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Bulgaria bank rescue likely to widen fiscal deficit - finance minister
July 11, 2014 / 12:15 PM / 3 years ago

Bulgaria bank rescue likely to widen fiscal deficit - finance minister

SOFIA, July 11 (Reuters) - The state funds required to rescue Bulgaria’s Corporate Commercial Bank (Corpbank) group will likely swell the country’s fiscal deficit, possibly to more than 3 percent of gross domestic product (GDP), the finance minister said on Friday.

Petar Chobanov said Bulgaria will issue new debt to support the rescue and that the fiscal deficit could be pushed to more than three percent of GDP, against a planned deficit target of 1.8 percent for 2014.

He said that the level of support required following a run on deposits at Corpbank in June could be around 1.5-2 billion levs ($1.39 billion), adding that any change to the fiscal deficit would be a one-off occurrence for this year only.

The central bank on Friday said it would strip Corpbank of its license, hive off its good assets and liabilities into a recently acquired unit of the lender and alert prosecutors to possible malpractices at the bank.

The statement on Friday follows an audit of Bulgaria’s fourth largest-bank, which was taken under state control last month following a run on deposits by clients unnerved by reports accusing the main shareholder, Tsvetan Vassilev, of shady commercial deals. He denies any wrongdoing. ($1 = 1.4376 Bulgarian Lev) (Reporting by Tsvetelia Tsolova; writing by Matthias Williams. Editing by Jane Merriman)

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