/ world today news/ On 22.08.2014, we witnessed another pitiful attempt by the BNB, led by Ivan Iskrov, to escape responsibility for its actions and inactions, which had a significant contribution both to the fall of KTB into the current crisis, and and for mapping the country’s financial stability.
This is stated in an address by the majority owner of KTB Tsvetan Vassilev, published on his personal website.
BGNES publishes the full text of the address:
“In chronological order, the activities of the central bank within the framework of the special supervision regarding KTB went through diametrically opposite actions and messages, which legitimately discredited the public and deprived it of confidence in one of the few untainted symbols of statehood in Bulgaria. BNB began the supervision of KTB with pathetic declarations that its activities will be aimed at “preserving the financial stability of the country”, “providing a complete analysis and assessment of the assets and liabilities of the KTB banking group” and “writing off the shareholders’ capital”, went through loud statements about established “deliberate abuses” and “actions inconsistent with the law and good banking practices”, not failing to accuse me, in my capacity as a majority shareholder, of absurd cash withdrawals of nearly BGN 206 million per day, threats to revoke KTB’s license and liquidate it, and in the end came to the cynical accusation of lack of any initiative on my part to support the financial institution in order to restore its activity.
The “straightforward” and “adequate” line of behavior on the part of the BNB regarding the KTB case, skillfully accompanied by pressure from the entire state apparatus and the spread of tendentious messages helpfully replicated in certain media, is clearly for all to see that the country is about to face an extremely difficult financial crisis. The danger of real destabilization of the financial and banking sector remained underestimated by the competent institutions in an unacceptable manner. Moreover, the ostentatious actions of the state prosecution, the arrests of the alleged murderers with whom I was associated, the accusations against the deputy manager of “Bank Supervision” for crimes in office, the scandalous decisions of the same “independent” judges in Sofia, the testimony of several ” “decent” people, etc., achieved their goal – making the bank unable to perform its inherent functions.
I personally informed Mr. Iskrov about this natural and predictable development of events at the very beginning of the targeted campaign against the bank, when the firm and categorical position of the central bank could have prevented attempts to artificially create panic among depositors. At the beginning of the mass withdrawals and before KTB was placed under special supervision, a request was made to the BNB to provide temporary liquidity support for the bank, which was not respected. In this sense, the argument with which the BNB justifies the non-provision of liquid support for KTB under the pretext that the supervisory authority must certify in a “sufficiently categorical and indisputable way the solvency and economic viability” of the financial entity is not only untenable in view of the moment, to which the support of KTB was requested, and also reveals the double standard in the treatment of two separate financial institutions that fell into a temporary liquidity crisis at almost the same time.
The arguments by which a clumsy attempt is made to transfer the responsibility to factors and events external to the BNB, regarding the non-application of “an established and working European model in recent years, applied in rescuing Banco Espirito Santo in Portugal” are also untenable. Behind the loud calls for the use of the ready-made recipe for dealing with banking crises is the ignorance of the case with the Portuguese bank, which does not provide answers to fundamental questions concerning the KTB case, such as how the sums of depositors for whom the Guarantee Fund would be paid Deposits are not covered.
As part of the targeted policy on the predetermined liquidation of KTB, the actions of the conservators in placing the bank under special supervision cannot be ignored. Despite claims to the contrary, the conservators acted as an outsourced unit of the investigation and prosecution, and not as a body that was called upon by law to deal exclusively with the recovery of the bank. Access to the bank’s premises and credit files was granted to third parties for unclear purposes unrelated to the financial institution’s recovery processes, insisting that credit files disappeared before KTB was placed under special supervision. Clients of the bank were faced with the absurd impossibility of servicing the loans by using sums on their accounts, and regardless of this, they continued to suffer the unlawful accrual of interest at their expense. Domestic payments were also unreasonably limited. This vicious practice was aimed at carrying out additional and completely unnecessary provisioning and artificial lowering of the capital adequacy of the bank in order to come as close as possible to the baseless accusations of draining the bank, unprofitability, excessive connectivity, etc.
However, it is evident that the financial institution collapse scenario did not work out as originally planned and calculated. One of the numerous proofs of this is that as of 11.07.2014, according to Mr. Iskrov’s statement and the subsequent consultations with the President on 14.07.2014, the BNB had sufficient information to lightly propose specific and quick steps to deal with the situation, expressed in its liquidation through the adoption of a special law. A few weeks later, however, this same information turned out to be “insufficient” to make decisions about the future of KTB. The central bank surprisingly concluded that additional time was needed to accurately determine the state of its loan portfolio, as well as the bank’s overall financial condition.
In the next place, the dismissive attitude and refusal of the BNB to have real negotiations with the General State Reserve Fund of the Sultanate of Oman should not be overlooked on the occasion of the Fund’s repeatedly expressed readiness to find a way out of the situation by providing the necessary support. Moreover, apart from the humiliating approach to which the representatives of the Omani side were subjected during their visits to Bulgaria, they were consistently and consistently convinced that they were being lied to and misled by me in view of the alleged drastic draining of the financial institution.
In this regard, the fact that until now none of the competent authorities in the country has approached me with an offer to participate in the capitalization of the bank or the search for a solution to overcome the artificially created crisis should also be taken into account. On the contrary, on 11/07/2014, in his memorial speech, the governor of the central bank even pronounced my sentence. It was clearly and unequivocally stated that KTB’s license would be revoked due to its current situation. The blame for draining the bank, apparently to the public, was placed on me, presumably with the aim of making it easier and faster to liquidate KTB through the proposed special law and to seize the mouth-watering assets financed by it. Any suggestion of my participation in the capitalization of the bank against the background of this statement was excluded. In this sense, I find cynical what was stated in the press release of the BNB dated 22.08.2014, according to which the majority shareholder in the bank “did not show any initiative to the supervisory authority to provide support to KTB, nor was a discussion sought with the central bank about the current financial condition of KTB and the financial resources necessary for its recovery”.
Despite everything and regardless of the attitude of the BNB and the state authorities sympathetic to the development of the crisis in KTB, I continue to work hard on the model for restructuring the bank together with the partners from the Fund of the Sultanate of Oman and other interested investors. I believe that we are close to presenting a principled decision for the recovery of the bank, which is in full compliance with the normatively established requirements for capital adequacy and liquidity. My role and attention at the moment is focused on providing a comprehensive conceptual plan and coordination of actions to exit the crisis by finding an adequate ratio between capital adequacy and liquidity, including the provision of liquid assets financed by the bank so far, to facilitate future investors in their decision to participate in the restructuring.
In this sense, it is important to state clearly and unequivocally that if the BNB and other state authorities continue to apply a double standard policy towards the various financial entities, transferring all the burden and responsibility for dealing with the crisis to new investors, this will necessarily lead to a financial disaster with huge damage to the entire country, businesses and households. The result will not be the bankruptcy of a financial institution, but of a business successfully served by the bank so far and generating hundreds of millions of BGN. This “hole” will not be able to be filled in any way, the country’s image will be completely destroyed in front of international investors. There should not be any doubt that in such a development of events, all those affected by the actions and inactions of the state bodies and the central bank will seek responsibility of the state and the guilty persons.
I will continue forward so that the truth about what has been happening in recent months will be revealed, as well as to clear the name of all those unjustly accused in this ridiculous scandal”, concludes Vassilev’s address.
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