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UPDATE 1-Austrian fund a "ray of hope" for Bulgaria's Corpbank, says PM
August 20, 2014 / 10:46 AM / 3 years ago

UPDATE 1-Austrian fund a "ray of hope" for Bulgaria's Corpbank, says PM

* Prime Minister says fund will present plan within 10 days

* Previous rescue efforts derailed by political backdrop (Adds detail, background)

By Angel Krasimirov

SOFIA, Aug 20 (Reuters) - An unidentified fund based in Vienna has expressed interest in rescuing Bulgaria’s Corporate Commercial Bank (Corpbank) and will present its plan within 10 days, Bulgaria’s Prime Minister Georgi Bliznashki said on Wednesday.

The fate of the country’s fourth-largest lender has been in limbo since June, when a run on deposits prompted the central bank to seize control of Corpbank and close its operations, sparking a banking crisis in the Balkan state.

The prospect of private backing would be welcomed by Bulgarian authorities after rescue efforts by the central bank and the former Socialist-led government were derailed by a lack of political consensus in July.

The central bank ordered an audit of Corpbank’s books, which is due to be completed in October, but it remains unclear whether the lender will be rescued or tipped into insolvency, and to what extent its depositors and bondholders will be protected.

Unable to access their deposits since the bank closed, hundreds of angry customers staged protests in Sofia and other towns and cities on Tuesday. Separately, a group of bondholders is contemplating legal action against the government.

“Yes, a fund based in Vienna showed interest in rescuing Corpbank,” Bliznashki told reporters. “Their representatives will present a concrete plan within 10 days ... it’s a ray of hope, but we’ll see.”


A caretaker government appointed by the president took charge of Bulgaria in early August and will govern the Balkan state until elections in October. The current administration does not have powers to raise new debt, making a state-funded rescue of Corpbank unlikely until after the polls.

An Omani sovereign wealth fund, which owns 30 percent of Corpbank, has also been in talks with Bulgarian authorities about stabilising Corpbank. Interim Finance Minister Rumen Porozhanov said at Wednesday’s news conference that he had not met with the Oman fund’s representatives since taking office.

Clients unnerved by reports of alleged shady deals involving Corpbank’s main owner, Tsvetan Vassilev, withdrew more than a fifth of deposits in a week-long run on the bank.

Vassilev, who was locked in a public feud with a rival at the time of the run, has repeatedly denied any wrongdoing and said the run was a plot hatched by his competitors. He has also previously accused elements of Bulgaria’s prosecution service of plotting against him.

The early results of the Corpbank audit showed activities at the lender “incompatible with the law and good banking practices”, the central bank said.

Bulgarian prosecutors have charged Vassilev with embezzlement and said that an international warrant for his arrest had been issued. (Writing by Matthias Williams; Editing by David Goodman)

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