Financial News

  • 29 June 2014, 1:56

Bulgaria Warning Over 'Organised Bank Attack'

Bulgaria's central bank has issued an unprecedented warning over an attempt to destabilise the country through an organised attack on the banking system.

It promised to do all it could to protect money held in accounts by Bulgarian citizens.

The bank issued a request for all state institutions to work collectively to protect financial stability.

It said legal action should be taken against those spreading "untrue and ill-intentioned rumours" about the health of the nation's banks.

The bank said in a statement: "In recent days there has been an attempt to destabilise the state through an organised attack against Bulgarian banks without any reason."

It added that the First Investment Bank had been a major target.

Shares in the bank on Friday morning were down a fifth, and the plunge came on top of a similar drop on Thursday.

A representative for First Investment Bank reassured investors and said it was in "excellent condition".

Last week, customers unnerved by reports of shady deals involving Corporate Commercial Bank - known as KTB - rushed to withdraw their deposits.

The run prompted the central bank to seize control of the lender and shut down its operations.

KTB, the country's fourth biggest bank, suffered a 20% drain on funds over six days and highlighted financial fragility in newer EU member states.

Tycoon Tzvetan Vassilev blamed media attacks and the country's prosecution service for sparking the run on his bank, which shareholders decided against rescuing.

It is now likely to be nationalised.

The ratio of non-performing loans in Bulgaria is expected to top 18% this year, as the economy continues to wallow from risky credit issued during a mid-2000 boom.

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