SOFIA, Bulgaria — 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. As a result, some businesses are having trouble making payroll, and many families are having to scrape by without access to cash. The trouble has pushed Bulgaria, the European Union’s poorest country, which has a reputation for mismanagement and corruption and is now being run by a caretaker government, ever lower in the esteem of the international financial community. Bulgaria’s longstanding ambition to join the euro currency union is hardly being helped. “Give us back our money,” read placards carried by hundreds of depositors who demonstrated on Friday in the Bulgarian capital. The same sentiment might have been uttered by international investors holding $150 million in bonds that the bank defaulted on in early August. 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. The businesses left hanging include Rila Style, a family-run clothing company that has about $2 million on deposit in the bank. Rila Style had been planning to expand, doubling its work force to about 500, based on the strength of orders from neighboring European countries, as well as Germany and Switzerland. “Not only did we not hire 250 new people as we had planned — we had to fire 140,” said Rauf Akhundov, the 29-year-old managing director of Rila Style. Other plans now deferred include opening another factory and renovating the company’s headquarters, a rundown Communist-era building in the center of Sofia. Mr. Akhundov showed a visitor around the deserted third floor of the building, which was gutted to make way for a new showroom before Rila Style’s deposits were frozen. With the renovation suspended, all that remains is rubble, broken glass and cables hanging from the ceiling. “Now we are struggling with the salaries for those who are left,” Mr. Akhundov said. “We can hold on for another two or three months, but not much longer.” 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. That plan, though, would bring little solace to businesses like Rila Style. http://www.nytimes.com/2014/09/03/b...-seizure-leaves-bulgarians-stranded.html?_r=0 Old story, but it shows how the European Bank Resolution Scheme works: NOT AT ALL! The clowns in Brussels still don´t get it and will destroy the European Union.
Although Europa has 50% more inhabitants than the US, more American banks went bankrupt than European. So even in the US there appears to live some clowns. At this moment there seems to be no problem at all in Bulgaria. But journalists have to fill a certain number of pages every day. http://problembanklist.com/problem-bank-list/
I live in Bulgaria the past 10 years...it's true....E-V-E-R-Y-T-H-I-N-G here is in Chaos...it's always been that way....and will continue....thats WHY i live here!
I wish the european govts would have let more banks go bankrupt instead of bailing them out with tax money.
You are not good informed. Most banks were not bailed out but received a loan. All loans were paid back with intrest. Most countries made a profit out of this loans. I know about 1 bank (Dexia in Belgium and France) that costed money to the taxpayers. This bank was mostly owned and managed by a big union and a big political party. So there taxpayers had to pay for the corruption of their own politicians. This bank can still cost billions of euros in future because they still have longterm contracts running that they cannot close now without taking huge losses.