Friday 20 April 2018

Oman fund in Bulgaria bank rescue talks

Sofia (Bulgaria), June 28, 2014

Oman's sovereign wealth fund held talks with the Bulgarian government and central bank on Tuesday about recapitalising Corporate Commercial Bank (Corpbank) , Oman's honorary consul in Sofia told Reuters.

His comment was the first indication of the Oman fund's response to the crisis at Corpbank, which was hit by a run last week after depositors became unnerved by reports of shady deals involving the lender and its main shareholder.

The sovereign wealth fund is Corpbank's second-biggest shareholder, with a stake of about 30 per cent.

Already reeling from a drubbing at the European Parliament elections in May, Bulgarian Prime Minister Plamen Oresharski's government has announced plans to nationalise Corpbank if its existing shareholders do not rescue it.

The crisis has put renewed attention on the investment climate of the European Union's poorest member state, which has been plagued by political instability and endemic corruption, and suffered a sovereign credit rating downgrade in June.

The fall-out from the bank run continues to be felt in international markets, with Bulgaria's credit default swaps (CDS) at a 15-month high, according to Markit data.

Nationalising Corpbank looked the most likely outcome after Oresharski said on Tuesday that shareholders were unlikely to rescue the country's fourth-largest lender.

It was not known whether he was speaking before or after the meeting with the sovereign wealth fund.

"Talks took place yesterday, but I do not know the outcome," Oman's honorary consul Stoyan Denchev told Reuters on Wednesday.

Another shareholder, Russian bank VTB, said on Tuesday it had no plans to inject capital into Corpbank.

Bulgarian businessman Tsvetan Vassilev owns just over half of the company, while the investment arm of VTB is the third-biggest shareholder with a 9.1 percent stake.

Both Corpbank and Vassilev have denied any wrongdoing. It is not known whether Vassilev himself could provide additional funds for the lender.-Reuters

Tags: Bank | rescue | Bulgaria | Oman fund |

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