Bank Seizure Leaves Bulgarians Stranded
What seemed at first to be a short-term banking crisis is looking more like a chronic condition.
But the name of the affliction probably does not matter as much to companies and consumers as the money, about $4 billion in all that has been stranded at a big Bulgarian bank since the government seized it in late June.
Most Bulgarian banks are operating as usual. But for the 200,000 or so businesses and individuals with deposits at Corporate Commercial Bank, the country’s fourth-largest institution, financial life has hardly returned to normal. The government has said the bank, known here as K.T.B., might not reopen before December.
The bank was forced to close on June 20 after customers, unnerved by news reports of dubious deals by its main shareholder, withdrew more than a fifth of deposits in a weeklong bank run. The Bulgarian central bank, which is now supervising K.T.B., has said the lender might remain closed until late this year as officials continue to wrangle over whether the state should bail the bank out or find private investors to save it.
On Friday, the country’s interim finance minister, Rumen Porozhanov, said the Bulgarian authorities were considering letting depositors withdraw sums of up to 1000 leva, or $670, a month.
Bulgaria guarantees bank deposits of up to 100,000 euros (about $131,000). But because K.T.B. has not been declared insolvent, that insurance has not yet kicked in.
The waiting game could kill some enterprises. More than 80,000 jobs could be lost if businesses that have money parked at K.T.B. go bankrupt, according to Konstantin Trenchev, president of the Podkrepa, Bulgaria’s second-biggest labor union.
Source: NYT
