Bulgaria’s central bank said on September 16 that it extended the special supervision period for the Corporate Commercial Bank (CCB) and its subsidiary, Victoria Bank, by two months, which means that the lenders are now scheduled to resume operations on November 20 and 22, respectively.
The Bulgarian National Bank (BNB) decision had been expected to do so, given the lack of any tangible proposals on how to proceed with the restructuring of Bulgaria’s fourth-largest lender and the conservatorship period due to expire on September 21.
BNB reiterated that it was not possible to make any legally binding decisions about the future of CCB before the assessment of the lender’s assets and capital adequacy ratios was completed. The administrators appointed by the central bank have hired three audit firms – Ernst&Young Audit, Deloitte Audit and Afa – to carry out such an assessment by October 20.
The central bank said that it ordered the administrators to submit the full assessment of CCB’s assets by October 20 and a report on CCB’s capital adequacy ratio, based on that assessment, no later than October 31.
Based on the information provided to BNB by the administrators, a decision on the future of CCB must be made between November 1 and November 20, BNB said in its statement. (Technically, however, BNB still can extend the administration period by another month to December 20, under current Bulgarian legislation.)
Concerning CCB’s subsidiary Victoria – the renamed Credit Agricole Bulgaria bank that CCB acquired in May – BNB said that the lender met the regulatory requirements on capital adequacy, but it could not receive state aid because the CCB group as a whole must meet such requirements, BNB said.
The central bank said it gave Victoria Bank administrators a mandate to prepare a tender to sell part of the lender’s credit portfolio in order to raise the necessary liquidity to “meet the bank’s obligations to depositors and creditors.”
Bid invitations have to be sent by September 23, with interested parties given until October 15 to make binding offers. BNB should then be notified, no later than October 20, by Victoria Bank’s administrators whether the highest bid covers the lender’s commitments to creditors and depositors, the central bank said.
However, should parties interested in recapitalising CCB group as a whole show an interest in keeping Victoria Bank, it was possible that the lender’s assets would not be sold – in order to secure the time needed to reach a decision on this issue, the central bank said that it extended Victoria Bank’s conservatorship until November 22.
Vienna-based investment house EPIC, representing CCB’s main shareholders – said to include the Omani government fund that holds 30.4 per cent in the bank, as well as other unnamed shareholders and potential investors – has already notified BNB of its interest to participate in the recapitalisation of the lender.
BNB has said earlier that EPIC’s letter of interest contained no detailed proposal and was contingent on “adequate state support by the Bulgarian government.” The central bank said on September 15 that it has asked EPIC to provide additional details, including the financial commitment that the shareholders and investors represented by EPIC were prepared to make.
(Also on September 15, the New Europe Corporate Advisory – EPIC’s partner in Bulgaria – said that it had decided “not to take any engagement on behalf of the consortium”.)
BNB said that CCB’s shareholders and other potential investors will be allowed to make their restructuring proposals, based on the results of the assessment of the lender’s assets, between October 28 and November 20.
(For full coverage of the CCB situation from The Sofia Globe, click here. Bulgarian National Bank. Photo: Clive Leviev-Sawyer)