Bulgaria's third largest lender must raise capital after tests (updated)

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13/08/2016 13:15

(Adds detail, background) 
    By Tsvetelia Tsolova 
    SOFIA, Aug 13 (Reuters) - Bulgaria's central bank has told 
the country's third largest lender First Investment Bank 
(Fibank) 5F4.BB  to raise about 206 million levs ($117 million) 
in additional capital by April, following a health check on the 
Balkan country's banks. 
    The central bank said on Thursday that the asset quality 
review (AQR) and stress tests showed none of Bulgaria's 22 banks 
require state support and that the banking system as a whole is 
well capitalised and resilient to market shocks. L8N1AS5KK  
    The health check was Bulgaria's first since a banking 
crisis, triggered by the demise of its fourth largest lender 
Corporate Commercial Bank (Corpbank) two years ago. 
    It looked at whether Bulgarian banks had valued their assets 
properly in their 2015 annual reports and how they can withstand 
a hypothetical three-year economic shock. 
    The central bank said on Saturday the AQR showed banks need 
to make adjustments worth 665 million levs in the way they 
valued their assets and prompted the need for a capital build up 
at two smaller lenders as well. 
    Analysts and bankers welcomed the results of the tests and 
said that both the adjustments and the needed capital are almost 
negligible and would not impact the country's economy. 
    "The results shows most of the banks did very well. The need 
of additional capital is very small and would not have any 
macroeconomic impact," said Lachezar Bogadanov, an economic 
analyst with Sofia-based Industry Watch.       
    The checks on the quality of Fibank's assets resulted in its 
CET 1 capital ratio dropping to 5.2 percent and when tested 
under a theoretical severe economic crisis this fell to -6.9 
percent. 
    Bulgaria's smaller Investbank also ended the test with -7.7 
percent and the central bank has given it to April to raise 20 
million levs in equity capital. Investbank said it would reduce 
its risk weighted assets by 134 million levs. 
    At the start of the test, Bulgaria's 22 banks had an 
aggregated CET 1 ratio of 19.98 percent, that fell to 14.4 
percent by the end of the test. 
    Fibank, with total assets of 8.5 billion levs  ($4.85 
billion), said it was already working on a plan to increase its 
capital buffers and a spokesman said it may happen sooner than 
April.  
    The bank was hit by a deposit run in 2014, days after the 
central bank took control over Corpbank, and earlier this year 
repaid 1.2 billion levs of state support it took to withstand 
the outflows. 
 
($1 = 1.7513 leva) 
 
 (Editing by Alexander Smith) 
 ((tsvetelia.tsolova@thomsonreuters.com; +359-2-93-99-731;)) 
 
Keywords: BULGARIA BANKS/TESTS