May 15, 2020 / 10:54 AM / 2 months ago

Bulgaria's Fibank opens subscription for capital increase

SOFIA, May 15 (Reuters) - Bulgaria’s First Investment Bank (Fibank) opened on Friday the subscription for new shares and trading of rights for a fundraising needed to help it cover a capital shortfall found by European Central Bank stress tests last year.

The Balkan country’s fifth largest lender plans to sell 40 million new shares and raise up to 200 million levs ($111 million).

Fibank’s capital increase is the last box Bulgaria has to tick before it can get the nod to enter the European Union’s banking union and the “waiting room” to join the euro. Sofia hopes to join both in July.

Fibank set the price at 5 levs per share, almost double the current market price of 2.56 levs.

Traders say they expect the government, most probably through the state-run Bulgarian Development Bank, to step in to buy some of the issue, given its significance for the country.

Fibank has said it will consider the issue a success if as few as 4 million shares are sold. Shareholders will have the right to buy one new share for every 2.75 held.

If the subscription, which will run until June 25, is successful, trading in the new shares should commence on Aug. 8.

The stakes in Fibank held by Bulgarian businessmen Tseko Minev and Ivailo Mutafchiev, who each hold 42.5% of the lender, would be diluted by the issue, but they would together still own a majority of the business.

The remaining 15% is floated on the Sofia bourse.

An assessment of six Bulgarian lenders by the European Central Bank last year found Fibank had a capital shortfall of 263 million euros ($284 million).

Finance Minister Vladislav Goranov has said the lender has managed to cover about 70% of the estimated gap and was working to secure the remaining part.

($1 = 0.9250 euros)

$1 = 1.8084 leva Reporting by Tsvetelia Tsolova; Editing by Mark Potter

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