Bulgarian National Bank (BNB) said on August 15 that it would allow customers of the Corporate Commercial Bank (CCB) and its subsidiary, Victoria Commercial Bank, to make loan payments to the two lenders.
The two lenders have been under the central bank’s special supervision since June, when all banking operations of the two lenders were suspended for as long as they remain under the BNB’s conservatorship.
BNB also said it would allow “cashless foreign currency exchange transactions when these are needed for repaying loans.”
However, the central bank said that it would not allow repayment of loans using deposits held by another customer because such operations could be used to circumvent the existing rules on deposit guarantees.
CCB, which was Bulgaria’s fourth-largest lender before it was put in administration, and Victoria remain under conservatorship, due to undergo a second asset evaluation next month, which makes it unlikely that the two lenders will resume operations on September 21, as scheduled.
BNB can extend the conservatorship period by up to three months, until December 21, under Bulgaria’s existing banking law.
The central bank’s main challenge is finding sufficient money to repay the deposits guaranteed under Bulgarian law (up to 196 000 leva, or 100 000 euro), which total about 3.6 billion leva. The state deposit guarantee fund currently has only 2.1 billion leva available, with the shortfall expected to be covered by a government loan.
However, such a loan would have to be approved by a sitting Parliament and Bulgaria currently finds itself without a legislature, as the 42nd National Assembly was prorogued last week without making any funds available to the caretaker cabinet. The next National Assembly will convene in autumn, following early elections scheduled for October 5.
(For full coverage of the CCB situation from The Sofia Globe, click here. BNB photo: Clive Leviev-Sawyer)