CORPORATE COMMERCIAL BANK AND CREDIT AGRICOLE BULGARIA TO REMAIN UNDER SPECIAL SUPERVISION UNTIL 21ST OF SEPTEMBER

Corporate Commercial Bank (CCB) and its subsidiary Credit Agricole Bulgaria will remain closed until at least 21st of September, when the 3-month term of special supervision expires, says a press release of the Bulgarian National Bank today, 15th of July.

The reason is that during the consultations at the President’s Office on 14th of July, no consensus was reached by the political powers on whether to pass the special law proposed by BNB, for finding a solution to the problems in CCB (KTB banking group). This means that for the time being, the BNB plan to transfer the ‘healthy assets’ from CCB to Credit Agricole bank and take Credit Agricole into state ownership will not take place.

The government’s press office announced that the Cabinet would continue to support the Bulgarian National Bank's efforts in finding a solution for the case of CCB. The statement also says that deposits of up to EUR 100,000 (BGN 196,000) as guaranteed by the current law, will be paid by the state and the government will provide all the necessary financial resources.

BNB has already contacted the European Central Bank’s Executive Board about starting a procedure for Bulgaria’s application for membership in the EU’s Single Supervisory Mechanism.

BNB specifies that until a solution is found for the problem in CCB the current legislation will apply i.e. when the 3-month period of special supervision expires, the two banks will be declared insolvent and thereafter, within the following 20 working days, deposits of up to 196,000 BGN will start being paid and then the banks will be closed down. In practice, hospitals, municipalities and companies having deposits less than the guaranteed amount will have access to their money around mid October. Currently, only customers who have loans with either CCB or Credit Agricole can continue to make installment payments to those banks.

BNB says that if the political consultations reach a consensus about changes in the legislation, BNB is ready to assist with its expertise.

The Cabinet supports the plan of the BNB Governor, Ivan Iskrov, to rescue the viable part of CCB though the support of the deposit insurance fund, BNB and the government. This option is preferred to the standard option of closing down the bank and securing the deposits of up to 100, 000 Euro (196,000 BGN), the statement of the Government reads.

The government’s statement also points out that the scenarios discussed for finding a solution to the problem in CCB do not aim to justify or cover up incorrect debtors, or people who caused losses to the bank and the cabinet insists on maximum transparency in respect of those people. The government calls for a dialogue between the political powers in the name of the stability of the state and to prevent ill-considered political talk, the statement adds.

The Financial Supervision Commission said that the blocked financial instruments of the CCB clients were not at risk and could be transferred to another broker or account. The trade in shares of CCB has been suspended on the stock exchange.

Following the agreement reached at the meeting with the Bulgarian President on 14th of July, BNB has commenced talks with the European Banking Authority’s Chairperson about initiating a review of the quality, capacity, practices and procedures of the BNB Banking Supervision Department. BNB has also contacted the European Central Bank’s Executive Board in relation to starting a procedure for Bulgaria’s application for membership in the EU’s Single Supervisory Mechanism.

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