Bulgarian National Bank Governor Ivan Iskrov submitted his resignation, ceding to pressure over his handling of Corporate Commercial Bank AD’s failure last year.
The central bank will have to prepare for an evaluation of its supervision practices, including “the institutional consolidation of the bank and the explicit solving of management issues,” Iskrov said in an e-mailed statement on Tuesday. Lawmakers will probably approve a new governor by July 10, when Iskrov leaves his post, Menda Stoyanova, head of parliament’s budget and finance committee, told reporters in Sofia.
Iskrov is stepping down about three months before his term in office ends, having ruled the central bank for twelve years, a period that saw seven different governments in power. The poorest European Union country in terms of per-capita output spent as much as 4 billion lev ($2.3 billion) to repay deposits after Corporate Commercial failed, causing the worst banking crisis in Bulgaria in 20 years and triggering early elections.
Since 1997, the country has been under a currency board system that curbs government spending and limits the central bank’s options to impose independent monetary policy, operating a lev-euro peg.
Prime Minister Boyko Borissov, who took office eight months ago, has repeatedly called for Iskrov’s resignation. Bulgaria needs “to restore supervisory credibility and strengthen crisis management tools” in the banking system, the International Monetary Fund said May 13. The government will hire a consultant by the end of the year to evaluate the asset quality of local banks in preparation for stress tests planned for July 2016, according to the Finance Ministry.
The yield on Bulgaria’s euro-denominated bond due in September 2024 fell 10 basis points to 2.99 percent, the lowest in two weeks, by 2:25 p.m. in Sofia.
Borissov’s Gerb party has nominated Dimitar Radev as Iskrov’s successor. He previously worked in the IMF and served as Bulgaria’s deputy finance minister. Other candidates proposed by parties in the governing coalition include Bisser Manolov, a former chairman and current board member of Bulgaria’s Deposit Guarantee Fund; Victor Yotzov, a university professor who earlier represented Bulgaria at the IMF, and Grigoriy Vazov, a former deputy industry minister.
The new governor will have to name deputies in charge of bank supervision and debt issuance policy as soon as possible, Iskrov said.
Tsvetan Gunev, previously in charge of bank supervision, was dismissed by parliament on Jan. 21 on the grounds that he hadn’t imposed adequate supervision over Corpbank. Gunev has been under investigation since July 2014. He has denied wrongdoing.