No special legislation and no use of public funds are needed to rescue Corpbank (KTB), the Expert Consultative Council on KTB and Bulgaria’s ombudsman have agreed.

The council, which comprises representatives of employers and trade unions and financial experts, met with the ombudsman, Konstantin Penchev, at the Bulgarian Industrial Association (BIA) in Sofia on Friday to discuss possible bailout options for Bulgaria’s fourth largest bank that has been closed since June.

The members of the council and the ombudsman agreed that Bulgaria’s existing legislation doesn’t impede the resolution of the KTB crisis but Bulgaria's central bank (BNB) is declining to enact the law, BIA said in a statement.

The participants in the meeting firmly rejected the possibility of introducing special legislation for bailing out Corporate Commercial Bank but agreed on the need for legislative amendments aimed at boosting public control over BNB’s decisions and actions.

The BNB’s “excessive autonomy”, especially when there is no sitting parliament, makes it impossible for any other state institution to make the central bank apply the existing legal mechanisms for rescuing KTB, the statement said.

Bulgaria’s parliament, which elects the BNB governor, was dissolved last month ahead of October 5 snap election and a caretaker government was appointed with the main task of preparing the vote.

The BNB placed KTB under special supervision in June following a bank run that saw nearly one-fifth of deposits at KTB withdrawn in a week. Since then KTB’s operations have been suspended pending completion of a BNB-ordered audit of its books with depositors having no access to their money.

According to Konstantin Penchev, “when an institution is unwilling to work, the citizens and other institutions should exercise public pressure to resolve the problem” that has affected directly or indirectly more than half a million Bulgarian citizens.

BIA Chairman Sasho Donchev called for an urgent meeting of the Financial Stability Consultative Council which comprises the BNB governor, the finance minister and the head of the Financial Supervision Commission to try to put the BNB’s actions in the KTB case under the control of the public and institutions.

“For us, it is obvious that we are faced with a deliberately organized attack targeting the bank with the aim of plundering its assets cheap and deleting the traces of some illegal activities conducted in past periods,” Donchev said.

He also told the ombudsman the members of the Expert Consultative Council on KTB have no personal or business deposits at the bank and their interest in resolving the issue has been provoked solely by a desire to prevent potential damage to Bulgaria’s financial system and economy.

The consultative council on KTB also informed the ombudsman that they have twice sought a meeting with the BNB leadership but the central bank has rejected their proposal for assistance without giving a reason which makes it evident that the BNB is unwilling to adopt a proactive approach to resolving the KTB problem, the statement read.

Looking at the financial instruments available to BNB under the Law on Credit Institutions for bailing out KTB, Konstantin Penchev highlighted that the placing of a commercial bank under special supervision doesn’t mean solely to close it for up to six months as the law provides a wide array of recovery tools, i.e. the special supervision regime aims to help the bank recover rather than liquidate it.

We need your support so Novinite.com can keep delivering news and information about Bulgaria! Thank you!