SOFIA (Reuters) – Bulgaria’s fifth largest lender First Investment Bank (Fibank)<5F4.BB> said on Thursday it has raised 195.4 million levs ($112.6 million) via a share issue to cover a capital shortfall found by the European Central Bank (ECB) last year.
Fibank’s capital increase is the last box Bulgaria has to tick before getting the nod to enter the European Union (EU) banking union and the ERM-2 mechanism, a two-year obligatory precursor to the euro zone. Sofia hopes to join both this year.
State-owned Bulgarian Development Bank has acquired a 18.35% stake in the bank, and Valea Foundation, owned by Czech billionaire Karel Komarek, will hold 7.87%, Fibank said in a statement.
This will be the first portfolio investment in Bulgaria for Komarek, owner of KKCG group, which controls one of the largest lottery operators in Europe, SAZKA, and is active in oil and gas, IT and investments. Forbes estimates his net worth at $3.6 billion.
“Fibank is increasing its capital with 195.4 million levs, which will bring the bank’s total capital adequacy ratio to 22.5% compared to 19.6% at the end of March,” the bank said.
The new shares were bought by the two investors at 5 levs per share, a serious premium to the current market price.
Following the announcement, Fibank shares rose by 3.1% to 2.66 levs per share.
The government has said the coronavirus crisis had hit investors’ appetite and the state had to step in to ensure Bulgaria would meet all requirements to enter the euro zone’s “waiting room”.
An opposition politician has filed a claim with a Bulgarian court contesting the government’s decision to buy 70% of Fibank’s capital increase for about 136 million levs at a price almost double the market one.
Stakes in Fibank owned by Bulgarian businessmen Tseko Minev and Ivailo Mutafchiev, who each had 42.5%, are diluted after the issue, but together they will remain majority shareholders.
The remaining shares are traded at the Sofia bourse.
(Reporting by Tsvetelia Tsolova; Editing by Andrew Cawthorne)