/ world today news/ Increasingly, the situation surrounding the banking crisis in Bulgaria is moving towards its logical development. It is high time to start calling things by their real names, namely – there is no “KTB” case, there is a “BNB” case.
From yesterday’s decision of the court to release the last two accused of embezzlement in the KTB with the lightest measure of remand, it is clear that gradually all the accusations are collapsing, or at least the prosecution is not particularly successful in its work on them. This is not a surprise, since even after the press conference of the governor of the BNB, Ivan Iskrov, and the stories about BGN 206 million taken out in sacks, not a single sober-minded person accepted this statement.
The inadequate reaction and incompetent management of the Central Bank became obvious to everyone. For two weeks, the governor of the BNB gave extremely contradictory statements, which led to a collapse of confidence in this institution. Society has every right not to trust it, observing how the Central Bank is managed – inadequately and incompetently.
This situation led to the breaking of several myths about the banking system in Bulgaria long imposed by the BNB Board of Directors and by lobbyists. The myth of the “best regulated and controlled system” has collapsed. Who today would believe that the banking system is the best regulated system, when the governor of the BNB comes out and claims that the Corporate Commercial Bank, which has been repeatedly awarded “Bank of the Year”, has a capital hole? Later it turns out that there is no such hole, or at least not in the size that the governor of the BNB is talking about. This same person stated that there are no credit files for a portfolio of BGN 3.5 billion, which is another absurd statement. It is even more absurd when such a statement is uttered by the Governor of the Central Bank. This statement was also refuted by the prosecutor’s office, and Iskrov, for his part, requested a special law for KTB. Let’s also recall the scandalous press conference, where the governor invited journalists selectively and left in front of the building some of those media representatives who asked him uncomfortable questions. Later he acquitted himself with his presser.
All these manifestations showed that this person is not standing firmly on his feet and is in a strange situation that shows panic and lack of competence.
The other version is about his actions is the claim that maybe third parties who use him for certain purposes. This is even more worrying because it shows a total lack of professionalism. How is it possible for the governor of the BNB to allow someone to use it in a way that would make it a laughing stock? The problem is that he is not only a laughingstock in his personal capacity, but with his actions he has also humiliated the institution he runs. The BNB does not have any credit of trust in the public, and it is logically worried that after the regulatory body has behaved inappropriately once, there is no guarantee that it will not repeat the unprofessional actions again.
I have always been a supporter of evolutionism, not revolutionary ideas, but in the case of the BNB, there are too many disturbing facts not only about Ivan Iskrov, but also about the entire behavior of the BNB Board of Directors. Not a single member of the Board of Directors distanced itself from the literally insane statements of its manager. They all stood by him at press conferences. The deputy manager of “Banking Supervision” was removed from his post, and none of the members of the Board gave a statement on the subject and did not say that he was also involved. The truth is that they are all empathetic. There is no sane person in the country who believed the tales of Ivan Iskrov, who tried to shift all responsibility to his colleague. No one would accept such an explanation as credible. The behavior of the other members of the Board of Directors, including Kalin Hristov, who is persistently promoted as manager, in no way creates confidence in the system.
Another myth has been shattered – about the BNB’s information policy. For years we have been criticizing the Central Bank for the fact that the Governor, the members of the Board and even the spokesperson of the BNB do not appear in front of the media regarding some pressing issues. Let me remind you that the BNB did not say a word about the murder of the banker in Burgas, which is a challenge for the legal framework in which the banks in Bulgaria operate. The legal framework is at the heart of this murder, as the extraordinary powers given to banks in Bulgaria led to it and many other cases, including several suicides.
Iskrov and the management of the BNB have led to a situation where even if KTB finds a way to open its doors, a large part of depositors will simply withdraw their deposits instantly. Trust has completely collapsed and this is due to the fact that the BNB did not act according to the law from the very beginning, providing liquid support for KTB. Even if an investor is found or one of the shareholders pours fresh resources, there is no guarantee that tomorrow new inadequate actions will not lead to the same situation.
There are also proposals to nationalize the bank. Such an action would mean that there was no other chance, and no one else agreed to pour in fresh resources, suggesting that these resources should come from the state to save the bank, keep it going, and in time get back on its feet and with owned assets to return the money to the state. These proposals come mostly from interested parties who have deposits above the legally guaranteed 100,000 euros. They prefer a business solution and avoided bankruptcy to save their deposits.
The people who led to this situation must bear their responsibility, because the crisis is not only in the depositors, but also in the investors. Would you invest a few billion when you know how the regulator works? According to my information, the fact that at the beginning of the crisis in China payments on cards issued by Bulgarian banks were limited is also evidence of the crisis in confidence. We are talking about sloppiness and a complete lack of professionalism.
As for the currency board, it works and there is no point in speculating with it. Its cancellation can be done by a political decision, but I would not like to be in the place of a politician who makes such a decision. Who would risk devaluing the savings of the population? Of course, there are indebted people who dream of repealing the board and would support it with both hands to depreciate their debts.
Let me recall a very interesting fact – the first law introduced by Ivan Iskrov as a member of parliament was related to the abolition of criminal liability for bankers who give out unsecured loans. People who may dream of falling overboard have taken precisely such loans. This law was the first introduced by MP Ivan Iskrov, which was accepted by the then majority. Today, this same Iskrov, with the help of Yordan Tsonev, introduced amendments to the Penal Code, which would bring the author of these lines under the law. In effect, instead of persecuting those who dole out unsecured credit, they want to persecute those who criticize it.
Finally, I would like to draw attention to Steve Hanke’s criticism of the President’s support for entry into the European Banking Union and Ivan Iskrov’s request for an IMF mission. It is a panic reaction on their part, seeking indulgence for their own actions and inactions. In this way they recognize that we are incompetent and unable to handle things ourselves and need someone from Brussels or Washington to do the job for us.
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Georgi Atanasov, Bulgarian Financial Forum.
#case #study #KTB #case #study #BNB
