The head of Oman's Shanfari Group of Companies has effectively bailed out Bulgaria's Investbank by taking a 25% stake for BGN50m in a deal approved on Wednesday, newswires reported.
Bulgaria's central bank had asked Investbank, majority controlled by local company Festa Holding, to boost its capital by BGN50m as the quality of its assets had worsened. Investbank saw its net loss more than double on an annual basis at the end of June to BGN16.5m, mainly due to a rise in provisions for bad loans.
"The central bank allowed al Shanfari to acquire 29.76m shares in the bank, which will increase its capital by 24.93%," Deputy Governor Rumen Simeonov said. "With this, the bank meets the requirements of the central bank's supervision for the time being."
Bulgaria's banking system is regarded as one of the most exposed to the Eurozone crisis, as its banks are heavily dominated by those from Greece and other struggling EU countries. According to the latest Standard & Poor's report on Bulgaria, "Greek banks own about one-third of the banking system, which has increased risks for Bulgarian banks with respect to the provision of liquidity and capital."