A MERGER BETWEEN BIOCHIM AND ANOTHER LOCAL BANK WILL BE TO BULGARIA'S BENEFIT
Gautam Vir, CEO of HEBROSBANK, to the BANKER WeeklyMr. Vir, the new privatisation procedure for Biochim Commercial Bank has already been initiated. Do you estimate as realistic the minimum sale price of BGN95MN, set by the Bulgarian Consolidation Company (BCC)?- This is a very diffciult question. What will matter after all will be the results from the forthcoming due diligence and the report from the audit, conducted by Deloitte Touche. We'll consider them and make an appraisal. It's a fact that state-owned assets depreciate as time goes. We have the impression that Biochim's performance improved considerably last year. If this is really the case, the asked price may be realistic, although it seems high at first sight. However, everything in Bulgaria gets more expensive as time goes on. We should conduct a financial and legal survey, based on the auditor's report. We'll probably do that in end-March.Last year you evaluated Biochim much lower. Is it possible for the bank to have improved its indicators within such a short period?- Two things happened. First, Biochim posted a significant profit in 2001. Second, as far as I can gather, its credit portfolio has improved considerably. This influenced Biochim's financial situation. However, the picture will become clearer after our due diligence.Comparisons are often made between the improvements of the bank's profitability and the prices at which United Bulgarian Bank and BULBANK were recently sold. Two things should be realized. It's very difficult to compare these two financial institutions with Biochim, because they were restructured to a much larger extent in advance. This cannot be said about Biochim. In that sense it is difficult to compare the prices at which these two banks were sold with the minimum asked price for Biochim. We maintain our interest. We'll be following the developments and we'll make our final decision in end-March.It became known that iRegent Group will increase HEBROSBANK's equity by the BGN-equivalent of USD2.5MN. Are you considering an additional increase of the capital so as to meet BCC's requirement to Biochim's candidate-buyers for minimum net assets of BGN100MN?- We raised the bank's equity in 2001, which was a comparatively good year for us.Towards the end of December HEBROSBANK's net assets were around BGN95MN. I am convinced that the upcoming capital increase, added to the bank's present equity, would be sufficient to satisfy BCC's requirement. If the financial data, to be considered by BCC, should be based on figures by end-December, 2001, we'll have to bid in a consortium and we'll probably participate together with a Croatian bank. iRegent Group owns various kinds of banks in Croatia. Therefore, there would be no problem with the consortium. The key problem is teh price and the participation itself.How is HEBROSBANK's restructuring going on? What results has the bank achieved since you headed it?- HEBROSBANK made a significant progress in its erstructuring last year. We began introducing a unified info system to replace the currently existing three software programmes. We segmented our operations into corporative and retail banking. We believe we should focus our attention in two directions: citizens and companies all around the country. Therefore, we incorporated the 14 regional branch offices into 4 main offices. We began separating the front-office and the back-office, as the skills required from the people employed in the front line are different from those of the bank officials who do not have a direct connection with the clients. The former are good at attracting and servicing clients, and the strong points of the latter are the control of accounts and the application of bank procedures.We are sure we succeeded to change the culture of our employees, make them think about the market conditions and assess what is to the benefit of the client and what is good for the shareholder. This process will continue and it will provide the greatest opportunity for achieving better profitability.I believe this would be our most significant contribution if we acquire a share in a financial institution like Biochim. We gained considerable experience, spent quite a lot of time, and invested a lot of money, so we believe to achieve a better return on investments. After all, Biochim would be an achievement for us, but on the other hand the bank itself and the country as a whole would benefit if the candidates who have already gained experience in Bulgaria are granted some preference in privatisation procedures.Would you share your plans for 2002 - new products, services, aims?- We constantly offer new products. The introduction of the euro was very successful. We launched two-three new things. We'll launch the internatonal debit cards very soon and we project to offer credit cards in the near future. We are aggressively advertising our programme for crediting small and medium-sized enterprises, which we are implementing with EBRD's cooperation. This process requires modern training of personnel and HEBROSBANK spends quite a lot of money for this purpose. We have worked out a scheme for incentives to employees for their good performance through compensations, bonuses, and increase of remuneration. We are sure this will have a considerable effect.What are the plans of the major shareholder regarding its operation in Bulgaria? What is the interaction between iRegent Group and HEBROSBANK?-Regent Group is very pleased with its operation in Bulgaria. It is interested in some projects outside the bank sector, but this is not in my competence. The interaction between us finds expression in sharing experience with the other banks of I Regent Group in the region.Some financiers in Bulgaria believe that iRegent Group intends to sell HEBROSBANK in the near future. Is that really so?- I do not know about any such ideas. We are discussing HEBROSBANK's participation in the privatisation of Biochim. The only way to do this is through a constant increase of the bank's equity capital and this is realized in practice. I hope you can draw your own conclusion from this fact.