BGN 3.5 B Missing at Corporate Commercial Bank - Independent Auditors
During the Bulgarian National Bank (BNB)'s press conference, Governor Ivan Iskrov cited the conclusions of the independent audit at the Corporate Commercial Bank (KTB).
He outlined the results of the inspection conducted by Deloitte Audit, Ernst & Young and Afa, as follows:
1. Results in regard to Credit Agricole Bulgaria are positive. This is a well-governed bank with good banking practices. The state of its credit portfolio is very good, its security and necessary provisions are at a reasonably good level.
2. Results of the audit on Corporate Commercial Bank (KTB) show, to say it mildly, actions incompatible with the law and good banking practices. Significant parts of the credit files for a credit portfolio of BGN 3.5 B, out of BGN 5.4 B worth of overall credit portfolio, are missing, or were more likely destroyed in the days before conservatorship. A substantial part of this portfolio points at a very deep relations between debtors and major shareholder Tsvetan Vasilev.
As a result of the lack of sufficient information, auditors are of the opinion that the financial situation of debtors and their ability to service their loans cannot be evaluated. The availability and quality of collaterals can nether be evaluated, which for its part leads to the impossibility of preparing a final conclusion on the state of the credit portfolio amounting to BGN 3.5 B. Unfortunately these actions cannot be registered with the tools of remote banking supervision and suggest intended abuse.
Precisely these actions could have possibly caused deliberate deprivation of the bank worth hundreds of millions of BGN. It is evident that the minor shareholders at the Corporate Commercial Bank are also a victim to these abuses.
Following the press conference BNB decided to revoke the license of KTB and to nationalize its subsidiary Credit Agricole Bulgaria.
It has also submitted the document to Bulgaria's Chief Prosecutor, as it shares the auditors' stance that actions at KTB went against good legal and banking practices.