publishing brief daily comments about how 2014 unfolded in Bulgaria and elsewhere.

In June, an unprecented attack was plotted and played out against two Bulgarian banks, Corporate Commercial Bank (Corpbank, KTB) and Victoria Commercial Bank. Nobody had expected a similar scenario. Within just a few days' time, depositors withdrew over a BGN 1 B from KTB, allegedly “the bank of power” the fourth-largest in Bulgaria. As a result the bank announced it was finding it impossible to pay and sought protection from the Bulgarian National Bank (BNB), which for its part place it under special supervision.

It is a fact that someone deliberately stirred panic and sent people to line up in front of paydesks. Just a week later there was a similar attack against First Investment Bank which did not unfold the same way. Placing KTB under special supervision was surprising and was followed by bombastic “findings” about more than BGN 200 M having been taken out in cash, and in sacks, by the bank's majority shareholder Tsvetan Vasilev in person. This was subquently refused even by those who tried to make it up.

The case is however crystal clear: the fact that no attempt was even made at saving the bank and the statements coming from the central bank BNB in the time while KTB was under special supervision are an evidence there had been strong political pressure and the event had been a cheap frame-up. Only a month before the attack, however, the BNB had allowed KTB to acquire another bank (and a smaller one), Credit Agricole Bulgaria. The act of giving the thumbs up on the deal suggests there had been a thorough analysis of KTB's finance which in May 2014 must have been in an excellent shape, while a month later their state required “special supervision” and revoking of its license. This makes it more than clear that the attack on the bank was an act of mob law with majority shareholder Tsvetan Vasilev who is still outside Bulgaria at the moment due to his safety concerns.

Trials are now forthcoming which should clarify whether someone toppled KTB on purpose “to have their debts relieved” and “to acquire bank assets at lower prices” or the bank failed after having granted billions of BGN in unsecured loans to related companies and persons.

But whatever the outcome, even children in Bulgaria know that in 2014 a pogrom on a stable financial institution from which thousands of depositors came out as losers along with the state and especially its investment rating. These losses are to place a burden on everyone for decades.


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Tags: special supervision, Credit Agricole Bulgaria, BNB, Ivan Iskrov, Tsvetan Vasilev, KTB, Corporate Commercial Bank, Corpbank


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