* PM stepped down after poor May election result
* Says regrets lack of support for reforms
* Bulgaria CDS rise to near three-week high
* Investors need swift solution to bank crisis: trader
(Adds PM quote, credit default swaps, background)
By Tsvetelia Tsolova and Angel Krasimirov
SOFIA, July 24 Bulgarian lawmakers voted
overwhelmingly to accept Prime Minister Plamen Oresharski's
resignation on Thursday, paving the way for an interim
government to take over in August and a snap election in early
Oresharski's departure leaves his successor to sort out the
Balkan state's worst banking crisis since the 1990s, with the
fate of its fourth largest lender undecided. Bulgaria's credit
default swaps rose on Thursday to their highest level since July
4, according to Markit, the financial information services
company, as investors sought insurance against losses.
In power for just over a year, Oresharski resigned on
Wednesday after a poor showing by his Socialist party in May's
European elections. Those results had also led the Socialists'
junior coalition partner to withdraw its support.
Approval of his resignation was largely a formality after
Bulgaria's political parties had agreed to hold early polls. The
vote was 180 approving the resignation, eight opposing, and
Political instability has plagued the European Union's
poorest state over the past two years. Failure to tackle
problems such as endemic corruption and inefficient state firms
prompted a sovereign credit rating downgrade in June.
"I do regret that we did not have enough political support
and time to carry out structural reforms in healthcare,
education and administration," Oresharski told reporters,
speaking publicly for the first time since his resignation.
Corporate Commercial Bank (Corpbank) was hit by a
run on deposits in June, forcing the central bank to take
control of the lender and shut down its operations. The run then
spread to another, bigger lender.
With the government gone, it is unclear how Bulgaria plans
to rescue Corpbank and to what extent it will protect its
depositors and dollar bondholders. Parliament had earlier
rejected a proposed rescue package, which would have hived off
Corpbank's good assets and liabilities to a subsidiary.
"The government's resignation has been long awaited and its
effects were already calculated by investors," said Dimitar
Georgiev, a trader with the Sofia-based Elana brokerage house.
"The whole political situation has been calculated already,
so there is no impact on stocks today. The market needs a swift,
fair and clear solution for Corporate Commercial Bank, which
should contain the problem to just this bank, and a stable
political environment after the October polls."
Bulgaria's Sofix index was down 0.17 percent as of
1009 GMT on Thursday, after the vote by lawmakers.
The blue chip index shot up more than 40 percent in 2013,
shrugging off the resignation of a previous government and
months of street protests, as investors decided its stocks were
undervalued as the economy recovered.
The index has risen more than 9 percent this year, but fell
to a year's low on June 27, when the bank run hit First
Investment Bank, Bulgaria's third largest lender, a
week after Corpbank was taken over by the central bank.
The main opposition, centre-right GERB party is expected to
top the Oct 5 polls. But it may struggle to get an outright
Bulgaria, a country of 7.3 million people, also needs to
overhaul its education system to make its workforce more
efficient and to clean up its graft-prone healthcare system.
Oresharski ruled in a minority coalition that relied on the
outside support of the nationalist Attack party to survive a
series of no confidence votes. The persistent instability
prompted ratings agency Standard & Poor's to downgrade Bulgaria
to one notch above junk in June, before the banking crisis
(Writing by Matthias Williams; additional reporting by Chris
Vellacott in London; Editing by Larry King/Ruth Pitchford)