Bulgarian politicians stay silent on Corporate Commercial Bank audit as opinions pour in

As economists and bankers pitched in with opinions following the central bank’s selected disclosure of the results of an audit at the Corporate Commercial Bank (CCB) on October 22, the voices conspicuous by their absence have been those of Bulgarian politicians.

For most of the summer, any utterance by the Bulgarian National Bank (BNB) on the topic of CCB’s future never failed to produce a reaction from political parties, even though the exact state of CCB’s finances was never made clear. The future of the bank, which was Bulgaria’s fourth-largest by assets at the point it was put under BNB’s special supervision in June, was also a major issue during the campaign ahead of the October 5 elections, with the newly-elected Parliament expected to tackle the CCB question as one of its first orders of business.

But after the central bank presented its executive summary of the audit’s findings – the very audit ordered by the BNB that was meant to clarify the extent of the troubles plaguing CCB, which said that the lender faced impairment costs of 4.2 billion leva because of poor banking practices – none of Bulgaria’s eight parties and coalitions elected to the new legislature have yet weighed in on the matter.

It was unclear whether the central bank planned to make the full audit reports available to Parliament. In its statement on October 22, BNB said that it would present “a summary of the events and all decisions made by BNB concerning the CCB group from June 20 to the current moment” to the 43rd National Assembly on October 27, the day the new legislature will hold its first ceremonial sitting. (The one institution that will get the full reports is the Sofia city prosecutor’s office, according to the BNB statement.)

At the same time, the central bank re-iterated its stance that any decisions concerning the “restructuring and/or rescue of CCB” would depend on Parliament’s decision whether to amend existing banking legislation.

The central bank’s orders to CCB administrators to account the audits by October 31 have put Parliament on the clock – under the existing laws, once CCB’s books are updated, BNB has five business days (until November 7) to repeal the bank’s licence, Open Society Institute senior economist Georgi Angelov wrote in a piece posted on webcafe.bg. After that date, the central bank will have 20 business days to begin payments on guaranteed deposits, now estimated at 3.6 billion leva, he said.

Angelov said that the impairment costs assessed by the auditors made CCB unsalvageable because there was no “rational reasons” for a private investor or the Bulgarian state to bail out a bank that “has almost no quality assets and no public reputation.” The short amount of time left until BNB has to repeal CCB’s licence made “impossible” the task of drafting a restructuring plan, securing approval for the plan and raising the funds needed for recapitalisation.

Senior bankers interviewed on breakfast television shows on October 23 appeared to agree with that assessment. Levon Hampartzoumian, chief executive of UniCredit Bulbank and chairperson of the Association of Banks in Bulgaria, told private broadcaster bTV that the most probably scenario was for BNB to repeal CCB’s licence; Violeta Marinova, chief executive of DSK Bank and deputy chairperson of the Association of Banks in Bulgaria, told Bulgarian National Television that she saw “no investor who would make such a capital and liquidity investment”.

(Bulgarian National Bank. Photo: Clive Leviev-Sawyer)



The Sofia Globe staff

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