April 23, 2020 / 12:49 PM / a month ago

Bulgaria's Fibank cuts price, nearly doubles number of shares it plans to issue to raise 200 mln levs

SOFIA, April 23 (Reuters) - Bulgaria’s First Investment Bank (Fibank) has cut the price and almost doubled the number of shares it plans to issue to raise 200 million levs ($110.2 million) to help it cover a capital shortfall found by ECB stress tests last year, the prospectus showed.

Fibank’s capital increase is the last box Bulgaria has to tick before it can get a nod to enter the European Union’s banking union and the “waiting room” to join the euro. Sofia wants to apply to join both at the end of April.

Bulgaria’s fifth-largest lender has given up plans to sell 25 million new shares at 8 levs per share and instead opted to issue 40 million new shares at 5 levs per share.

The new plan received a green light from the country’s financial regulator on Thursday.

Fibank will consider the issue a success if as few as 4 million shares are sold. Shareholders will have the right to buy one new share for every 2.75 held, the prospectus said.

The trading of rights and subscription of new shares is expected to start around June 12 and the capital increase be registered by the end of July, the document showed. Trading in new shares should commence in the middle of August.

The stakes of Bulgarian businessmen Tseko Minev and Ivailo Mutafchiev, each owning 42.5% of the lender, would be diluted after the issue, but the two would remain majority shareholders, the document showed.

The remaining 15% are floated on the Sofia bourse.

Shares of the bank with total assets of 10.7 billion levs rose by 15.7% to 2.5 levs by 1150 GMT.

The new price, 5 levs per share, is still at a premium to the market price of the lender, with traders saying there is speculation that the state might buy some of the issue, particularly given its potential broader financial significance for the country.

Fibank needs to bolster its capital after a comprehensive assessment of six Bulgarian lenders by the European Central Bank (ECB) last year found it had a capital shortfall of 263 million euros ($286 million).

Finance Minister Vladislav Goranov has said the lender has managed to cover about 70% of the estimated gap and was working seriously to secure the remaining part. ($1 = 1.8149 levs) (Reporting by Tsvetelia Tsolova; Editing by Steve Orlofsky)

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