Insurance companies, investment, pension funds could lose 103M leva if Corpbank, Victoria go bankrupt – financial supervisor
Insurance companies, investment and pension funds could lose at least 103 million leva if Bulgaria’s Corporate Commercial Bank and its subsidiary Victoria merchant bank go bankrupt, according to the country’s Financial Supervision Commission.
Corpbank and Victoria Bank’s operations were suspended over liquidity problems by central Bulgarian National Bank in June and they are to remain closed until late November. (For full coverage of the CCB situation from The Sofia Globe, click here.)
In an overview of the non-banking financial sector in Bulgaria in the second quarter of 2014, the Financial Supervision Commission said that if the two banks are not rehabilitated, investment firms, management companies and mutual funds could directly lose 42.9 million leva that they currently have in the form of deposits and current accounts in Corpbank and Victoria.
The insurance industry damage would be 41.1 million leva currently blocked in the two suspended banks. These amounts do not include losses in accrued interest on deposits and accounts.
Indirectly affected are insurance companies that do not have directly blocked accounts in the banks but hold shares and bonds in Corpbank, which fell significantly after the bank was placed in conservatorship.
According to the Financial Supervision Commission, insurance companies could also suffer indirect losses through supplementary pension schemes incurring losses as a result of investments in collective investment schemes that have funds blocked in Corpbank.
The commission said that the estimated total losses for the insurance market were close to 19 million leva.
These estimates should be regarded as the lower limit of potential losses to the non-banking financial sector, the commission said.
The commission’s analysis noted that the problems in the banking system had a negative impact on the capital market, with all BSE indices recording a serious decrease.
In the four days before trading in Corpbank shares was suspended in June, they shed 9.8 per cent of their value.
(Photo: Zsuzsanna Kilian/sxc.hu)
