The Bulgarian National Bank (BNB) said on Sept 16 it is extending its special supervision of Corporate Commercial Bank (Corpbank) by another two months until Nov 20 after first taking control over the troubled lender three months ago.

BNB maintained the Oct 20 deadline for the results of the full audit of Corpbank's books that is being carried out by Deloitte, Ernst & Young and local auditor AFA. The lender's fate can be decided only after the quality of its assets is assessed, the central bank said.

It also informed that the auditors have been going through the credit portfolio of Corpbank for more than a month now and that they have troubles in assessing the creditworthiness of some of the lender's major borrowers due to insufficient information. Auditors have also found cases of insufficient collateral, adding to the existing evidence that Corpbank has been employing questionable methods to calculate the risk of default of borrowers. Weaknesses in the lender's loan loss provisioning policy have also been found.

Corpbank suffered a run on deposits in June that was triggered by speculations about its financial health and the arrest of BNB's main credit supervisor.

The bank's shareholders and other unnamed potential investors have shown interest to cover a likely capital shortfall. They are seeking to sign a non-disclosure agreement with Bulgarian authorities that should be followed by a full due diligence on the bank.

Corpbank's majority shareholder is Tsvetan Vassilev with a 50.6% stake. He is accused of misappropriation by the Bulgarian prosecutor's office and reportedly surrendered to Serb police on Sept 16 after being on the run for more than a month. The second largest shareholder in Corpbank is Oman’s sovereign wealth fund (SGRF) through its Bulgarian Acquisition Company II. VTB Capital, the investment unit of sanctions-hit Russian financial group VTB, owns a 9.1% stake in the bank.