Wednesday, June 25, 2014

Another bank run in Europe???? Bulgaria

SOFIA, June 24 (Reuters) - Bulgaria will go ahead as planned with a 1.5 billion euro bond sale despite a sovereign credit rating downgrade and an expected state rescue of a local bank as these will not push yields up to unattractive levels, two sources familiar with the sale said.
Bulgaria kicked off a European investor road show in Germany on Monday to raise money needed to repay global bonds that mature in January and to finance a budget deficit the government targets at 1.8 percent of gross domestic product this year.

The road show, which also travels to London, Paris and Vienna this week, has been overshadowed by a run on Corporate Commercial Bank (Corpbank) by depositors rattled by media reports of suspect deals at Bulgaria's No.4 lender.

Both the bank and its main shareholder deny any wrongdoing.

Bulgaria's central bank has taken control of Corpbank and a recently acquired subsidiary and has outlined a plan for a state rescue of the lender if talks with existing shareholders to prop up the bank with more capital fail.

The bank run followed on the heels of a sovereign downgrade by global ratings agency Standard and Poor's earlier in June to one notch above junk, citing ongoing political turmoil that has put the brakes on reforms needed to spur economic growth.

(Borrowing to pay outstanding debts .... 10 dustbins with 9 covers)

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