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Oman files arbitration against Bulgaria on bank collapse

SOFIA, October 27, 2015

Oman's biggest sovereign wealth fund has filed an arbitration claim against Bulgaria over the collapse of Corporate Commercial Bank (Corpbank), the online database of Washington-based International Centre for Settlement of Investment Disputes showed.

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

The bank collapse triggered the Balkan country's biggest financial crisis since the 1990s, prompting Sofia to pay over 3.6 billion levs ($2.03 billion) to guaranteed depositors and boosting the country's fiscal deficit for 2014 to 5.8 per cent of economic output.

The fund is seeking at least 150 million euros ($165.81 million), a lawyer familiar with the claim told Reuters.

In July, a source familiar with the situation told Reuters that the Fund's claim will be based on the book value of its investment.

The SGRF argued that the Balkan country has breached key principles for equal treatment and protection of investors in the way it handled the bank's collapse, the lawyer said.

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

A Bulgarian parliamentary commission has accused the lender's main shareholder, Tsvetan Vassilev, of running Corpbank as a pyramid scheme under lax supervision from the central bank and the intelligence service.

A Bulgarian court declared the bank insolvent and opened bankruptcy proceedings after an international audit showed major failings in the way the lender was run that prompted a writedown of two-thirds of its assets.

Bulgaria has hired consultants AlixPartners to help trace and recover the assets of the collapsed lender. – Reuters




Tags: Bulgaria | Oman fund |

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