Bulgaria’s central bank said on July 15 that it extended the special supervision period for the Corporate Commercial Bank (CCB) to three months, which means that the lender is now scheduled to resume operations on September 21.
CCB was put under the Bulgarian National Bank’s (BNB) administration on June 20 after becoming the subject of a run on deposits, with its recently-acquired subsidiary Credit Agricole Bulgaria put in conservatorship two days later. (For a full timeline of events that led to BNB’s decision to repeal CCB’s licence, read The Sofia Globe report here.)
The central bank’s statement did not clarify whether Credit Agricole Bulgaria will likewise remain under administration until September as well, but that appears likely, given BNB’s intention to transfer CCB’s “good assets”, as described by the central bank, to Credit Agricole Bulgaria.
In recent days, BNB’s proposals have been criticised by economists and political observers as rushed and too vague, considering how much about CCB’s situation remains uncertain.
Such plans appear to have been put on hold following talks hosted on July 14 by President Rossen Plevneliev, at which parliamentary-represented political parties did not reach an agreement on the “legislative approach proposed by the central bank and the government” to address the CCB situation.
With no amendments to banking laws, or even a special law on dealing with the CCB fallout, forthcoming, only deposits of up to 196 000 leva (the equivalent of about 100 000 euro) in CCB are guaranteed, under the existing provisions in Bulgaria’s legislation.
The central bank has hinted that it was in favour of guaranteeing larger deposits as well – it is statement on July 11, BNB said it sought to “safeguard the interest of all [CCB] depositors.”
Bulgaria’s cabinet appears to be in agreement, with the government saying on July 15 that it “continues to believe that the alternatives where the healthy part of CCB […] continues to operate are to be preferred to the standards scheme of shutting down the bank and guaranteeing deposits of up to 100 000 euro.”
Although the talks hosted by Plevneliev on July 14 did not result in consensus on the way forward concerning CCB, the parties involved did agree to start the formal process for Bulgaria to join the EU’s Single Supervisory Mechanism, as the first step towards joining the EU banking union.
To that end, BNB said that it has contacted the European Central Bank’s executive board “as part of the preparations for a talk between the Head of State and the ECB President about starting a procedure for Bulgaria’s application for membership.”
Likewise, the BNB has already started talks with Andrea Enria, head of the European Banking Authority, on another topic agreed during the talks on July 14, namely “initiating a review of the quality, capacity, practices and procedures of the BNB Banking Supervision Department.” The central bank said that the review’s findings would be made public once it is concluded.
(Bulgarian National Bank. Photo: Clive Leviev-Sawyer)