Банкеръ Weekly



The sale of Municipal Bank depends no more on the Sofia Municipal Council, but on the good will of several private companies: Sofia Pharmacies AD and Sofstroy AD, both of which hold over 19.5% of the credit institution's shares. The two firms registered an increase of their stakes in the bank's equity capital in december 2004 by purchasing the packages of shares of the Sofia municipal companies Roads and Equipment and Water Supply and Sewage.The Sofstroy Private MEBO holds 75% of Sofstroy's stocks. It's worth noting that according to the last registration in the firms department of the Sofia City Court, a member of the management Board of Sofstroy is Ralitsa Grozdanova, sister of Dilyana Grozdanovaa, who is Political Secretary of Sofia Mayor Stefan Sofiansky's party - Union of Free Democrats - and wife of Lyubomir Pavlov, Chairman of Municipal Bank's Supervisory Board and right-hand man to Mr. Sofiansky.A 75% stake in Sofia Pharmacies is in the hands of Capital City Pharmacies, a company whose capital is distributed between numerous natural persons. It is known that Sofia Pharmacies was also controlled by M. Sofiansky. By the frims' privatisation in 2000 his influence there was imposed by Penka Ivanova, wife of the head of the mayor's cabinet Lyubomir Ivanov, and afterwards - by Ognyan Donev, Executive Director of Sopharma, which is also in the sphere of Stefan Sofiansky and Lyubomir Pavlov's interests. According to Vladimir Kissyov, Chairman of the Sofia Municipal Council, the Water Supply and Sewage and Roads and Equipment firms have also sold their shares in the bank between Christmas and New Year of 2004, without notifying BNB's Bank Supervision department about the deal. Here we should specify that the central bank's Bank Supervision department knows about the deal as it has at its disposal all data in the Municipal Bank's register of shareholders, but it was not asked to approve that transfer of stakes from the credit institution's capital. And an approval was not asked as under the Banks Act, the central bank gives a permission for acquisition of shares only if they are 10% or more of a certain bank's capital. In this case Sofia Pharmacies and Sofstroy hold less than 10% of the credit institution's paper even after the deal. It's true that at present Sofstroy and Sofia Pharmacies which are believed to be controlled by Stefan Sofiyansky and Lyubomir Pavlov can block any initiative for a sale of Municipal Bank. According to the statute of the credit institution, all important decisions concerning the bank's development - raise of capital, changes in the statute and the supervisory board, are to be taken by the votes of the owners of 75% of its capital. Currently, the capital is shared as following: 67% of it is owned by the Sofia municipality, 19.5% is property of the private Sofstroy and Sofia Pharmacies, nearly 5% is held by the former municipal companies Forum, Chistota, and Sofinvest privatised in the past few years and also believed to be under the influence of Sofiyansky and Pavlov, 2.9% of the capital is owned by 19 Bulgarian municipalities, and the remaining 6.6% is held by municipal companies. Last week the head of the Sofia Municipal Council Vladimir Kissyov told the media that he would schedule an extraordinary meeting of the municipal council for January 25. A decision will be taken there for a general meeting of the bank on which the statute may be changed in order to allow for making important decisions by the holders of 67 and not 75% of the capital. But a decision of the kind will hardly be voted if the private companies that hold bank shares oppose to it.The present situation indicates that even if an investor acquires all 67% from the Sofia Municipality and 6.6% from the municipal companies, he will not have a share in the bank's capital that will allow him to change either its statute or its management. If he wants to do so, he will have to take into account the interests of the private companies holding shares in it.In fact, financial circles comment that Lyubomir Pavlov is using intermediaries to negotiate with the Austrian Kommunal Bank which declared itself willing to buy the Municipal Bank majority stake. Rumours spread that the investor is not going to insist on changing the statute of the credit institution and removing the requirement for 75% of the shareholders votes. In case a deal of that kind is made, the Sofia Municipal Council will lose the control over the bank but will remain dependent on the companies close to the Mayor Sofiyansky.

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