KTB To Stay Closed Beyond September 21
Bulgaria’s troubled Corporate Commercial Bank (KTB) will not open on September 21 as initially expected, the central bank has decided.
The Bulgarian National Bank (BNB) on Thursday released the findings of the administrators of KTB, or Corpbank, who it appointed on June 20 for a period of three months following a bank run that saw depositors withdraw more than one-fifth of total deposits in a week from KTB.
Under Bulgarian law, BNB can keep a bank under special supervision for a period of up to six months.
The findings of the administrators showed that based on the unaudited financial statements, the bank’s overall capital adequacy as of end-June had been 10.54%, and the Tier 1 capital adequacy 7.86%.
The bank financial result as of June 30, 2014 was a loss of BGN 65.3 M, “which is fully accounted for by the loan portfolio impairment costs incurred during the month,” the BNB said in a statement.
The findings showed that the bank’s assets amounted to BGN 6,896 M at end-June, down by BGN 741 M from a month earlier. The deposits of individuals and companies as of end-June amounted to BGN 5,620 M, down BGN 630.7 M compared to end-May.
Based on the administrators’ findings, the BNB Board has drafted an action plan for rescuing KTB.
Under the plan, the administrators must must invite KTB’s current shareholders “to declare their interest in, and the possibility of, providing both capital and liquidity support to KTB”.
The initial three-month period of special supervision will be extended beyond September 21 with the acting Deputy Governor in charge of the Banking Supervision Department Neli Kordovska due to submit to the BNB Board a proposal on the required extension of that period.
The administrators must also sign additional contracts with the auditing companies, which already performed the initial audit - Ernst and Young Audit, Deloitte Audit, and AFA - for a comprehensive evaluation of the KTB’s assets. The evaluation must be completed by October 20, which means the bank will not exit the period of special supervision before November.
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Indeed; I chose my banks with some care, and when that was relevant made sure never to have more than the guaranteed amount in one bank (eggs/baskets). But those who didn't still are protected by the deposit guarantee system. That Bulgarian administration needs prodding by the EU to do what it is supposed to do is another matter.
I am fed up with whining about losses on risky transactions. Before 2008, there were schemes where banks would lend you money to buy shares. Many people went into those although they didn't have any savings to speak of (including a couple of people in my office whom I had warned explicitly). When the stock exchanges crashed, some people found themselves with negative net worth and the banks asked for additional payments. There were howls of indignation. I repeated to several people the lesson every first-year student of economics gets: "Leverage can give you a fast ride up - and down.
I also lost money in 2008. But it was my own money and I didn't whine.
They shouldn't have put their money into a Bulgarian oligarch bank in the first place. One can have accounts in more than one bank, you know. But they let themselves be seduced by a bit more interest - like the people who banked on Iceland. If you burn your buttocks, you have to sit on the blisters.
You couldn't get it more right.
But how does anyone put pressure on the BNB to start the refund procedure when they appear not interested.
If only we could find the firm taking on clients to sue them! Anyone know who the firm is?
And I'm nor referring to the US Bondholders
Another DELAY this is now gone to far the government can not and should not be withholding peoples money that is below the legal limits . Accounts that are held at the KTB that are below the 100,000 EURO limit should be released to account holders ,There is NO REASON for any further DELAY ,People need their salaries they can not be expected to live from air and hand outs from family .
What EXCUSE does the government/BNB have for not allowing the release of funds from these accounts ?
The EUC should now be putting pressure on the government /BNB to honor the legal right by law for account holds to be given their money. How many laws are being broken by withholding and prohibiting access to account holders money ?
The central bank has twice created false information by not reopening the bank on 21st July and now 21st September . The central bank management should all be arrested and prosecuted under the same laws they created for giving out false information ! Maybe then , they will do their job properly from jail.