BANKS GO TO WAR FOR CUSTOMERS
The myth about evil banks and their unapproachable directors has obsessed the Bulgarian society so deeply that it will take more than one generation for it to be forgotten. In 1996, bankers were accused of causing the collapse of the national economy; then they were blamed for refusing to launch credits. Whenever the financing of the economy was concerned, everybody kept saying: banks do not lend money. Of course, people working in the credit institutions are not perfect, but life has proven that it is never relevant to make general conclusions.If the analysis of the Bulgarian banking sector, prepared by the experts of the IMF in March 2002, is to be taken into account, the sector already has a kind of an anticrisis immunity and is relatively stable in case of domestic and international financial shocks. And according to BNB statistics for the past months of 2002, blames for launching a very small number of credits are not well-founded. From January 1 until June 30, 2002, the total amount of bank credits has grown by BGN610MN - from BGN4.16BN as of December 31, 2001, to BGN4.77BN as of June 30, 2002. Compared to the amount reported in end-June 2001, the amount of released credits is up BGN1.3BN. It is also worth noting that over 93% of these credits are served properlyAccording to information announced in BNB quarterly bulletins, money in cash and deposits at disposal of the banks as of June 30, 2002 amounted to BGN3.2BN. This is a sufficient reserve, which in case of a crisis would allow the payment of over 36% of the deposits of individuals and companies (which total some BGN8.8BN) within a week.Of course, some banks have not yet cleared old losses accumulated as a result of suspicious operations of their shareholders and former managers. Others still fail to collect or to sell the assets they acquired a couple of years ago. There are also institutions which are simply ready to make experiments in order to increase their assets and market share. However, these are exceptions which the bank supervision authority has been successfully coping with so far.As time goes by, however,the battle for more customersis getting more furious, especially when it comes to the biggest and most solvent companies. Banks offer them various extra services just in order to attract them as clients. Financial experts comment that the local subsidiary of a European bank attracted solvent companies by promising to lend the credits under more favourable conditions. The companies would use these credits to settle their debts to the serving institution. This is a very old trick applied for attracting customers. However,the battle for attracting deposits of individualsis spreading on all fronts. Most banks whose assets exceed BGN100MN as of June 30, 2002 (except BULBANK, Biochim Comercial Bank, BNP-Paribas (Bulgaria), UNIONBANK, and Corporate Bank) offer a wide range of consumer and household credits. Some of them even launch specialized loans - for example, loans for buying a car or a computer. Bank directors keep a close watch on the conditions offered by their rivals and, if the market situation allows them, try to reduce interest rates, fees and commissions... The data provided by BNB as of June 30, 2002 show that credit institutions in Bulgaria are able to survive even without relying on revenues due to deposits abroad. Their total profit amounts to some BGN123.3MN, their net worth - to BGN1.6BN, and their assets - to BGN11.4BN (BGN1.2BN more than the amount reported in the middle of 2001).According to the ranking prepared by the BANKER weekly every quarter of the year, BULBANK, DSK Bank, First Investment Bank, SG EXPRESSBANK, and HEBROSBANK are the best performing banks in the country. They are the only ones included among the ten institutions which meet all the five criteria, selected by the weekly - balance sheet value, equity capital, profit, return on share capital, and return on assets. According to the BANKER weekly, the summarized evaluation of these five crieria provides a clear understanding of the position of each bank on the market, of its financial stability, and its efficiency.