/ world today news/ KTB has been making a profit for years, unlike Credit Agricole Bulgaria, the bank claims
Corporate Commercial Bank published its reaction to today’s disclosures by the Bulgarian National Bank. “The temporarily suspended management of KTB AD” addresses “the entire public”.
Here it is in its full form:
Dear Ladies and Gentlemen,
We would like to comment on the content of the statement of the BNB Board of Directors from today. According to this statement:
“On June 18, 19 and 20, after numerous media publications and, in our opinion, the strange press conference of the then management of Corporate Commercial Bank, sums of nearly BGN 1 billion were withdrawn from the bank.”
We would like to clarify that the withdrawals began after a number of media and institutional attacks against KTB AD already in the week before June 18, 2014, of which the President of the Republic of Bulgaria, the Speaker of the National Assembly, the Prime Minister, the Governor of the BNB, the Minister of Finance, Board of Directors of the Association of Banks in Bulgaria. Thanks to the given press conference and other adequate actions of the management of KTB AD on Wednesday afternoon, June 18, 2014, withdrawals were suspended and there were even canceled customer requests for cash withdrawals. Two-thirds of the withdrawals in the period June 13-20 were realized on Thursday and Friday – June 19 and 20, 2014, after the anonymous letter read on the BNR about the involvement of the Deputy Governor of the BNB Tsvetan Gunev as a defendant. According to this letter: “Gunev is being investigated because he “served the bank, whose name you will remember, and violated the interests of the Bulgarian citizens and the state. In other words, he did not take supervisory measures to stop the draining of this bank and its recovery”.
Today’s BNB statement states that:
“On June 20, Friday, at 11:40 a.m., the BNB received a request from the management of Corporate Commercial Bank to place the bank under special supervision on the basis of Art. 115, para. 2, points 2 and 3 of the Law on Credit Institutions.
Since this is not widely known and there were inaccurate interpretations in the media regarding the initial actions of the central bank, we note that it is at such a request that the Bulgarian National Bank is required by law to impose special supervision. Which was done – first at the Corporate Commercial Bank, and then at the related Credit Agricole Bulgaria”.
We clarify that the special supervision was imposed after the Chairman of the Board of KTB AD Orlin Rusev was refused liquid support from the BNB. In this situation, the only possibility to preserve the interests of depositors and customers was to request the placement of the bank under special supervision, which the management of KTB AD did in a timely manner.
We emphasize that the management of KTB AD did not want Credit Agricol Bulgaria EAD to be placed under special supervision.
We would also like to draw attention to the conclusions and assertions based on the auditors’ review:
According to the BNB: “The results regarding Credit Agricole Bulgaria are positive. It is a well run bank with good banking practices. The condition of the loan portfolio is very good, its collateralization and the necessary provisions are at a sufficiently good level.”
According to the requirements of the law, the report should be submitted to the BNB by the conservators, not by the auditors, and only the conservators are obliged to give a final report on the state of the two institutions based on the auditor’s report. The fact is that the “well-managed bank” Credit Agricole Bulgaria EAD has been losing money for years, which is why its sale was necessary. In contrast, the “bad” bank KTB AD has been making a profit for years, and in recent years it has been in the top three according to this indicator. It is also strange to us how, within 10 days, the auditors managed to reach any results regarding the state of the credit portfolio of KTB AD, which is in the amount of BGN 5.4 billion, and consists of nearly 2000 credit files. The insinuations of deliberate destruction of bank documentation are extremely serious qualifications which, before being made, should be supported by relevant evidence. A national institution of the rank of the BNB should work with accurate indicators and facts, not with probabilities and guesses. With equal weight, it can be argued that there is a likelihood of documents being destroyed or removed during the audit.
“Also strange is the other conclusion that a significant portion of the portfolio points to a connection between the debtors and the majority shareholder.”
First, the law does not in principle prohibit connectivity, but introduces rules to regulate it. Second, all persons related to the bank with whom banking transactions, including credit transactions, are concluded are duly listed in the audited annual reports of KTB AD in accordance with the requirements of the law and international accounting standards.
The statement of the Board of Directors of the BNB claims: “As a result of the lack of sufficient information, the auditors express the opinion that it is not possible to assess the financial condition of the debtors and their ability to service their loans. The availability and quality of collateral cannot be assessed either, which in turn leads to the impossibility of drawing up a final conclusion on the state of the credit portfolio in the amount of BGN 3.5 billion. Unfortunately, these actions cannot be registered with the toolkit of remote banking supervision and suggest deliberate abuses’.
Any open-minded person would ask himself the question of how the absence of a conclusion could lead to the thought of “intentional abuses” and to deliberate damage to the bank with hundreds of millions of BGN. The facts show that as of May 31, non-performing loans in the bank were below 2%.
All other loans are regularly serviced and all interest is repaid on time, according to the information available to the BNB. In our opinion, the baseless and contrary to legal requirements claims of a connection between Mr. Vasilev and borrowers forming a loan portfolio worth BGN 3.5 billion do not give any reason to single them out from the group of customers – borrowers of the bank, and to be treated under an extremely less favorable regime. We do not wish to comment on the division of KTB AD’s assets into “good” and “bad” – categories that are applicable in other areas than in banking. We also do not see the legal possibility of nationalizing both KTB AD and Credit Agricol Bulgaria EAD at this stage, but perhaps the relevant change in the law aimed at the nationalization of private financial institutions is coming, which will be a precedent not only in the latest our history after 1947, but also within the EU, and in complete contradiction to the basic principles laid down in the Treaty of Lisbon.
With the comment that: “Investigating authorities can answer the question of whether the majority owner robbed his own bank in this way”the BNB is in direct conflict with Art. 103, para. 2, item 22 of the Civil Code, which allows public disclosure of a violation and a violator, but in this case there was neither a decree issued for a violation nor a found violator.
Regarding the claim that: “The Prosecutor’s Office of the Republic of Bulgaria can fully rely on the expert potential of the BNB in order to reach the end in the search for the whole truth in this criminal case”we state that the qualifications for abuses, for robbery and for a criminal case are in the prerogatives of other bodies, and not of an institution like the BNB, and such unproven claims should not be made public by responsible officials of the Central Bank.
In conclusion, we would like to ask how it happened that the “bad” bank KTB AD was allowed to buy Credit Agricole Bulgaria EAD after a thorough examination by the BNB of its current financial situation, and the deal was finalized a day before the massive attack on KTB AD, and on June 17, 2014 – three days before placing KTB AD under special supervision, the BNB notified the entire public that: “The BNB categorically confirms that the banking system, including KTB, has high liquidity and capital adequacy and is functioning normally.”
In which case did the BNB tell the truth – then or now? And when did the BNB fill KTB AD to claim that it is “bottomless”?
#KTB #hits #BNB
