Bulgaria's government will inject capital into local Corporate Commercial Bank (Corpbank) in an attempt to rescue the troubled lender, the central bank said over the weekend.
On Friday the central bank placed Corpbank, the fourth biggest lender in the country, under special supervision over risk of insolvency.
The central bank has also placed Corpbank's subsidiary Victoria Commercial Bank, formerly Credit Agricole Bulgaria, under special supervision for three months, the central bank said in a press release on Sunday.
The capital of the banking group’s shareholders will be written off and their rights will be withdrawn, the central bank also said.
The central bank’s management has appointed two conservators at each of the two banks to evaluate their assets and liabilities within a ten-day period.
Corpbank and Victoria Commercial Bank will reopen on July 21, it added.
Lack of liquidity at the Corpbank banking group is an isolated case in the banking system and is not connected to the operations of the rest of the banking sector, BNB noted.
Speaking at a news conference on Friday, central bank governor Ivan Iskrov said Corpbank is not bankrupt. The idea is to remediate it, cut its capital if deemed necessary, and then possibly hold talks with potential buyers, he added.
Corpbank's assets totaled 7.3 billion levs ($5.1 billion/3.7 billion euro) at the end of March, according to central bank data.