Bulgarian National Bank (BNB) governor Ivan Iskrov re-iterated on October 29 his readiness to resign his position, but made such a move conditional on “solving the Corporate Commercial Bank problem.”
Iskrov has been widely criticised for his handling of the Corporate Commercial Bank (CCB) case, which was the country’s fourth-largest lender before it asked to put under central bank special supervision on June 20. The two largest parties in the newly-elected Parliament – centre-right GERB, expected to form the next government, and the socialists – have both called on Iskrov to resign.
Speaking at a hearing of the interim budget committee of the 43rd National Assembly, where he presented the central bank’s actions concerning the bank, Iskrov reportedly complained about the attacks on the BNB in recent months, while praising the central bank’s actions during the global financial crisis of 2009. He said it was the BNB’s concerted efforts that prevented any bankruptcies in the Bulgarian banking sector at the time.
On the central bank’s next actions concerning CCB, he said that the central bank was required by law to repeal the lender’s licence once the asset write-down – suggested by audit firms that completed a review of the bank’s loan portfolio and found 4.2 billion leva worth of impaired assets – is carried out by the end of the week.
Iskrov said that it was up to Parliament to decide whether to amend the existing banking laws, extending the deadline by which BNB has to repeal CCB’s licence. Currently, the law requires the central bank to repeal a bank’s licence within five business days asset write-downs push a bank’s own capital into negative figures, as is expected to happen to CCB.
Reports in Bulgarian media this week have claimed that an amendment extending this five-day period is expected to be tabled before the end of the week. If such a bill is passed, it would give both the central bank and the next government more time to find a solution for the CCB conundrum – including time to raise an estimated 1.5 billion leva needed by the deposit guarantee fund to pay out all claims on guaranteed deposits at the lender.
This is the second time that Iskrov, who has less than a year left on his second term as central bank governor, has offered to resign. He did so at the end of July, when he made his resignation conditional on Parliament acting swiftly to designate his successor.
At that time, his offer was rebuffed as GERB leader Boiko Borissov said the BNB governor should “submit his resignation and wait”, while the head of the socialist parliamentary group at the time, Atanas Merdjanov, suggested that Iskrov should focus on his duties and described Iskrov’s letter offering his resignation as “frivolous”.
(For full coverage of the CCB situation from The Sofia Globe, click here. Bulgarian National Bank governor Ivan Iskrov. Photo: BBCC)