The State General Reserve Fund of the Sultanate of Oman has lodged an arbitration claim against the Bulgarian government with the International Centre for Settlement of Investment Disputes (ICSID), which is part of the World Bank group.
The claim was registered on October 22, with the ICSID online database offering no further details on the subject. However, it was widely expected for months that the Omani fund would resort to arbitration following the loss of a 30 per cent stake in the Corporate Commercial Bank (CCB), which was declared insolvent earlier this year.
CCB, Bulgaria’s fourth-largest lender by assets, was put under the central bank’s administration in June 2014 following a bank run on deposits. An audit in October 2014 found that the bank held mainly impaired assets, requiring a write-down of 4.22 billion leva (about 2.16 billion euro), which led to CCB losing its banking licence a month later.
The Bulgarian National Bank was criticised for its lax supervision of CCB and poor crisis management; in the end the Bulgarian government had to step in, lending the state deposit guarantee fund about two billion leva to ensure full payout of all depositor claims, which pushed the country’s Budget deficit to 5.8 per cent of gross domestic product, according to Eurostat data published last week.
Reuters reported, quoting people familiar with the situation, that the Omani sovereign wealth fund sought at least 150 million euro in damages. The fund is represented in the arbitration lawsuit by Freshfields Bruckhaus Deringer, with offices in Vienna and Frankfurt, while Bulgaria will be represented by Arnold & Porter, which has offices in Washington and London, as well as Sofia-based Tomov & Tomov, according to the ICSID database.
(For full coverage of the CCB situation from The Sofia Globe, click here. Shuttered CCB branch in Sofia’s Lozenets borough photo: Alex Bivol)