KTB Operations Halted, but Bank Not Failed - BNB

The Corporate Commercial Bank (KTB) did not fail, because the central bank intervened quickly and decisively, BNB Governor Ivan Iskrov explained.

Bulgarian National Bank (BNB)'s Governing Council held a press conference just an hour after the central bank announced it had placed KTB under special supervision upon the commercial bank's request.

It decided to do so after KTB sent a letter asking for the step, due to “exhaustion of liquidity and termination of all payments and banking operations”.

With its move, as of June 20, 2014 BNB revokes the rights of KTB shareholders and appoints a supervisory board.

In the Governing Gouncil's statement to the media delivered at the press conference, Iskrov reminded that KTB was “among the banks with the highest liquidity" before a "rumor" involving a BNB Deputy Governor and his alleged dependency on "a certain bank" (implying the role of KTB) was spread by an anonymous e-mail sent from a purported central bank employee to the media.

The rumor coincided with the start of pre-trial proceedings against BNB Deputy Governor Tsvetan Gounev.

It also led to the withdrawal of "huge amounts of ready money" and prevented the bank from delivering on its liabilities, the BNB Governor explained

In the statement Iskrov presented the Governing Council's decision, under which BNB places KTB under supervision for a period of three months.

The bank is to freeze any operations within that stretch of time and is forbidden to perform any activity.

As a result clients of the bank would have it difficult to be provided any services.

A Supervisory Board of two members, Hristina Stanova and Slavyana Danailova, has been appointed.

BNB also temporarily dismisses KTB's four...