July 26, 2019 / 7:12 PM / a month ago

UPDATE 1-Bulgaria's Fibank secures 130 mln euros to prop up capital

(Adds details, background)

SOFIA, July 26 (Reuters) - Bulgaria’s fourth largest lender First Investment Bank has already secured 130 million euros ($144.6 million) to prop up its capital buffers after the European Central Bank found a 262.9 million euro shortfall, it said on Friday.

The ECB carried out a comprehensive assessment of six Bulgarian banks, a preliminary step in Sofia’s efforts to join the euro zone, and found capital shortfalls at First Investment Bank and another small bank, Investbank.

The Balkan country’s top three banks - Unicredit Bulbank , DSK Bank, a unit of Hungary’s OTP, and UBB, part of KBC Group - as well as locally held Central Cooperative Bank successfully passed the exercise.

Fibank, which has total assets of 9.5 billion levs ($5.41 billion), said in a statement it would address the outstanding 133 million euro shortfall through profits, de-risking of its credit portfolio, and other measures.

It did not provide a timeline.

The bank’s common equity tier-one capital ratio (CET1), a key measure of financial strength, plunged to 4.5% after the asset quality review, below the 8% threshold, from an initial 15.7%, ECB data showed.

Under the baseline scenario, its CET1 was 4.1%.

Ratings agency Moody’s downgraded Fibank’s long-term deposit ratings to speculative grade B2 in June with a stable outlook, citing the bank’s high level of problem loans and significant repossessed assets that continued to pose a risk to the bank’s capital base.

Investbank, which was found to have a capital shortfall of 51.8 million euros, said it plans to capitalise its profit and work to diversify and restructure its assets.

In 2016, following health checks on all Bulgarian banks, Fibank was asked to increase its capital by 206 million levs ($117.2 million). Investbank has also to bolster its capital then. ($1 = 0.8990 euros) ($1 = 1.7575 leva) (Reporting by Tsvetelia Tsolova; Editing by Kirsten Donovan and Jan Harvey)

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