Bulgaria's Fibank shares rise after revamped share issue plan (updated)

First Investment Bank AD

16/04/2020 15:00

(Adds market reaction, detail)
    By Tsvetelia Tsolova
    SOFIA, April 16 (Reuters) - Shares in Bulgaria's First
Investment Bank  5F4.BB  (Fibank) rose on Thursday after it
revamped its plan to raise 200 million levs ($112 million) via a
share issue to help cover a capital shortfall found by ECB
stress tests last year.
    Traders noted the new stock would be priced at a substantial
premium to the market price of Fibank shares and said there was
speculation state-run Bulgarian Development Bank might buy some 
of the issue, particularly given its potential broader financial
significance for the country. 
    A press official for the Bulgarian Development Bank had no
immediate comment.
    Fibank's capital increase is the last box Bulgaria has to
tick before it can get a nod to enter the 27-member bloc's
banking union and the "waiting room" to join the euro. Sofia
wants to apply to join both at the end of April.  urn:newsml:reuters.com:*:nL5N2BY1B4 
    The Balkan country's fifth-largest lender needs to bolster
its capital after a comprehensive assessment of six Bulgarian
lenders by the European Central Bank (ECB) last year found it
had a capital shortfall of 263 million euros ($286 million). 
    Fibank plans to offer 25 million new shares at 8 levs per
share, it said in a statement late on Wednesday, adding it would
consider the issue a success if as few as 2.5 million shares
were sold. Shareholders will have the right to buy one new share
for every 4.4 held.
    In December the bank wanted to raise the same amount by
selling 40 million shares at 5 levs per share, but in February
the Bulgarian financial regulator rejected its prospectus. The
regulator now has two weeks to rule on the new proposal. 
    Shares of the lender rose by 7.4% to 2.32 levs by 1350 GMT.
    The issue price of 8 levs is still well above the market
value but the bank said it reflected its balance-sheet value per
share, valuations of recent bank acquisitions in the country,
the bank's size and its financial indicators, among other
factors.
    Fibank said it had secured an additional capital buffer of
more than 197 million euros through capital enhancement and risk
mitigation measures last year. 
    Bulgarian businessmen Tseko Minev and Ivaylo Mutafchiev each
own 42.5% of the lender, which had total assets of 10.7 billion
levs at the end of 2019. They have not said if they will take up
their rights to the new equity.
    The remaining 15% has been floated on the Bulgarian Stock
Exchange. 
    ($1 = 1.7938 leva)
    ($1 = 0.9180 euros)

 (Reporting by Tsvetelia Tsolova
Editing by Muralikumar Anantharaman and David Holmes)
 ((tsvetelia.tsolova@thomsonreuters.com; +359-2-93-99-731;))