Corpbank loses licence, faces bankruptcy

By bne IntelliNews November 6, 2014

bne -

 

Bulgaria's central bank (BNB) has revoked the operating licence of Corporate Commercial Bank (Corpbank), once the country's fourth-largest lender, after private investors and the government refused to take steps to plug the BGN3.75bn (€1.9bn) hole in the bank's capital.

BNB said in a statement that it has asked the courts to declare Corpbank insolvent. Once that has happened, the Bulgarian Deposit Insurance Fund (BDIF) will take over the bank and appoint a new management. 

The central bank said it would recommend that the new management of the bank investigate its predecessor's stewardship of Corpbank. Bulgaria's prosecutor's office will also investigate allegations of misappropriation by the previous management of the bank.

BNB placed Corpbank under receivership after the lender suffered a liquidity crisis in June caused by massive deposit withdrawals. The BNB then ordered a comprehensive audit of its balance sheet, totalling some BGN7.6bn in assets, to see whether the lender met regulatory capital requirements. 

The audit recommended that Corpbank needs to make provisions of BGN4.2mn, which compares with the bank's equity of only BGN198mn. The hole in the balance sheet led Corpbank's capital adequacy ratio to fall to a negative 180.2%, the central bank said. 

BNB is now required by the law to withdraw the licence of the lender because of its capital shortfall and the lack of recapitalisation efforts.  Shareholders refused to inject additional capital, and no other market player offered to provide their own funds to recapitalise the bank.

Insured depositors (i.e. those holding accounts of up to €100,000) will regain access to their funds on December 4, the BDIF said in a statement. In order to respect all legitimate depositor claims, the BDIF will have to boost its liquidity through a loan. It currently has only BGN2.1bn at its disposal, while the amount of insured Corpbank deposits is said to be at least BGN3.7bn. 

The BNB said it plans to propose that the new temporary management of the bank hires a firm with international experience to investigate the lender's asset management before it was placed under receivership.

 

 

 

 

Related Articles

Macedonia kept on hold as Balkans edges towards EU goal

Clare Nuttall in Bucharest -   Macedonia’s EU accession progress remains stalled amid the country’s worst political crisis in 14 years, while most countries in the Southeast Europe region have ... more

Austria's Erste rides CEE recovery to swing to profit in Jan-Sep

bne IntelliNews - Erste Group Bank saw the continuing economic recovery across Central and Eastern Europe push its January-September financial results back into net profit of €764.2mn, the ... more

CEE leaders call for Nato troops to help deter Russian aggression

bne IntelliNews -   Central and Eastern European leaders blasted Russian "aggression" on November 4 and called for Nato to boost its presence in the region. The joint statement, issued at an ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss