* 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)
By Tsvetelia Tsolova and Angel Krasimirov
SOFIA, June 26 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
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)