Банкеръ Weekly



By the end of October the Association of Commercial Banks (ACB) is going to inform the Bulgarian National Bank (BNB) whether or not it accepts the offer to buy 66% of the capital of the Borika national card operator at its market price. This price amounts to BGN12.5MN which is five times the face value of the company's capital (BGN2.5MN).Therefore, if commercial banks approve the offer from BNB they will have to pay BGN8.25MN for 66% of the capital of Borika. It is not clear yet which banks will be willing to become Borika's partners. Moreover, it remains to be seen whether the banks interested in BNB's offer are going to acquire stakes independently or all candidates will join forces to form the potential owner of 66% of the card operator. However, it is already certain that none of the credit institutions will be allowed to control - either directly or indirectly - more than 10% of Borika's capital. In turn, BNB will keep 34% of the stakes. That will be necessary because according to the Law on the Central Bank BNB is responsible for the reliability of the settlement system in Bulgaria. Borika and Bankservice are the two companies that form the mainstay of this system.In principle, the decision for selling Borika which is currently 100% owned by BNB was taken a year ago. But commercial banks lost too much time in debating how to acquire the card operator. The bank managers split in two groups. Some of them held the opinion that BNB should keep the controlling stake of its capital and others thought the company should be privatized completely. Eventually, last March the managers of the commercial banks agreed with leaving BNB the owner of a blocking share in the national operator.At the beginning of July, the ACB offered BNB to sell the shares in Borika at their face value. The banks justified their proposal saying they would not seek dividends from their shares in Borika's capital but would invest the whole profit of the company in development of its information technologies.However, the governors of BNB declined the offer. They said Borika was in a very good financial condition and had at its disposal BGN6MN due to deposits alone. Considering that, BNB cannot sell 66% of the operator's capital at its face value which is BGN2.5MN. It would mean to place all assets of the company (including the BGN6MN deposits) under the management of commercial banks in return to just BGN1.65MN. That is why at the beginning of September BNB sent an offer to the ACB saying it was ready to sell 66% of Borika's capital at its market price. By October 9, the Association is going to present the details of the offer to its members and in the end of the month its management will make a decision.

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