Bulgarian Development Bank to Contribute Up to 70% of Fibank's Capital Increase
June 12 (BTA) - The Bulgarian Development Bank (BDB) will contribute up to 70 per cent of the capital increase of First Investment Bank (Fibank).
The Council of Ministers on Friday adopted a report by the Economy Ministry and the Finance Ministry on activities taken by the BDB to participate in the capital increase of the bank.
Finance Minister Vladislav Goranov recalled the history of Bulgaria's application to the eurozone and EU's banking union and said that the last condition was the capital increase of Fibank. The shares will be bought at market prices, said Prime Minister Boyko Borissov.
Borissov said: "Though not an urgent matter, we adopt this report at an extraordinary meeting because Bulgaria's entry to the banking union and ERM II is a priority."
Finance Minister Goranov said that the last step to a closer cooperation between the Bulgarian National Bank and the European Central Bank was the increase of the capital buffers of two Bulgarian banks - Investbank and Fibank. Investbank fulfilled its plan to raise additional capital buffers in March. On June 10, the Bulgarian Development Bank purchased 77,729,330 rights of Fibank's capital increase. They will be subscribed to 28,265,200 shares, which is less than 19 per cent of the bank's authorized capital.
Fibank's capital will be increased by up to 40 million shares at a nominal value of 5 leva per share. The balance sheet value is 8.80 leva per share, said Goranov.
In order to disperse doubts that money allocated for measures against the effects of the COVID-19 crisis, BDB's capital will be increased.
"Fibank is the largest Bulgarian-owned bank and BDB will be its partner without being its competitor. The BDB will participate in Fibank's management," said Goranov. He added that BDB's contribution to the increase of Fibank's capital does not constitute a state aid according to the rules of the European Commission.
Economy Minister Emil Karanikolov said that Bulgaria's admission to ERM II will boost Bulgaria's credit ratings and investor interest and will make the banking system more secure. RI/PP