(Adds FIbank’s shares surge upon announcement)
SOFIA, April 28 (Reuters) - First Investment Bank (Fibank) , Bulgaria’s third largest lender, said on Friday it had hired Citigroup to advise on its strategic options that could involve attracting new core investors.
The announcement pushed Fibank’s shares up 9 percent in midday trading on the Bulgarian bourse, with traders saying the move showed the bank was serious about propping up its capital buffers following a central bank recommendation last year.
“The bank is reviewing strategic opportunities which may include: entering into strategic partnerships and/or consolidations; attracting new core investors; raising new capital to fund the future growth of the bank,” it said.
Fibank said this month it had met central bank recommendations to raise about 206 million levs ($115 million) in additional capital by reporting pre-tax, pre-provision profit of 266 million levs for 2016.
The central bank told Fibank to raise further capital after an asset quality review slashed its CET 1 capital ratio to 5.2 percent, and when tested under a theoretical severe economic crisis this fell to -6.9 percent.
The bank has said it has been working to diversify its loan portfolio and reduce credit risk in cooperation with international consultant Bain & Co.
Fibank’s financial results showed its CET 1 capital ratio stood at 12 percent in 2016, while overall capital adequacy was at 15 percent. Total assets stood at 8.85 billion levs.
Fibank is controlled by Bulgarian businessmen Tzeko Minev and Ivaylo Mutafchiev, each with 42.5 percent stakes.
$1 = 1.7953 leva Reporting by Tsvetelia Tsolova; Editing by Alexander Smith and Edmund Blair