Interviewed on Bulgarian National Television (BNT) Saturday evening, Asen Christov, Chair of the Supervisory Board of Eurohold Bulgaria, said that a Bulgarian company has been under the attack of officials of the Romanian financial regulator and called on the institutions to intervene in support of Eurohold's insurance subsidiary in Romania. He cited the example of support they are receiving from the European Bank for Reconstruction and Development.
Earlier in the day, Eurohold Bulgaria reported an organized attack against Euroins Romania (the largest insurance company within Euroins Insurance Group AD) involving senior and mid-level management employees of the Insurance Department of Romania's Financial Supervisory Authority (ASF), as well as people who caused the crisis with the Romanian company City Insurance. In its press release, Eurohold Bulgaria argued that these actions jeopardize the financial stability of the company, of the entire insurance industry and the country's economic stability.
"Over more than three years, the Vice President of the Financial Supervisory Authority, Cristian Rosu, together with his director Valentin Ionescu and several other people, have tried several times to force our company to merge with the bankrupt Romanian company City," Christov said on BNT and explained that it was still on the market then. "There was an offer to buy their portfolio for one leu and take all the risks and liabilities of the company, again the offer came informally from Cristian Rosu. Our refusal was followed by repressive measures and controls to make our company look as if it had problems, not City," Christov explained. According to him, the last four months before City went bankrupt, Cristian Rosu ordered audits at Euroins Romania and the regulator's employees stayed for8-10 hours in the Bulgarian company's office.
"We are the largest holding in terms of revenues and volumes in Bulgaria," Christov said, adding that they operate in 12 countries and their turnover is over EUR 2.5 billion, "so if you look carefully, we are talking about several per cent of the Bulgarian economy, which is why we are trying everywhere to sound the alarm that this could affect the entire economy," he explained.
The company, which has a market share of approximately 28%, is coming under certain attacks from individuals, he explained, stressing that he was not referring to the entire supervision or regulator but to attacks from individuals who work there. "Let's put it this way," Christov added, "Bulgaria and Romania are close countries, with close mentality, and in Romania, as well as in Bulgaria, they have their eight, ten, fifteen 'dwarfs; who, holding government office, sometimes take the liberty of abusing it.
As Christov put it, the insinuation is that sometime in September 2022 the Romanian regulator's financial supervision authority checked some balance sheets and was left with the impression that the company might be missing some EUR 400 million, so they had to place the company under some provisional administration and attract new investors.
"If that was really the case, the company would have ceased to exist since September," Christov added. "Moreover, they admit that by June 30, 2022 the company was in a wonderful condition but, surprise, surprise, there was something wrong with the balance sheet by September 30."
According to Hristov, the regulator's staff produce reports that mislead the ASF Board - after all, some seven people work there, too, and they have their concerns. If somebody went and handed them a report saying that there were concerns about a couple of million so let's place the company under supervision, those people would also be concerned and say, "well, yeah, even if a tenth of this be true, let's do it."
"If that is done, it implies placing an absolutely sound company under supervision," Christov said.
He said that when the company is put under administration, the administrator can say that there are some more violations and "first some capital has to be invested. Some capital comes in from another company that contributes the capital and says, 'we're the owners now'. Yes, this is a theft of a business with the help of the State which is unaware of it," Christov said.
He added that the EBRD shareholders now stand behind the company, as well as the big Western banks that are lending to them. "The Bulgarian insurance supervisor understood the case perfectly well, checked the balance sheet and is very protective of us, the rest are understanding, but public institutions are non-committal," Christov pointed out. He believes that this is dangerous because that company has invested more than EUR 200 million on the Bulgarian Stock Exchange. That company's assets in Romania exceed EUR 400 million. "If, say, some bad-faith administrator enters there, he could claim an immediate buy-back of those EUR 200 million from the stock exchange and, accordingly, the money would be recovered, saying that the company needs some cash, which it does not need," Christov emphasized. "Can you imagine if the exchange, with its BGN 2 million turnover, is avalanched with claims for EUR 200 million? The next day the company will grind to a halt and will be broke," he predicted.
Replying to a question, Christov ruled out that a possible bankruptcy of Euroins could have a contagion effect on Eurohold. "We have already taken all precautions against such bad scenario," he explained, admitting that such a turn of events could still trigger a minor crisis in Bulgaria's energy sector. Regardless of the fact that Eurohold has huge financial resources at its disposal, the contracts for some of the overdraft loans it has concluded for electricity purchase state that if any of the companies has a problem, part of these loans can be accelerated or suspended.
"Power outages are hardly likely, but we are the only electricity distribution company that currently affords the luxury of not claiming payments from its business customers once every three days. The rest of the [electricity distribution companies] are doing this because of the [volatile] electricity prices," Christov explained. He confirmed that his company has both liquidity and full confidence in their own auditors, who say that Eurhold has no problems.
The report, which two officials are trying to present to their colleagues on the regulator's supervisory board, has been audited and analyzed over the last seven days by other companies which have concluded that even when it was drawn up, more than 57 articles of Romanian and European law had been violated, Christov said. "If this is tolerated, it would indeed set off a major scandal," he added. "It's not so much about the financial crisis but about Schengen", in his opinion. "Can you imagine if even a mini financial crisis broke out over such a scandal with companies, how could any of the two countries be admitted to Schengen?" Christov asked.
/LG/
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