/ world today news/ Today the management of the Bulgarian National Bank (BNB) presented the results of the audit of the Corporate Commercial Bank (CTB).
We present to you the full text of the statement of the Governor of the BNB, Ivan Iskrov, which he made to certain media:
Dear Ladies and Gentlemen,
On June 18, 19 and 20, after numerous media publications and the strange press conference of the then management of Corporate Commercial Bank, amounts of nearly BGN 1 billion were withdrawn from the bank.
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.
As you know, conservators were immediately appointed in both banks of the Corporate Commercial Bank group. On June 25, independent auditors entered the two banks in order to review the assets and liabilities of the banks within ten working days, which expired on Wednesday. Yesterday, Thursday, the auditors’ reports were submitted to the central bank.
The conclusions of the auditors’ review in summary are as follows:
1. 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 security and the necessary provisions are at a sufficiently good level.
2. The results of the review of Corporate Commercial Bank speak, to put it mildly, of actions incompatible with the law and good banking practices. Essential parts of the credit files for a credit portfolio in the amount of BGN 3.5 billion, out of a total credit portfolio of BGN 5.4 billion, are missing, and it is more likely that they were destroyed in the days before the quaesture. A significant part of this portfolio points to a very strong connection between the debtors and the majority shareholder, Mr. Tsvetan Vassilev.
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 loan 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.
These very actions of officials at Corporate Commercial Bank may lead to deliberate damage to the bank with hundreds of millions of BGN. It is obvious that minority shareholders in Corporate Commercial Bank are also victims of these abuses.
For the reasons listed, today we will submit the auditors’ report on the review of the assets and liabilities of Corporate Commercial Bank to the attention of the Prosecutor General of the Republic of Bulgaria.
In addition to what has been said about the state of the Corporate Commercial Bank and based on the data provided to us from a separate inspection carried out by the conservators themselves, on July 9, 2014, with incoming number 6199, we have already submitted another report to the General Prosecutor due to suspicions of criminal activities to persons related to the bank. Specifically – according to the data of the conservators, on June 19 of this year – just a day before Corporate Commercial Bank was placed under special supervision, through a third party, the equivalent of BGN 205,887,223 in cash was withdrawn and handed over against a receipt to the majority owner of Corporate Commercial Bank. mostly in euros. What act this is and what actions should be taken is only within the competence of the prosecutor’s office. Investigating authorities can answer the question of whether the majority owner robbed his own bank in this way. 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.
In the future, the prosecutor’s office will decide on the issues presented so far, so as not to interfere with the procedural and investigative actions. From now on, the Bulgarian National Bank, together with the government, is concentrating on the restructuring and recovery of the “good part” of Corporate Commercial Bank with a view to protecting the interests of all its depositors.
What actions will be taken regarding Corporate Commercial Bank and Credit Agricole-Bulgaria from now on?
It is obvious that we cannot fill the “bottomless pit”, as the wise Bulgarian people say, and we cannot nationalize the Corporate Commercial Bank in its current form, as was announced on June 22, before the inspection data were known.
We would endanger both the activities of the Bulgarian Development Bank and a significant part of public and BNB resources.
But the goal remains the same! And this goal is for citizens and companies to be able to dispose of the full amount of their funds. The only exception to this will be the companies of the majority owner of the Corporate Commercial Bank and its related persons and companies.
What is the new practical plan of action, already discussed between the BNB and the government and supported by the main political forces represented in the parliament?
It contains numerous technical details, but in brief, the measures include the following steps:
1. Nationalization of Credit Agricole – Bulgaria EAD;
2. Transfer of all “good” assets and liabilities of Corporate Commercial Bank to Credit Agricole. It is important to know that all deposits of citizens and companies fall here, for which this will represent only one legal and accounting operation, which will in no way affect the main thing – every citizen and every company will have their accounts, deposits and savings. The only exception to this, we emphasize, will be the majority owner of a Corporate Commercial Bank and its related companies and individuals. They will not be guaranteed by the state and remain in KTB;
3. Provision of absolute liquidity support for the state-owned Credit Agricole /which will be renamed/ by its new owner – the state. For this purpose, sufficient funds will be provided from the Bank Deposit Guarantee Fund, the state budget and the Bulgarian National Bank. As much as necessary. The mechanisms for this have already been developed, as a result of the joint work of the public institutions involved in this process, including BNB and the Ministry of Finance;
4. The license of the Corporate Commercial Bank will be revoked and it will be declared bankrupt. Privileged creditors of KTB-in bankruptcy – will be the state in the person of the Ministry of Finance and the Bank Deposit Guarantee Fund;
5. What has been said so far will become possible after the voting of the draft of a special law, which has already been prepared and will be presented today to the main parliamentary forces.
From now on, the politicians are on the move!
Finally, ladies and gentlemen,
we clearly understand that there are criticisms of the Bulgarian National Bank for the activities of Banking Supervision in this particular case. However, what is not known to the general public, I want to clarify today – and that is: according to the law on the Bulgarian National Bank, which has been in force since 1997 and at the moment, the legislator assigned the rights and responsibilities for the function of bank supervision to a deputy governor, head of department Banking supervision. The Governor and other members of the Governing Council of the central bank do not have any directly assigned duties or rights in relation to ongoing banking supervision. In connection with this, we are introducing legal changes with which we will assume such responsibilities.
In conclusion, I would like to share that over the past few weeks, the Bulgarian National Bank has been working in full sync with the Head of State of the Republic of Bulgaria and other state institutions, guided by the understanding that banking stability is a primary public good. And we believe that if anyone had doubts, everyone is now convinced that this is an indisputable fact.
The restructuring and rehabilitation of this credit institution is very important both for key sectors of the economy, as well as for large Bulgarian municipalities, hospitals, many companies and thousands of citizens. Any other decision would be irresponsible and lead to long-term negative socio-economic and political consequences.
We emphasize again, we are working to have the rehabilitated state bank open on July 21.
The politicians are on the move!
Thanks for your attention.
#Statement #BNB #audit #KTB
