Bulgarian Prime Minister Boiko Borissov said on April 8 that he ordered Economy Minister Emil Karanikolov to fire the chief executive and the board of directors of Bulgarian Development Bank (BDR), one day after media reports said that the state bank made a large loan to a company with almost no revenue.
The recipient of the 75 million leva (about 38.3 million euro) loan was linked by the media to another firm that specialised in buying non-performing loans from commercial banks.
BDR’s management attempted to quell the controversy saying that the loan would be used to purchase non-performing loans from two lenders, arguing that the transactions would boost the liquidity in the Bulgarian banking sector.
But the timing of the loan, as Bulgaria’s economy is facing a possible recession due to the lockdown put in place to stop the spread of the novel coronavirus and with BDR slated to receive 1.4 billion leva in a cash injection and government guarantees meant to support commercial banks in their lending activities, did not sit well with Borissov.
“I am appalled by what the Bulgarian Development Bank did. The Finance Minister [Vladislav Goranov] told me that he was not consulted, so I ordered the Economy Minister, who is the principal of the bank, to immediately relieve the executive director and board of their duties,” Borissov said.
BDR chief executive Stoyan Mavrodiev, a former MP for Borissov’s party Gerb, has been at the helm of the state bank since 2017, having served as head of Bulgaria’s Financial Supervision Commission before that. During his tenure, both at the financial regulator and the bank, he has repeately found himself the focus of public controversy over policy decisions, facing calls to resign from opposition parties.
(Stoyan Mavrodiev during an appearance on Bulgarian National Television in March 2020.)