Financial news

Local Elections Affirm Positions of Ruling Parties. GERB achieved their 10th consecutive election victory. The ruling party won the mayoral seats in ten regional cities: Sofia, Bourgas, Varna, Rousse, Stara Zagora, Blagoevgrad, Veliko Turnovo, Dobrich, Gabrovo, and Smolyan. According to sociologists, GERB won 34.5 per cent of the votes for municipal councillors in the country, followed by the Bulgarian Socialist Party (BSP) with 17.2 per cent, the Movement for Rights and Freedoms (MRF) with 14.6 per cent, the Reformist Bloc with 9 per cent, the Patriotic Front with 5.2 per cent, ABV with 4.3 per cent, and Ataka with around 3 per cent. The voter turnout at the local elections was comparable to the one at the last general elections and was by around 7 per cent higher than the voter turnout at the referendum. The referendum was organized to ask voters whether they are in favour or oppose electronic voting. Referendum managed to collect over 35% turnout of voters, as in favor of electronic voting  were 71.96% who are much more than his opponents (28.04 percent).

Gross external debt amounted to EUR 35.3907 billion (82.2% of GDP) at end-August 2015, decreasing by EUR 3.9657 billion (10.1%) from end-2014 (EUR 39.3565 billion, 92.1% of GDP). On a year-on-year basis gross external debt declined by EUR 3.1747 billion (8.2%) from August 2014 (EUR 38.5654 billion, 90.2% of GDP). Long-term liabilities totalled EUR 27.4971 billion (77.7% of the total debt, 63.8% of GDP) at end-August 2015, down by EUR 1.8904 billion (6.4%) from end-2014 (EUR 29.3874 billion, 74.7% of the total debt, 68.7% of GDP). On a year-on-year basis, long-term liabilities decreased by EUR 1.9859 billion (6.7%) from August 2014 (EUR 29.483 billion, 69% of GDP). Short-term liabilities equalled EUR 7,893.6 million (22.3% of the total debt, 18.3% of GDP), declining by EUR 2.0754 billion (20.8%) from end-2014 (EUR 9.969 billion; 25.3% of the total debt, 23.3% of GDP). On a year-on-year basis, short-term liabilities dropped by EUR 1.1888 billion (13.1%) from August 2014 (EUR 9.082.4 billion, 21.2% of GDP).

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Companies

The loss of the National Electricity Company (NEK) is expected to reach BGN 400 million at the end of the year. In the first nine months the company’s loss was BGN 311 million, said Finance Director of NEK Rumyana Krasteva within the open meeting of the Commission for Energy Regulation (KEVR) to discuss the minimum depreciation of the additive 'obligation to society’ for business from 1 November. According to Krasteva, change of additive 'obligation to society’ will positively affect the state power company. BGN 40.5 million will be saved from the cost of electricity by district heating companies as expectations are for revenues of BGN 35 million for the whole regulatory period. According to Krasteva, however, this will not lead to a lowering of the company's liabilities. NEK’s revenues decreased in August and September as the received revenues are by BGN 10 million less.

The State General Reserve Fund of Oman has taken legal action against Bulgaria, seeking to recover the book value of its investment in collapsed Corporate Commercial Bank. The Omani sovereign wealth fund was also reportedly seeking interest payments for the period from the putting of the bank under the Bulgarian central bank’s control to the date when it was declared insolvent. The Bulgarian National Bank (BNB) put the country’s fourth-largest lender under direct administration on June 20, 2014 following a run on deposits, suspending shareholders’ rights. In April, Corporate Commercial Bank was declared insolvent as of November 6, 2014 – the date when the Bulgarian National Bank suspended its banking licence. The SGRF owned 30% of Corporate Commercial Bank through Bulgarian Acquisition Company II S.a.r.L. Experts estimate the total SGRF claim at EUR 720 M. The claim against Bulgaria’s Finance Ministry had been filed with an European court of arbitrage. The Finance Ministry has confirmed  that the Omani fund has started legal action.

Commission for Protection of competition gave a green light to Romanian company Dante International to take control over Fashion Days Shopping EOOD Bulgaria. The action is part of a deal in which Dante International acquires companies Fashion Days that are based in Romania, Bulgaria, Hungary and Italy. Dante International is a joint controlled company by Mic Allegro BV Netherlands and the Romanian citizen Julian Gabriel Stanchu. Mic Allegro BV Netherlands on the other hand is a subsidiary of Naspers Limited Cape town, South Africa. All acquired companies are under independent control of Naspers. Dante International is engaged in retail trade with consumer goods in Bulgaria, Romania, Hungary and Poland through the following Internet sites: www.emag.bg, www.emag.ro, www.emag.hu и www.emag.pl. In Bulgaria the global operator of platforms Naspers operates through Fashion Days Shopping EOOD and via Alegrogroup Bulgaria. The latter controls the web site for online ads www.olx.bg. The proposed transaction is an acquisition of sole control by Dante International on businesses of Fashion Days.

Financial Supervision Commission (FSC) initiated proceedings to revoke the license of Citadel Capital Management Ltd to conduct business as investment intermediary (IP). The previous name of Citadel Capital Management was Golden Lev Brokers LTD. The company cannot carry out its activities, as there is no professional staff. At the end of August Commercial Register published information that its managers were deleted and its headquarters and registered office were replaced. Check of FSC in September showed no approved persons as managers of IP Citadel Capital Management Ltd., as well as persons who may enter alone or jointly with other person transactions for the firm. The regulator will notify the Registry Agency of the urgent need to appoint a liquidator in the intermediary in case it is decided that the company’s license is revoked.

Bulgarian Insurance company Nadezhda AD plans to start offering insurance services on the Italian market. During a meeting on 23 October, the Financial Supervision Commission decided to send a notification to its Italian colleagues on the intention of the company to carry on insurance services under the freedom to provide services in the Republic of Italy. Thus, Insurance company Nadezhda AD would become the first Bulgarian company in the sector to enter the market in Italy.

Bulgarian car battery manufacturer MonBat said its consolidated pre-tax profit fell by an annual 1.0% to BGN 20.1 million in the first nine months of the year. Consolidated net sales revenues rose 11.2% to BGN 176.96 million in the January-September period. In September alone, the company's consolidated pre-tax profit dropped by an annual 46.4% to BGN 2.1 million. Consolidated net sales revenues added 1.5% to BGN 21.4 million. MonBat operates four plants for manufacturing and recycling of lead-acid batteries, diodes and light-emitting diode luminaires.

Europe

“The upward momentum of overall economic activity in Germany continued in the third quarter,” the Bundesbank wrote. The central bank conceded that the economic growth in the third quarter may not come out “quite as dynamic” as in the preceding quarters. German gross domestic product (GDP) expanded by 0.3 percent and 0.4 percent in the first and second quarters, respectively. “But the underlying economic trend remains very robust,” it said, pointing to the “continued favourable consumer climate.” Employment was on the rise and households’ real income was benefitting from higher wages and lower energy prices, the Bundesbank argued. “That consumers are taking advantage of the favourable conditions to make additional purchases can be seen in the increased sales in consumer-orientated service sectors such as the retail and automobile sectors,” the report wrote. The construction industry had lost momentum and activity in the manufacturing sector was failing to pick up speed, the Bundesbank cautioned.

America

Quarterly profits and revenue at big American companies are poised to decline for the first time since the recession, as some industrial firms warn of a pullback in spending. From railroads to manufacturers to energy producers, businesses say they are facing a protracted slowdown in production, sales and employment that will spill into next year. Some of them say they are already experiencing a downturn. “The industrial environment’s in a recession. I don’t care what anybody says,” Daniel Florness, chief financial officer of Fastenal Co. , told investors and analysts earlier this month. A third of the top 100 customers for Fastenal’s nuts, bolts and other factory and construction supplies have cut their spending by more than 10% and nearly a fifth by more than 25%, Mr. Florness said. Caterpillar Inc. last week reduced its profit forecast, citing weak demand for its heavy equipment, and 3M Co., whose products range from kitchen sponges to adhesives used in automobiles, said it would lay off 1,500 employees, or 1.7% of its total, as sales growth sagged for a wide range of wares.

Asia

China, Japan and South Korea will hold a summit in South Korea when Chinese Premier Li Keqiang visits, China and South Korea said on Monday, the first such meeting since they were discontinued in 2012 amid tension dating back to World War Two. Chinese Foreign Ministry spokeswoman Hua Chunying, speaking at a daily news briefing, did not provide an exact date, but Japanese media have said it would be on Nov. 1 in Seoul. Li will visit South Korea from Oct. 31 to Nov. 2. South Korean President Park Geun-hye's office said she would meet Li on Oct. 31 in Seoul. It did not announce dates for the trilateral summit or Japanese Prime Minister Shinzo Abe's visit. Park said this month she hoped the three-way meeting would help clear obstacles to better relations with Tokyo and boost stability in Northeast Asia. Chinese Vice Foreign Minister Liu Zhenmin told reporters in Beijing that while issues of history would inevitably be brought up, the three countries also had important shared economic interests and needed to get relations back on track.

Etropole monastery

The Etropole monastery is located in the foot of the Cherni vrah summit in the Stara Planina mountain, some 5 km east of the town of Etropole. It was built on a travertine rock, which is probably where his second name – Varovitetz (“varovit” in Bulgarian language means “limy”) came from. The monastery is known to have existed as early as the Second Bulgarian State. A legend tells that in search of solitude, St. Ivan Rilski settled in one of the caves in the nearby region of Varovitetz. The proximity of a village, however, forced him to leave his shelter and to move to the Rila mountain, far from all human vanity. After the Saint left the place, local residents, thinking the place was holy, decided to build a monastery on it and called it Varovitetz. During the Ottoman yoke, the cloister was ravaged and all monks who lived in it had to leave it. Then a period followed in which it fell in absolute oblivion. In the end of the 16th century, it was restored, and gradually turned into one of the biggest spiritual and educational centers in Bulgaria.

On that day:  Plakovski Monastery