KTB Unlikely to Redeem Depositors Under Caretaker Cabinet - Analyst

Guaranteed deposits in Bulgaria’s troubled Corporate Commercial Bank (KTB) will most likely be repaid under the next elected government, a leading Bulgarian economist has said.

According to Lachezar Bogdanov from Industry Watch economic consultancy, the repayment of deposits of up to EUR 100,000 equivalent covered by state guarantee in case of bank insolvency is unlikely during the two-month term of office of the caretaker government appointed on Tuesday by President Rosen Plevneliev.

“The latest announcement by the Bulgarian National Bank (BNB) from last week indicates that it (the repayment) would not take place in the coming two months and obviously the task will be transferred to a future government,” Bogdanov told Bulgaria on Air TV channel on Tuesday.

Bulgaria is expected to hold early elections in October after the Socialist-led coalition government of Prime Minister Plamen Oresharski resigned last month.

The caretaker government could be required to repay the state-guaranteed deposits in KTB only if the BNB withdrew the KTB’s banking licence in the next 30 days or so, “which, it seems, will not happen”, said Bogdanov. In theory, he added, this is possible but “having in mind the plans the central bank has announced” with regard to KTB “I believe this will not happen”.

The BNB said last week that KTB will not open on September 21 as initially expected. The initial three-month period of special supervision by BNB will be extended beyond September 21 with the acting Deputy Governor in charge of the Banking Supervision Department Neli Kordovska due to submit to the BNB Board a proposal on the required extension of that period.

At the end of July the BNB effectively extended its control over KTB...