Sofia municipal council is making a second attempt to choose a consultant to oversee the sale of the capital citys stake in Municipal Bank.
The council has given bidders a deadline of February 21 this year.
The city owns 67 per cent of Municipal Bank. Municipal companies own a further four per cent.
According to a statement by the municipal council, the consultant will have to do an analysis of the legal status of the bank, compile an assessment and come up with a strategy for the privatisation.
The winning bidder will also have to provide consultancy services for the preparation of the tender documentation.
If the deal is successful, the council said, the consultant will be paid a fee of 150 000 leva for services, as well as two per cent of the agreed selling price.
In 2006, in its first attempt to appoint a consultant, Sofia municipal council chose PriceWaterhouseCoopers and gave it a brief to come up with a strategy for the sale. However, no contract for the firm to act as consultant was signed. Media reports said that other candidates with which discussions were held declined the job because the fee offered was too low.
The decision to make a further attempt to sell the municipal stake in the bank was made at a meeting of the municipal councils budget committee on December 12 2006.
There will be two stages to the new procedure to choose a consultant. First a strategy, due diligence, privatisation appraisal and an information memorandum should be prepared. The second stage includes the marketing prior to the sell-off procedure and the preparation of the tender papers.
Municipal Bank was set up in 1996 following the collapse of the local banking sector to safeguard the financial stability of the municipalities it serves.
Bulgarian National Bank (BNB) issued a licence to Municipal Bank for domestic operations in March 1996 with a capital of 450 million leva.
Initially, Sofia municipality was the main shareholder in the bank, holding 97.12 per cent of its capital, while the remainder was distributed among about 20 municipal firms.
In April 1997, BNB gave a full banking licence to Municipal Bank for operations at home and abroad after the bank raised its paid-in capital to 2.36 billion leva.
The banks capital was raised from 805 million leva through a transfer of the 1996 net profit of 411 million leva into the share capital and a new share issue covering the remainder.
After the capital hike, Sofia Municipality held about 63 per cent in the capital with the rest controlled by 17 municipal companies.
In January 2005, the Sofia municipal council decided to sell its entire stake to a strategic investor. In June that year, businessman Hristo Kovachki bought close to 26 per cent of the bank by buying out the stakes of the private shareholders through 11 of his companies.
