Bulgaria picks four banks for 1.84 billion pound bridge loan - sources

SOFIA (Reuters) - Bulgaria has picked Citi (C.N), HSBC (HSBA.L) and local units of Societe Generale (SOGN.PA) and Unicredit (CRDI.MI) to arrange bridge financing for this year, two sources familiar with the process told Reuters on Tuesday.

Bulgaria's parliament has given initial consent to plans to raise an extra 4.5 billion levs (1.84 billion pounds) to plug this year's budget gap and prop up the banking system after the collapse of Corporate Commercial Bank .

"Two international and two local banks have been chosen to provide the bridge financing ... 1.3 billion euros ($1.6 billion)," an industry source, who asked for anonymity, told Reuters.

The Balkan country needs to lend its Deposit Insurance Fund some 2 billion levs to cover guaranteed deposits at Corpbank. Another 1 billion levs will be used to refinance state support to First Investment Bank (Fibank)(5F4.BB), the third biggest lender, which was caught up in the panic in June.

Earlier on Tuesday the European Commission approved the extension of state aid to Fibank and agreed it can be extended for up to 18 months.

The finance ministry's spokeswoman declined to comment and said the lenders' names will be made public only after government approval.

Some 19 banks have expressed interest in providing the funds, which Bulgaria will refinance by issuing global bonds next year.

A second source expected these bond sales in February or March next year, depending on market conditions.

Finance Minister Vladislav Goranov told reporters he plans to present his budget and debt plans for 2015 to the government by the end of the week. He has already said the 2015 fiscal deficit will not exceed the EU threshold of 3 percent of GDP.

New borrowing will bring Bulgaria's public debt to 28.4 percent of economic output this year, up from 18 percent in 2013, but it will remain the European Union's least indebted state.

(Reporting by Tsvetelia Tsolova; Editing by Ruth Pitchford)