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Bulgaria-based Fibank mulls capital hike through share issuance, bond placement

First Investment Bank AD is planning a public offering of up to 40 million new ordinary shares with a par value of 1 leva and an issuing price of 5 leva apiece.

The lender wants to increase its capital from 110 million leva to up to 150 million leva via the planned offering. The lender said its capital will only increase if at least 4 million shares are subscribed for and paid and the increase will be proportional to the value of the subscribed shares.

First Financial Brokerage House EOOD was appointed investment intermediary to service the planned capital increase, the bank noted in its Dec. 20 filing.

The lender also said it completed the private placement of perpetual, deeply subordinated, unsecured, nonconvertible bonds worth €30 million with a fixed interest rate of 8%, which it plans to include in its additional Tier 1 capital.

The capital hike carried out through the planned issuance of additional shares and the bond placement will be used to implement Fibank's strategy to boost lending to small and medium-sized businesses and individuals.

In addition, the Bulgarian bank sold nonperforming loan portfolios worth around 538 million leva, which included mainly secured loans to individuals and legal entities.

The European Central Bank said in July it found a capital shortfall of €262.9 million at Fibank following a comprehensive assessment of six local lenders. Fibank — Bulgaria's fourth-biggest bank in terms of the size of assets — said at the time that it had already secured €130 million from several sources and was going to address the remaining €133 million capital shortfall with financial resources coming from its operating profit and by de-risking its credit portfolio along with implementing other measures.

As of Dec. 20, US$1 was equivalent to 1.77 Bulgarian leva.