SOFIA: Bulgaria is to allow its fourth-biggest lender to collapse and will hive off its healthy activities into a separate bank as it moves to clear up the mess from the country’s worst financial scandal since the 1990s.
The central bank said it was removing Corporate Commercial Bank’s (Corpbank) licence and alerting prosecutors to the possibility that its main shareholder stole money from the bank just before the central bank took over its operations.
The scandal broke last month when Corpbank clients unnerved by media reports accusing top shareholder Tsvetan Vassilev of shady business deals dashed to withdraw their savings.
The bank run spread quickly to another lender and saw Sofia announce a protective $2.3bn credit line, a reminder that parts of Europe’s financial system are still far from secure despite progress from the worst days of the financial crisis. “The results of the review of Corporate Commercial Bank speak, to put it mildly, about actions incompatible with the law and good banking practices,” the central bank said in a statement as it published the results of an audit. It said much of the documentation to back up 3.5bn levs ($2.43bn) out of Corpbank’s total 5.4bn-lev loan portfolio was missing. The documents were, it believed “most likely destroyed in the days before the central bank sent administrators there.” Reuters
