Bulgaria's Bank Law Changed to Allow Temporary Assignees at KTB
Finance | March 18, 2015, Wednesday // 11:51| views
KTB's headquarters in downtown Sofia. Photo by BGNES
Lawmakers in Bulgaria gave on Wednesday the green light to changes to the Bank Insolvency Act allowing for a temporary assignee to manage the assets of troubled Corporate Commercial Bank (Corpbank or KTB).
Prior to the amendments, such a development contravened the legislation, which had required that a court decides to open insolvency proceedings first.
A temporary assignee, proposed by the Bulgarian Deposit Insurance Fund (DIF), will now be able to represent the bank whose license was revoked last year. He or she will run the bank on a daily basis and manage its assets.
His or her appointment will mean that conservators, who moved into the bank in June of last year at the behest of the central bank BNB, will end their assignment there.
The step was approved by an overwhelming majority, though there were only 92 out of 240 MPs present: 88 voted in favor, and only four lawmakers of nationalist Ataka abstained.
A debate started among MPs during the second and last hearing in Parliament but it was mostly about how transparent the work of temporary assignees would be.
The move had already been agreed among lawmakers from most political parties after Prime Minister Boyko Borisov and Finance Minister Vladislav Goranov proposed the changes to make sure that, in their words, the "looting" of KTB is prevented.
KTB was placed under special supervision in mid-June after a bank run, and BNB later requested to begin insolvency proceedings. However, the bank's majority owner Bromak lodged an appeal and the case is now pending at the Sofia City Court. A sitting on is yet to be held after a judge who was in charge begged to be struck off.
On Tuesday, Bromak also sent a statement to Parliament Speaker Tsetska Tsacheva, calling on Parliament not to adopt the measure since, it says, the latter would contravene both Bulgarian and EU law (you can read the full text here).
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