KEYWORDS TODAY:   BUDGETWESTINGHOUSESIGMACARETAKER GOVERNMENTKTB

HOT: » Bulgaria's President is holding political consultations with party leaders after GERB's decision to withdraw its support from the 2014 budget update

Fitch: Runs on Bulgarian Banks Flag Governance Risks

Business » FINANCE | July 3, 2014, Thursday // 12:06| Views: 1106 | Comments: 0
  • Send to Kindle
Bulgaria: Fitch: Runs on Bulgarian Banks Flag Governance Risks Photo by EPA/BGNES

Liquidity risks are heightened for all Bulgarian banks following two bank runs in quick succession, rating agency Fitch said Wednesday.

In a message posted on its website, Fitch stresses that "corporate governance problems at domestically owned companies" were highlighted by events at the two largest Bulgarian-owned banks.

"Domestically owned banks are more vulnerable to a loss of depositor confidence because of their corporate governance weaknesses," the agency also argues.

Fitch however made clear "the run at FIBank was triggered by electronic media messages, rather than credit fundamentals."

Its statement came after Corporate Commercial Bank (KTB) and First Investment Bank (FIBank) faced large-scale asset withdrawal on two consecutive Fridays following rumors they might fail.

Fitch reminds that FIBank's low (b-) Viability Rating given earlier by the agency was a result of "poor corporate governance, including potential related-party lending". (The Viability Rating measures the borrowing capacity of a certain bank and the likelihood of its failure in the agency's view.)

It points political stability as vital for reducing risks to financial stability.

But "political uncertainty is likely to persist in the near term", Fitch argues, explaining that Bulgarian President Rosen Plevneliev will dissolve Parliament on August 6 and call elections on October 5.

The agency praises the action of authorities which "took action quickly" at FIBank.

It describes the intervention and Sofia's decision to provide liquidity support for the bank as "in line" with its expectations which were reflected in its BB- rating.

Fitch rates FIBank (and not KTB), as it is the largest Bulgarian-owned bank and the second-largest Bulgarian bank by retain deposits.

Finance » Be a reporter: Write and send your article
Tags: FIBank, KTB, Fitch, Rosen Plevneliev, liquidity, interim government, parliament, banks, domestically owned companies
Expats.bg All Are Welcome! Join Now!

Leave a comment


Bulgaria news Novinite.com (Sofia News Agency - www.sofianewsagency.com) is unique with being a real time news provider in English that informs its readers about the latest Bulgarian news. The editorial staff also publishes a daily online newspaper "Sofia Morning News." Novinite.com (Sofia News Agency - www.sofianewsagency.com) and Sofia Morning News publish the latest economic, political and cultural news that take place in Bulgaria. Foreign media analysis on Bulgaria and World News in Brief are also part of the web site and the online newspaper. News Bulgaria