Банкеръ Weekly



The Bank Consolidation Company delivered on February 18 and 20 its draft contracts to UniCredito Italiano, Bank Austria and Hungary's OTP. After they are signed, Bulgaria will undertake BCC's commitments to the three foreign investors, which purchased BULBANK, Biochim Commercial Bank and DSK Bank. In its agreement with UniCredito, the BCC transfers its responsibilities to the State. Bulgaria, on its part, will guarantee to the Italian bank that if by end-2005 old liabilities to tax authorities are discovered in BULBANK (about which the buyer was not informed when the deal was closed), they would be undertaken by the Bulgarian State. The same commitments, but with term of validity till the end of 2007, will be undertaken by the Government to Bank Austria. The important detail here is that the State has offered to cover losses up to 25% of the purchase price (EUR82.5MN), paid by the Austrians for Biochim, i.e. the State undertakes to pay losses not exceeding EUR20.625MN. Hungary's OTP has been offered that the Bulgarian State would undertake eventual losses from old liabilities till the year 2008 if they do not exceed 25% (EUR77.775MN) of the purchase price of EUR311.1MN, paid by OTP for DSK Bank. BCC's Executive Director Nelly Kordovska expects that by end-March 2004 the owners of BULBANK, Biochim and DSK Bank will consider the draft contracts and make their remarks (if there are such). BCC's Board of Directors (BoD) is ready to discuss the proposals for amendments, made by the buyers of the three banks and will hold additional negotiations with them if necessary. After their conclusion, however, BCC and the State, represented by the Finance Minister, will sign with each of the three investors a trilateral agreement for undertaking the above-described commitments by the Government. The completion of this procedure will enable BCC's BoD to proceed with winding down the company. The decision for that is expected to be made during BCC's annual meeting, which will be probably held in April 2004.

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