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Oman fund set to seek ruling over Bulgarian bank collapse

SOFIA, July 23, 2015

Oman's biggest sovereign wealth fund is set to seek an arbitration ruling against Bulgaria over the collapse of Corporate Commercial Bank (Corpbank), a source familiar with the situation told Reuters.

Oman's State General Reserve Fund (SGRF) owned a 30 per cent stake in Corpbank, Bulgaria's fourth-largest lender, which collapsed last year following a bank run.

The market value of Oman's stake stood at about 170 million levs ($95 million) last June, before the central took control of Corpbank, triggering the Balkan country's worst financial crisis since the 1990s.

SGRF's claim would be based on the bank's book value, which would likely be significantly different from its market value, though the source did not disclose the value of the claim.

SGRF has already taken preparatory steps to seek a ruling against the Balkan country from the Washington-based International Centre for Settlement of Investment Disputes, part of World Bank Group, the source, who asked not to be identified, said.

The parties had tried for three months to reach an agreement without success and a meeting between the parties in Sofia at the end of May did not yield results, the source said.

"The deadline to amicably settle the dispute has expired. The opening of an arbitration case looks imminent," the source said.

"The Fund will be seeking to recoup its investment in Corporate Commercial Bank at least at book value as of the date the bank was put under special supervision."

Bulgaria's finance ministry declined comment beyond noting arbitration cases are regulated by complicated procedures which were strictly confidential.

The Omani Fund also declined comment.

A final decision to file the claim could be taken in coming weeks and will be on the grounds that the Balkan country breached key principles for equal treatment and protection of investors in the way it handled Corpbank's collapse, the source said.

A consortium of investors including the Omani fund had submitted proposals for rescuing Corpbank in October, but a month later the central bank stripped the lender of its licence and ended any chance of a turnaround.

In a recent report, a Bulgarian parliament commission accused the lender's main shareholder, Tsvetan Vassilev, of running Corpbank as a pyramid scheme under the lax supervision of the central bank and the intelligence service. - Reuters




Tags: Oman | fund | Bulgaria | ruling | Collapse | corpbank |

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