Bulgarian government reassures depositors after bank run
21/06/2014 15:58
By Tsvetelia Tsolova
SOFIA, June 21 (Reuters) - Bulgarians will not lose any
money after this week's run on Corporate Commercial Bank
(Corpbank) 6C9.BB , the deputy prime minister said on Saturday,
looking to reassure depositors and urging people to stay calm.
A run on the Balkan state's fourth-largest lender prompted
the central bank to take control of Corpbank on Friday for a
period of three months. It pleaded with depositors - many of
them queuing up outside Corpbank branches - not to panic.
The run started this week after media reports of suspect
deals involving the bank and its top shareholder. Both have
denied any wrongdoing.
The run was an ugly reminder for Bulgarians of a domestic
financial crisis in 1996-1997 that bankrupted 14 banks and
forced the introduction of a currency board regime.
It also poses another challenge to Prime Minister Plamen
Oresharski's government, which has struggled to revive economic
growth and is expected to step down shortly following a poor
showing at the European Parliament elections in May.
Bulgarian bank deposits in local and foreign currencies are
guaranteed up to 196,000 levs ($136,600), or 100,000 euros, by
law. The central bank will open talks with shareholders to
calculate the support the bank will need, it said on Friday.
"The Bulgarian government supports the actions of the
Bulgarian National bank. We will not allow the citizens to lose
a single lev," Deputy Prime Minister Daniela Bobeva said on
radio on Saturday. The lev is the Bulgarian currency.
"People should remain calm," she said.
Bobeva also played down the impact of the bank run on
state-run companies that have accounts with Corpbank, chiefly in
the energy sector. She pointed out that a rule change limits the
amount of money a state company can keep in one bank.
That rule change means state companies hold about 130
million levs in the bank, compared with 700 million levs when
Oresharski's government came to office last year.
SERIOUS SHAREHOLDERS
The leading shareholders in the Sofia-listed bank are
Bulgarian businessman Tsvetan Vassilev, with just over half the
company; Oman's sovereign wealth fund, with around 30 percent;
and Russia's VTB Asset Management, with nearly 10 percent.
The central bank governor said depositors in the bank
stepped up withdrawals after an anonymous letter was leaked to
media that said the central bank's deputy governor in charge of
banking supervision was being investigated by prosecutors for
abuse of office. Bulgarian media linked the investigation of the
deputy governor to allegations of corruption at Corpbank.
The central bank has since confirmed the investigation and
said the deputy governor had taken a voluntary leave of absence.
Bulgarian tobacco company Bulgartabac 57B.BB , one of the
bank's prominent clients, also announced earlier this week it
was taking its accounts out of the bank.
Finance Minister Petar Chobanov on Friday night told a local
TV station he hoped the central bank's control over Corpbank
would be shorter than three months.
"We expect things to develop faster. You see that talks with
the shareholders are starting and they are serious - with VTB
Bank and the Omani Fund. We will see what exactly their
intentions are," he said.
"There is no risk for our banking system as timely actions
were undertaken, which guarantee the stability and the
protection of the depositors at Corporate Commercial Bank."
"The state stands behind the actions of the central bank.
The aim is to recover and stabilise the bank. This is an
isolated case and by no means influences the whole banking
system."
(Editing by Matthias Williams)
((matthias.williams@thomsonreuters.com)(Reuters Messaging:
matthias.williams.thomsonreuters.com@reuters.net))
Keywords: BULGARIACORPBANK/GOVERNMENT