Corporate Commercial Bank AD (), commonly called Corpbank, was a Bulgarian bank. Corpbank was a universal bank, serving both as a traditional commercial bank, as well as an investment bank.
According to official data from the Bulgarian National Bank (Bulgaria's central bank)"Distribution of Banks by Group as at November 30th", BNB's official website at the end of November 2013, Corpbank was the fourth largest bank in Bulgaria in terms of assets, third in terms of net profit, and first in terms of deposit growth. Following a bank run in June 2014, which many believe was artificially induced, the bank requested special supervision by the Bulgarian National Bank. Its license was subsequently withdrawn by the Bulgarian National Bank in November 2014. However, in 2022, the European Court of Human Rights held the license was revoked in violation of the right to a fair trial and the right to property. The second largest shareholder in the bank litigated before the International Centre for Settlement of Investment Disputes. The chairman of the bank's supervisory board and majority shareholder, Tsvetan Vasilev, was granted political asylum in Serbia.https://www.dnevnik.bg/bulgaria/2022/05/28/4351300_cvetan_vasilev_poluchi_politichesko_ubejishte_v/, Tzvetan Vassilev received political asylum in Serbia, the court conclusively denied extradition, Dnevnik, 28 May 2022
Background Since 2007, Corpbank had been a publicly traded company with a two-tier management system. The shares of the bank were traded on the Bulgarian Stock Exchange Bulgarian Stock Exchange (BSE) – Sofia AD. In 2009, 30% of the bank's capital was acquired by the State General Reserve Fund of the Sultanate of Oman through its subsidiary Bulgarian Acquisition Company II Luxembourg.Oman's Sultan Buys 30% of Bulgaria's Corporate Commercial Bank Novinite.com, January 27th, 2009 In 2010, Fata Assicurazioni Danni S.p.A. and Fata Vita S.p.A. (subsidiaries of the Italian insurance holding Generali Group) acquired a minority stake in Corpbank.Generali Acquires Stakes in Corporate Commercial Bank, Bloomberg, December 10, 2010 In 2013, 9.9% of the bank was acquired by one of the biggest banks in Russia, VTB Capital.VTB Capital Buys 9.9% of Bulgaria's Fifth-Largest Bank, April 22, 2013
At the beginning of 2014, Corpbank signed an agreement with Credit Agricole S.A., France, to acquire 100% of the shares of Credit Agricole Bulgaria EAD's capital. The completion of the acquisition was expected to be done after an approval from the regulatory agencies.Corpbank AD Buys Credit Agricole Bulgaria, The Banker newspaper, January 22nd, 2014.
Bank collapse and takeover
Following a bank run in the third week of June 2014, the administration of the bank was forced to seek conservatorship from the Bulgarian National Bank. The Bulgarian National Bank allegedly applied dual standards and did not provide liquidity help to Corporate Commercial Bank while it provided a liquidity injection to another bank which also faced a bank run at the same time, First Investment Bank. Contrary to standard practice in the sector, Bulgaria's government rejected a bailout proposal by the bank's shareholders too. Moreover, the Bulgarian National Bank withdrew the bank's license on 6 November 2014 based on a confidential report which it refused to make public. Corporate Commercial Bank's depositors have raised concern that the report allegedly relies on an obscure methodology which has significantly devalued the bank's assets.
Tsvetan Vasilev, the State General Reserve of the Sultanate of Oman, and the depositors of Corporate Commercial Bank appealed the decision before the Supreme Administrative Court of Bulgaria. The appeal was rejected with the argument that none of them had a "legal interest" in appealing the decision. One of the judges dissented based on case law by the European Court of Human Rights against Bulgaria. The State General Reserve of the Sultanate of Oman lodged a claim against Bulgaria for expropriation and violation of investor rights in breach of the Bulgaria-Oman Bilateral Investment Treaty. Vasilev, the management, and the depositors of Corporate Commercial Bank have lodged claims before the European Court of Human Rights. In 2022, the European Court of Human Rights held the bank's license was revoked in violation of the right to a fair trial and the right to property. The bank's bondholders have also threatened Bulgaria's government with legal action.
In 2017, Vasilev as well as the NGO "We, the Citizens", which represents thousands of depositors at Corporate Commercial Bank, submitted applications against media mogul Delyan Peevski and Bulgaria's General Prosecutor Sotir Tsatsarov under the US Magnitsky Act as they deem they devised a plan to artificially bankrupt Corporate Commercial Bank, so that its assets could be stolen. International depositors have submitted a claim under the US Racketeer Influenced and Corrupt Organizations Act in the United States District Court for the Southern District of New York against Delyan Peevski, the Bulgarian National Bank and others: the claimants submit the defendants engaged in fraud to deviate assets from Corporate Commercial Bank.https://www.pacermonitor.com/public/case/26288082/RUDERSDAL,_EOOD,_et_al_v_HARRIS_et_al, Case Information from the PacerMonitor Federal Court Case Tools
Corporate management
Supervisory Board Tsvetan Vasilev – Chairman of the Supervisory Board Zlatozar Surlekov – Member of the Supervisory Board Abdul Salam Mohamed Abdullah Al Murshidi – Member of the Supervisory Board Faisal Amur Mohamed Al Riyami – Member of the Supervisory Board Lyubomir Denev – Member of the Supervisory Board Corporate Commercial Bank AD's Official Website“
Management Board Orlin Rusev – Chairman of the Management Board, Executive Director Iliyan Zafirov – Member of the Management Board, Executive Director Georgi Hristov – Member of the Management Board, Executive Director Aleksandar Pantaleev – Member of the Management Board, Executive Director Corporate Commercial Bank AD's Official Website
History
Purchase of Vivacom In 2012, Vasilev bought a stake in Vivacom, which is the brand name of the Bulgarian Telecommunications Company EAD (BTC). Vivacom is the largest telecommunications company in Bulgaria. It is the leading market provider in a variety of telecommunications services, including landline, mobile, Internet, radio, and TV. Around 3,500 work for Vivacom, and it is headquartered in Bulgaria's capital, Sofia.
Back in 2007, AIG executed a buyout of Vivacom, after which Vivacom went heavily into debt. Vasilev spotted an opportunity and raised the capital to purchase the company. At one point, Forbes magazine ranked Vasilev as the second-most influential man in Bulgaria.
By 2014, Corpbank was Bulgaria's fourth-largest bank, and it had an extensive portfolio of companies that it owned or partially-owned. Corpbank was the only bank in Bulgaria investing in start-ups and entrepreneurs; as such, its profits and power grew.
DPS request of assets Because of its growth, wealth, and power, in April 2014 one of the most influential political parties in Bulgaria called DPS visited Vasilev. The request was simple: transfer assets for free to the "mobster circle of DPS." Vasilev refused. DPS is a Bulgarian political party, which is also known as the Movement for Rights and Freedoms in English. Its recognizable members include Delyan Peevski, Ahmed Dogan and Yordan Tsonev.
Collapse and takeover
Run on the bank In June and July 2014, Corpbank customers withdrew large amounts of cash in a panic, known as a "run on a bank". At the time, Bulgaria's central bank, Bulgarian National Bank, said runs on Corpbank were part of a "deliberate and systematic attempt to destabilise Bulgaria's banking system" by criminals using emails and texts. The messages urged people to withdraw their money from Corpbank and other large banks. It wasn't until later that the Bulgarian government blamed Vasilev himself for failure of the bank.
Typically, rumors that depositors' money is unsafe is how bank runs start. In the case of Corpbank, several Bulgarian media outlets ran stories accusing Vasilev of trying to organize the murder of Peevski. Prosecutors raided companies affiliated with Corpbank. They confiscated financial documents from those companies. Ultimately, the attempted murder charge was dropped in court. But before that happened, TV stations ran live feeds of the prosecution's raids. Over the course of 4 days, over 20 percent of Corpbank's assets were withdrawn in cash by depositors.
After the bank run, Corpbank was closed for about six months. Corpbank customers were unable to access their money because Bulgaria violated the Deposit Guarantee Scheme Directive, as established by the Court of Justice of the European Union.http://curia.europa.eu/juris/document/document.jsf;jsessionid=13051C2FFDBCB035BB673FC4CE0089F0?text=&docid=206427&pageIndex=0&doclang=EN&mode=req&dir=&occ=first&part=1&cid=754180, Decision by the CJEU of 4 October 2018, Official Site of the CJEU The Bulgarian government did not provide liquidity to help to Corporate Commercial Bank while it bailed out First Investment Bank which faced a bank run in the same period.https://www.mediapool.bg/darzhavata-shte-podkrepi-pib-i-bankovata-sistema-s-33-mlrd-leva-news222052.html, Mediapool.bg, 30 June 2014 According to Forbes, "Paying off depositors was therefore impossible. But reopening the bank was not an option either, since that would simply re-start the run. Therefore, the BNB kept the bank "on ice"."
In July 2014, Plamen Oresharski's government resigned and President Rosen Plevneliev appointed a caretaker government led by Georgi Bliznashki in August 2014. Important decisions regarding the fate of Corporate Commercial Bank and the stability of the banking system were taken at meetings organized by President Plevneliev.https://www.capital.bg/politika_i_ikonomika/bulgaria/2017/06/10/2986711_stenogramata_za_ktb_dobre_che_niakak_se_razmina/, Capital.bg, 10 June 2017 However, both President Plevneliev and his successor President Rumen Radev refused to make the minutes of these meetings public. After numerous claims against the Presidency by journalists and civil activists pursuant to the Law on Access to Public Information, the Bulgarian court forced President Radev to make the minutes public.https://clubz.bg/54858-prezidentyt_shte_oglasi_pyrvata_stenograma_za_ktb_do_2_sedmici, clubz.bg, 8 June 2017
Bank collapse and government takeover In late 2014, the bank collapsed which caused the largest financial crisis in Bulgaria since the 1990s. Bulgaria's central bank, Bulgarian National Bank, then took control over the bank.
Corpbank was officially shut down and its assets taken over by the Bulgarian National Bank in July 2014. According to media reports at that time, the shutdown was due to a dispute between Vasilev and "Bulgarian media oligarch Delyan Peevski."
Bulgaria violated European Union banking laws, specifically the EU Deposit Guarantee Scheme Directive. Bulgaria did not repay eligible deposits within 20 days following the bank's failure, as required by the directive. The Bulgarian Deposit Insurance Fund only had 1 billion euros, which was not enough money to repay the guaranteed deposits for Corpbank.
"Delyan Peevski is simply one of the main tools that the Bulgarian political mafia uses to blackmail Bulgarian business—the visible part of a rather large iceberg of corruption," Vasilev said in a Forbes interview. "The political mafia is persistently trying to downgrade what happened to Corpbank to a personal conflict between Mr. Peevski and me, which is utterly untrue. I had a conflict with the political mafia ruling the country, which has been blackmailing and threatening me for many years."