In a new letter to the media, the suspended directors of Bulgaria's troubled Corporate Commercial Bank (KTB) accused the Bulgarian National Bank of not doing its job right and on time.

In the letter they present their version of the June events which led to the placing of KTB under conservatorship and the continuing stalemate.

According to the suspended KTB directors, the attacks against KTB started on June 10 and escalated three days later when certain media published information suggesting that the KTB offices are being searched by the police.

The suspended KTB directors claim they informed BNB of the attacks and demanded urgent measures for stabilising the banking sectors and termination of spreading of information derogating KTB's reputation. Such measures, according to the directors, were not taken by BNB, though it is required by law.

In the days preceding June 20 when KTB was placed under conservatorship and all its business activities were suspended, its depositors withdrew sums amounting to BGN 1.5 B. “The situation got even more tense by publications in certain media stimulating withdrawals,” the letter says. “During this entire time in the KTB central office was present a BNB representative from the financial supervision, who was receiving real time information on KTB's liquidity. This means that the BNB management was fully informed on the developing situation.”

According to the suspended KTB directors, it was apparent that such large withdrawals would lead to destabilisation of the bank, and even though it became clear that KTB was being “hit”, the BNB remained an impassive observer of the events.

“In spite the BNB being well informed, it did not take timely measures to improve the liquidity of KTB and suggested that it be placed under conservatorship,” the letter reads. “The lack of timely actions for stabilising KTB (compared to the liquidity support provided by BNB to the First Investment Bank (FIB), which was in a similar situation a week later), points either at inadequate evaluation of risk for the various banks, or a certain special treatment of KTB on part of BNB”.

In their letter, the suspended KTB directors claim they continued their efforts to provide liquidity and demanded measures, including conservatorship, though, in their words, they did not expect that it would lead to full suspension of its business activities. “BNB refused methodical and liquidity support to KTB, but provided it to FIB a week later,” the letter says. “This demonstrates double standards – in the case of FIB it acted swiftly and stabilised it, while in the KTB case it blocked its activities, melted away its profits and derogated the reputation of Bulgaria's fourth largest bank.”

“By placing KTB under conservatorship, its problems were not solved, but are being made more serious,” the letter said.

In conclusion, the suspended KTB directors pointed out that on September 11 they had sent a letter to BNB, listing their suggestions for urgent measures for the improving of the situation of the bank.

They include lifting of all limitation of loan repayments, both by debtors and third parties, improving of correspondence relations with other Bulgarian and foreign banks allowing KTB to carry out its commitments, allowing limited withdrawal operations from card accounts, allowing the bank clients to receive their wages, pensions and other social payments, allowing the municipalities, who were struck by disasters, to make small withdrawals from their accounts and limiting of the exponential growth of expense for external services and hiring of new staff.

The suspended KTB directors urged BNB to use its legal rights to lift the limitations on KTB's activities, to implement the suggested measures and take any additional measures for improving the state of the bank, including the offered help from the European Commission, the proposals of the other KTB shareholders and the willingness of leading bank experts to help with advice.

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