UPDATE 2-Bulgarian bank shares tumble after ruling party MP comments
* Shares in third biggest listed lender lead falls
* Traders say Socialist MP comments triggered declines
* Last week central bank took control of troubled lender (Adds details, background)
SOFIA, June 26 (Reuters) - Shares in Bulgarian banks fell sharply on Thursday after a lawmaker from the ruling Socialist Party said another lender could come under attack following a run on the country's fourth largest bank.
However, analysts said low turnover on the Sofia bourse had exaggerated the price declines and Fitch rating agency said it saw "limited" risk of serious banking sector contagion from the crisis over Corporate Commercial Bank (Corpbank).
Last week, customers unnerved by reports of shady deals involving Corpbank rushed to withdraw their deposits, prompting the central bank to seize control of the lender and shut down its operations.
Shares in First Investment Bank, Bulgaria's third largest lender, closed 4 percent down on Thursday after earlier shedding as much as 18.7 percent. Central Cooperative Bank was down 4.8 percent and Bulgarian-American Credit Bank lost 4.4 percent.
A Reuters photographer saw no signs of panic outside two branches of First Investment Bank in Sofia on Thursday.
"It is still early to say what scared the investors, but it could certainly be linked to a statement by a politician this morning that suggested a new attack on a bank might be in the making," said one trader, speaking on condition of anonymity.
Earlier, Socialist lawmaker Anton Kutev told Nova TV he thought there had been a deliberate attempt to "break" Corpbank.
"Someone is trying to pull down another bank, as far as I feel," he added, according to the channel's website.
Kutev did not specify who might be trying to take such action but added that Bulgaria's wider banking system and the currency board that underpins it could be at risk. Kutev could not be reached for further comment.
The run on Corpbank, which may lead to its nationalisation, was an ugly reminder for Bulgarians of a crisis in 1996-1997 that bankrupted 14 banks and forced the introduction of the currency board regime, which pegs the Bulgarian lev to the euro.
The Corpbank affair has also highlighted persistent concerns about poor governance and shadowy ties between state officials and private business in Bulgaria, the European Union's poorest member state and one of its most corrupt.
Corpbank's problems are a headache for Prime Minister Plamen Oresharski's minority government, which has struggled to revive economic growth and stem a sharp drop in foreign investment, and is due to resign shortly after losing European elections in May.
Global ratings agency Standard and Poor's downgraded Bulgaria to one notch above junk earlier in June, citing political instability that has stifled economic reforms.
Despite its woes, the Bulgarian government successfully launched a 1.5 billion euro bond sale on Thursday, needed to roll over existing bonds until January and also to finance a budget deficit planned at 1.8 percent of GDP for 2014.
"The Bulgarian stock exchange has such a low liquidity and turnover that I would not say it reflects reality properly. The banking system in Bulgaria is in a good condition, has excellent capital adequacy ration and is very liquid," said Georgi Angelov, a Sofia-based economist with Open Society Institute.
After the run on Corpbank, government ministers urged people to stay calm and stressed Corpbank's problems were an isolated case. On Saturday the deputy prime minister said citizens would "not lose a single lev" as a result of Corpbank's problems.
"The central bank's takeover of Corpbank will test its bank rescue and resolution framework," Fitch Ratings said in a statement on Thursday.
"But CorpBank's problems are idiosyncratic and any contagion to the largely foreign-owned banking sector will probably be limited. The rescue is therefore likely to be neutral for Bulgarian bank ratings," it said.
About two thirds of the banking sector is foreign-owned.
A spokesman for First Investment Bank said the fall in its share price was "a normal market response" to the poor liquidity of the bourse and the "current situation" in the banking sector, adding the bank was in "excellent condition".
A central bank spokesman contacted by Reuters said the institution never commented on share price falls.
The central bank has started talks with the existing shareholders of Corpbank about rescuing it. If the talks fail, the central bank is expected to nationalise it.
Corpbank and its main shareholder deny any wrongdoing. (Additional reporting by Stoyan Nenov; Writing by Matthias Williams; Editing by Gareth Jones)
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