Credit Agricole bailout could cost taxpayers up to 2B leva – Bulgarian Finance Minister

Written by on July 11, 2014 in Business - Comments Off on Credit Agricole bailout could cost taxpayers up to 2B leva – Bulgarian Finance Minister

The recapitalisation of Credit Agricole Bulgaria could cost Bulgarian taxpayers up to two billion leva (about one billion euro) and lead to excessive deficit proceedings by the European Commission, Bulgaria’s Finance Minister Petar Chobanov said on July 11.

Chobanov’s estimate came during an urgent meeting of the Parliament’s budgetary committee, called to hear Bulgarian National Bank (BNB) governor Ivan Iskrov on the results of the audit into the assets of Corporate Commercial Bank (CCB), put under central bank special supervision on June 20.

Credit Agricole Bulgaria was acquired by CCB earlier this year and the lender is no longer affiliated with the French banking group Credit Agricole. BNB said that it would change the bank’s name once it is nationalised, BNB said earlier on July 11.

(Budget committee chairperson Yordan Tsonev apologised, during the committee hearing, to the French group for any use of its name in the proceedings.)

The exact cost of the bailout would depend on the exact instruments chosen, which could include new debt and an increased Budget deficit, Chobanov said. Although this was a “one-off occurrence”, this could prompt the EC to begin excessive deficit proceedings if Bulgaria’s budget deficit rose above three per cent of gross domestic product, he said.

Bulgaria’s cabinet targets a Budget deficit of 1.8 per cent this year (although the latest Budget figures have already thrown some doubt about the prospect that figure will be met).

The bailout would be regulated by a special law that Parliament will have to pass.

BNB said earlier on July 11 that its proposal envisioned the recapitalisation of Credit Agricole Bulgaria to be carried out using public finances, the BNB and the state fund for deposit guarantees.

According to GERB MP Menda Stoyanova, a member of Parliament’s budget committee, the state fund for deposit guarantees currently has 2.1 billion leva.

(Bulgarian Parliament. Photo: Clive Leviev-Sawyer)

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