NYT: KTB Crisis Hits Thousands of Bulgarians
For some 200,000 individuals and businesses with deposits at Corporate Commercial Bank (KTB) “financial life has hardly returned to normal” since June, the New York Times has said.
In a Sofia-datelined article titled “Bank Seizure Leaves Bulgarians Stranded” the newspaper highlights that “what seemed at first to be a short-term banking crisis is looking more like a chronic condition”.
With some USD 4 B stranded in Bulgaria’s fourth largest bank since the central bank placed it under its control in June following a deposits run “some businesses are having trouble making payroll, and many families are having to scrape by without access to cash,” the article says.
Drawing attention to Friday’s protest rally by KTB depositors in Sofia demanding to be given back their money and the frustration of international investors holding KTB bonds on which the bank defaulted last month, the NYT says that “the trouble […] has pushed Bulgaria … ever lower in the esteem of the international financial community.”
The article then goes on to say that many Bulgarian businesses are suffering from the freezing of their money at KTB and the risks the bank's closure poses to the Bulgarian economy.
The managing director of clothing company Rila Style Rauf Akhundov is quoted as saying that instead of hiring additional staff to expand production and open a new factory they had to fire part of current workforce and put expansion plans on hold.
While Bulgaria guarantees bank deposits of up to EUR 100,000 equivalent in case of bank insolvency, that deposit insurance scheme “has not yet kicked in” because KTB has not been declared insolvent “as officials continue to wrangle over whether the state should bail the bank out or find private investors to save it”.
The stalemate at KTB threatens companies that have money parked at the bank and more than 80,000 jobs could be lost if those businesses go bankrupt, the NYT quoted the president of Bulgaria’s Podkrepa trade union Konstantin Trenchev as commenting.
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