Former PM Kostov Urges Fast Action to Rescue KTB

Business » FINANCE | August 28, 2014, Thursday // 14:18| Views: | Comments: 0
Bulgaria: Former PM Kostov Urges Fast Action to Rescue KTB Ivan Kostov. File photo

Bulgaria’s former Prime Minister Ivan Kostov on Thursday said there are two options to rescue the troubled Corporate Commercial Bank (KTB).

Referring to an unnamed Vienna-based fund reportedly ready to invest BGN 1 B to save Bulgaria’s fourth biggest lender that has suspended operations since June, Kostov said that negotiations with this potential investor should be launched immediately to allow the bank to resume work without a bailout package from the government and the central bank (BNB).

Bulgaria's caretaker Prime Minister Georgi Bliznashki said on August 20 that an unidentified Vienna-based fund had shown interest in rescuing KTB and would come up with its plan within 10 days.

According to Kostov, if the Vienna-based investor didn’t exist, or it didn’t want to commit itself to rescuing KTB, the government and BNB could bail out KTB, using much fewer funds than the sum of some EUR 3.7 B reportedly needed to repay the obligations of KTB and its wholly owned subsidiary Victoria Bank to depositors and other creditors.

He did not give details but said that a team of experts, with which he is working, has drafted plans to restore KTB’s liquidity balance that would enable the bank to reopen on October 15 without fearing a run on deposits.

According to Kostov, the right decision to resolve the KTB crisis should be based on a political agreement to immediately replace the BNB governor and update the 2014 budget.

It was not immediately clear what timeframe Kostov had in mind as Bulgaria’s 42nd National Assembly was dissolved earlier this month ahead of snap general election to be held on October 5. Under the Law on the BNB, Bulgaria’s Parliament elects the BNB governor and the three deputy governors. Any revision of the budget also needs to be endorsed by lawmakers.

“If they cannot save the [KTB-Victoria] banking group, they should ask me. Fourteen banks had died in my hands and I know how their assets were plundered,” Kostov said in an interview for bTV channel, adding that he had "succeeded in rehabilitating several banks which were subsequently privatized and now form the backbone of Bulgaria’s banking system".

Kostov led a right-wing cabinet from 1997 to 2001 which came to power riding on a wave of public anger at hypeinflation and the collapse of nearly one-third of Bulgarian banks in 1996-1997.

Kostov also said that hard times lie ahead for Bulgaria between November 27 and December 20, just before Christmas. He did not elaborate.

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Tags: KTB, BNB, Ivan Kostov, rescue plan, Vienna-based fund, bTV
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