Two months after the Bulgarian National Bank (BNB) made its bombastic announcement about the alleged embezzlement at the Corporate Commercial Bank (CCB), the debate about the future of Bulgaria’s fourth-largest lender has now drawn in new actors, but clarity remains elusive.
With 10 days to go until BNB’s special supervision period expires, one of the few certainties is that the central bank will extend its administration of CCB, although the new deadline for the bank to resume operations is yet to be announced.
The simmering discussion – much to the displeasure of CCB depositors, who have taken to holding regular protests in front of the BNB’s main building in Sofia in recent weeks – has been brought back to the forefront of public attention with the surprising involvement of Bulgaria’s Prosecutor-General, Sotir Tsatsarov.
Until now, the prosecutor’s office has forged ahead with its investigation in a fairly low-key manner, issuing progress statements mainly in reply to the occasional frenzy of speculation in local media.
But last week, when asked about the progress of the investigation, Tsatsarov gave no details, instead volunteering his opinion that “the financial demise of the bank is no solution for the people who deposited their money there.” He went on to suggest that the existing legal provisions that guarantee deposits of up to 196 000 leva, or 100 000 euro, should be “overleapt” and the bank should be bailed out in full.
Tsatsarov did not stop there, though. Earlier this week, he hosted a meeting of financiers, banking experts, trade union and employer association representatives, attended by caretaker Finance Minister Roumen Porozhanov and BNB governor Ivan Iskrov – with the obvious question as to why the prosecutor-general is involving himself in an issue that is the purview of other state institutions remaining unanswered.
Predictably, the meeting offered no solution to the CCB conundrum and made headlines for the fact that one of the participants said afterwards that Iskrov made a commitment that BNB would have more clarity about the lender’s future by September 21, only for the central bank and the prosecutor’s office to deny the existence of such a commitment.
Tsatsarov’s involvement and his suggestion for a full bail-out of CCB – the solution strongly backed by the central bank before it became clear that the now-prorogued 42nd National Assembly would not amend existing laws without BNB providing a clear picture of the bank’s current state – has further kindled the fires of the conspiracy theory, suggested by CCB majority shareholder Tsvetan Vassilev, that state institutions, including the prosecutor’s office and the central bank, were acting in concert to oust him from CCB.
(Vassilev, incidentally, remains wanted by Interpol after the prosecutor’s office issued an international arrest warrant in his name. His lawyer said recently Vassilev was prepared to return to Bulgaria if his arrest warrant is rescinded, with a Sofia court due to hear an appeal against the arrest on September 12.)
Since Parliament refused BNB’s proposed bailout bill, the central bank has steadfastly maintained that its hands were tied under the existing legislation and that the lender’s future will have to be decided by the new legislature that will take office after early elections on October 5. Although the central bank has not said so outright, it is expected that by that point CCB’s situation will become clearer, following an audit ordered by BNB, due to be completed by October 20.
BNB’s stance has come under harsh criticism from various quarters, including ombudsman Konstantin Penchev, who slammed the central bank’s “inaction and empty words” in an interview with Bulgarian National Radio on September 11.
“People must know who can take the responsibility and in my mind, only BNB can do so. I have had the opportunity to see BNB’s arguments and, as a lawyer, I completely disagree with the central bank’s legal arguments. Those are just a runaround and kicking the can down the road for reasons that are unclear,” Penchev said.
Meanwhile, a recent public opinion poll by Alpha Research showed 31 per cent of respondents blaming politicians for the CCB saga, with 29 per cent blaming the central bank’s lack of oversight of the lender.
More than half of the respondents, 54 per cent, said that they expected more problems in the banking sector, which could endanger Bulgaria’s financial stability. An ever bigger majority, 64 per cent, said that CCB’s customer information should be exposed so that the names of any public figures that might have benefitted from the bank’s lending and deposits largesse.
(For full coverage of the CCB situation from The Sofia Globe, click here. Logo and corporate motto of Corporate Commercial Bank – “our clients are dear to us” – from a CCB advert. Screengrab from corpbank.bg)