/ world today news/ From what was said by the governor of the Bulgarian National Bank, Ivan Iskrov, it appears that everything almost happened outside the Central Bank. And if there were really serious problems, where was this oversight?
Moreover, two days before Corporate Commercial Bank /KTB/ was placed under special supervision, Iskrov made a statement that the banking system was stable and liquid. This fully applies to KTB as well – reports of this bank have been submitted for years and in fact there were no suspicions. And if what was done for the First Investment Bank was half done for KTB, then it could have been saved. After that, if there are problems inside, they can be solved accordingly.
But the BNB did not say a single word in defense of KTB, to reassure customers. There was an opportunity for financial support, but it was not given. Unfortunately, along with the Central Bank, the government bears its responsibility, and it is huge. And there were no statements from the government – neither from the finance minister, nor from the prime minister. And what Iskrov proposes, Prof. Valery Dimitrov has already commented on it – the BNB simply does not want to make a decision, since whatever decision they make, there will always be criticism of them. And that’s why, if possible, politicians should take on the entire commitment. But the main answer to the question is not given – what is the state of the bank, when will its fate be decided.
I expected Iskrov to say – by October 10, or by October 20 or by some real date, we will have an idea of the state of the bank and see what capital support it has, after which we will think together about liquidity – because this is the serious problem. I think they will not prove who knows how big a capital hole, but rather the problem is liquidity, how to get the bank’s customers not to withdraw their money in the first days when it is operational.
In the situation that has arisen, without government intervention – even with a word or some support, the issue will either not be resolved, or the price that will be paid will be higher. But in order to ask for state intervention, one must know what will be done, since the BNB has put the bank under supervision, the BNB must lift the supervision and resolve the operations. It should say: if the shareholders support the bank with any amount of capital, they will be in the game. If not, we are looking for an alternative. The option is for the state to acquire this bank. Or to go for the scenario – a hospital bank and a separate “Victoria” bank.
It is clear to everyone that the target of those who attacked the bank was not the bank itself, but the bank’s portfolio and, above all, the enterprises that were bought with loans. The scenario, for example, of the recovery of the bank with the transfer of the assets to Bank “Victoria” and the de facto declaration of liquidation of KTB is exactly this. Then it’s just that “the wolf is full, and the lamb is whole” apparently. Because all the bank’s customers will be satisfied that their money will be saved, even beyond the guaranteed amount – and without any special government intervention. These screenwriters will be satisfied, because for once the blow is against Tsvetan Vassilev and the other shareholders, that the bank will not have it, and above all because in the portfolio of KTB will remain all those credits that are connected to Tsvetan Vassilev and to which they are appetites. Then a receiver will come in and they will be able to acquire. When they begin to acquire them, it will be seen in the end who was behind all these interests.
However, I am deeply convinced that there is still a chance for salvation. Yes, in any case, it will be with changed regulations. Even an imitation of debt instruments to replace deposits and investments with, for example, different types of bonds to solve the liquidity problem requires even a minor adjustment in the laws that control banking activity.
The point is that instead of pretending to be interesting and untouchable, it’s better to sit down and talk. It is not a question of pressure groups or blackmailing the BNB to make any decisions, but simply talking and looking for different options – not only on behalf of the BNB, but also on the part of experts and specialists. Then go to the politicians and tell them what the possibilities are. And what are the necessary legislative initiatives. This would mean that the politicians from the first day have different scenarios, can consult them with their experts and say: yes on October 10, life and health we do this and that. I have said it many times and I will say it again – there can be no decision for the bank earlier than the second half of October.
But Iskrov did not say anything about what they were doing, how they accelerated the inspection to see the actual situation. For example, there were disturbing things in the report of the conservators, that for a large part of the borrowers they did not receive any information and the conservators could not make a real assessment. What is the problem with bringing these companies out into the public space and those who are on strike in front of the BNB also going to the offices of these companies and banks that do not provide information and do not want to service their loans. Then it will be seen whether these are companies related to Tsvetan Vasilev, whether they are related to someone else. The borrowers have already been announced. Now let’s make a list in which to say who are those who do not submit the necessary information, which makes it difficult to assess the state of the bank and from there to develop the relevant scenarios for getting out of the situation. Moreover, in the report of the conservators it is implied that many of the companies that did not submit information are based on the fact that the documents were taken by the tax and prosecutor’s office. In fact, the tax authorities and the prosecutor’s office are directly responsible for not getting a real picture of the bank in order to take rescue measures.
Then let us speak with the truth, which is. Let’s say which files are in the tax office, why they are in the tax office, or if they are in the prosecutor’s office, why they are there and why they are not certified copies, for example. Or borrowers speculate that there are tax or prosecutorial audits. Because there’s no way they didn’t leave some documents behind. They can’t have all their documents confiscated. The conservators have done a lot of work but are prevented from updating the information and giving it to the auditors. And the auditors don’t really work. To publicly see which of these 120 to 140 companies are substandard – and they are 20-30%. What is the problem that companies are also hiding, and the strikers go and ask them – do they intend to return the loans.
But nothing is being done in the direction of more publicity. Apparently, this is exactly what some borrowers are aiming for. Because it is easiest to fish in murky waters. Otherwise, there is nothing to comment on Iskrov’s statement.
What about this story about BGN 6.5 billion – excuse me, which bank in the world was saved as someone, especially your owner, took out liquidity equal to the entire attracted resource. There is no such animal. Banks therefore go bankrupt because there is a liquidity crisis. And he wants: now give 6.5 billion. How, where will they get this money? At the same time, it does not hint at all about other tools that can be used. This means that he talks to himself as if he were in a fairy tale and nothing more. Why doesn’t he say if he will resign? There is another phenomenon there – if he does not resign, they cannot release him. Now is the time to set a condition for all members of the Management Board to submit their requests for resignation, and when they will be accepted is an additional question. By law, Iskrov cannot be released without resignation.
The other option goes through a long path, which goes through a change in the Law on the BNB, for which the reaction of the European Central Bank and the European Commission must be sought. I.e. tinkering – tinkering until the six-month period expires and then by law the bank must be liquidated.
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Prof. Stoyan Alexandrov, financier. He was the Minister of Finance in the period /1993-1994/.
#BNB #decision #KTB #sitting
