BANKS WILL BE SURVIVING ONE BY ONE
(continued from Issue 47, p. 23)Bank consolidation in Bulgaria very much resembles the market economy - everybody expects it and it never comes. For years on end experts have failed to provide an adequate explanation for the operation of 28 banks and 7 branches of foreign credit institutions on such a small market as the Bulgarian one. Moreover, some 47% of all bank assets are concentrated in BULBANK, DSK Bank, and United Bulgarian Bank, and the remaining about 53% are distributed between the other 32 credit institutions, some of which the BANKER weekly presented in its previous issue.It would be logical to suppose that under the current market situation the time has come for unification. It has been the talk of local banks' managers and shareholders since mid-2001, but there is no evidence whatsoever by now that this would happen. On the contrary, each of our banks tries to expand its market share by itself.Bulgarian Post Bank was not particularly aggressive on the market throughout the first nine months of 2001. Its balance sheet value went up from BGL509MN to BGL575MN in the January 1 - September 30 period. The bank's executive directors Panayotis Varelas, Oliver Whittle, David Barton, and Theodoros Karakasis, stake on the improvement of services to corporative clients and on the expansion of the credit products, offered to citizens.Bulgarian Post Bank is one of the few Bulgarian financial institutions, offering housing credits and almost all kinds of consumer loans - for current expenses, fridges, washing machines, cars, etc. From June to September the aggregate amount of this type of loans increased by 12.7 per cent - from BGL45.4MN to BGL51.2MN, while credits to private firms rose by 28.2 per cent - from BGL148.4MN to BGL190.3MN.Raiffeisenbank (Bulgaria) also counts on crediting as the main source of its revenues. Unlike the leaders in the branch, however, the bank has concentrated on the corporative sector primarily, and has almost excluded consumer loans from its services. The explanation of its Management Board Chairman and CEO Johan Jonah is that launching of credits to citizens and households is profitable only for banks with well-developed branch networks, which have specialized informational products for such activities. The Austrians extend consumer loans only to the employees of companies which are their clients.The strength of Raiffeisenbank (Bulgaria) lies in the financing of big companies. The minimum amount of credits released by it is USD150,000 or its equivalent in Bulgarian leva or euros.As of the autumn of 2001 the bank offers jointly with the Soros Fund for Economic Development target credits for small and medium-sized enterprises. Firms that have been operating for at least two years and employ between 10 and 100 people may apply for such loans. The minimum size of credits is EUR30,000, and the ceiling is EUR100,000. The guarantees for these loans are at least 130% of their value, and the annual interest rate is between 9% and 10 per cent. The bank charges additionally a commission for management, amounting to 2.5% of the respective credit's prinicpal.Raiffeisenbank (Bulgaria) is among the few banks, whose aggregate amount of extended credits exceeds half of its total assets. In end-June 2001 this ratio was 50.5 per cent, and three months later it went up to 62.4 per cent. Moreover, within these three months alone the total amount of released credits increased by 24.7 per cent - from BGL171.2MN to BGL213.5MN. In the same period proceeds from interest on the extended loans rose by over 67 per cent, reaching BGL10.4MN, and the bank's net profit went up more than twice - from BGL1.5MN to BGL3.1MN.BNP-Paribas (Bulgaria) has also bound its operation with big corporative clients. Unlike Raiffeisenbank (Bulgaria), however, it does not count so much on crediting, but on the management of assets. The bank's mangers intensified this policy after the financial institution was headed by Ulrich-Guenter Schubert in 2000. On assuming his post Mr. Schubert announced his intention to develop the so-called private banking, i.e. management of the finances of affluent citizens amd prosperous firms. This undertaking is already successful in Bulgaria. According to BNP-Paribas officials, by end-September the bank was already managing more than BGL30MN of private persons' free financial resources.The credit institution's balance sheet value rose by 7% in June 1 - September 30 - from BGL340MN to BGL366.1MN. In mid-2001 the loans lent by the bank amounted to 22.2% of its assets, and three months later went down to 21.1 per cent. The bulk of the private and corporative money, attracted to BNP-Paribas have been invested in deposits in foreign banks.ROSEXIMBANK, however, follows quite a different type of policy. It is currently one of the most quickly developing credit institutions in Bulgaria. From the beginning of 2001 to the end of September the total amount of its assets rose by some 136.8 per cent - from BGL96MN to BGL227.3MN. The bank's Chairman Emil Kyulev succeeded to attract as executive directors the former heads of Bulgarian Post Bank Vladimir Vladimirov and Reni Petkova.On assuming the management Mr. Vladimirov announced his intention to double ROSEXIMBANK's balance sheet value by the year-end and is about to fulfill his promise. The bank's assets totalled BGL132.7MN in June and reached BGL227.3MN three months later. ROSEXIMBANK offered the Moneygram system for immediate settlements abroad and a possibility for electronic payments. Its clients can effect their remittances to their partners in Russia in roubles.The bank's managers are also taking steps to expand its positions on the debit cards market. But improvement of services and attraction of new clients is just one line of ROSEXIMBANK's policy.The other direction for expansion of market positions to which Mr. Kyulev attaches much importance is the acquisition of bank assets. ROSEXIMBANK is a candidate-buyer of the bankrupt BALKANBANK, but the big challenge for it is the bidding for Biochim commercial bank. Emil Kyulev has a dream and it is to turn ROSEXIMBANK into a big credit institution that will be a real competitor to the locally operating banks, controlled by western capitals.The managers of Bulgaria Invest Bank stake on the image of its major shareholder - Allianz Bulgaria Holding. The latter has a well-developed structure, including three insurance companies and a pension insurance fund. Industrial Holding Bulgaria, which controls a dozen of valuable local enterprises, is also its ownership. On that background the bank's main task is to efficiently manage the free financial resources (about BGL50MN) of Allianz Bulgaria Holding and its subsidiaries. So far the bank's managers - Oleg Nedyalkov, Dimitar Kostov, and Strahil Videnov - are successfully fulfilling this task. Bulgaria Invest is one of the biggest local buyers of state Eurobonds. It has acquired securities worth a total of EUR8MN for its clients.From the beginning of 2001 till now Bulgaria Invest is trying to develop also services to clients which are not within the holding's structure. The bank offers special deposits, giving automatically an opportunity for getting a credit. Some 170 persons have so far used this service, and BGL2.3MN has been attracted into such deposits.Within a year the cards issued by Bulgaria Invest increased from 371 to 15,015 and the number of payments by them rose from 1,271 to 135,396. In the sphere of crediting the bank still concentrates on firms. Loans extended to them account for 96% of its entire credit portfolio, which totalled BGL49.5MN in end-September. The total amount of consumer credits is just BGL1.9MN.NEFTINVESTBANK has also concentrated its efforts on servicing mainly corporative clients, most of them connected with the business of Naftex Petroleum Bulgaria and of Festa Holding. The bank's balance sheet value was BGL96.8MN at end-September, and the amount of released credits totalled BGL26.3MN, some 98% of which - to private companies.Through the Contact system NEFTINVESTBANK gives Bulgarian and foreign citizens an opportunity to effect immediate international payments up to USD2,000 with the European and Asian countries of the ex-USSR, with Lebanon and the USA. The bank's clients can use its debit cards but operations with them may be effected on Bulgaria's territory only. NEFTINVESTBANK offers a special investment deposit, yielding between 6% and 8% annually. The service is intended to private and corporate clients with free financial resources exceeding BGL10,000 or the equivalent in convertible currency. The interest towards this service is very big, the bank's Executive Director Maria Koteva specified. Some 400 specialized investment deposits have been opened so far, with the total amount on them exceeding BGL13MN.Corporative Bank is busily making its way on the local financial and credit market. In the summer of 2000 when BULBANK sold it to ten companies registered abroad it was capsuled - its balance sheet value was around BGL13.3MN. In the beginning of 2001 Corporative Bank's assets exceeded BGL22.1MN, and at end-June they were over BGL35.5MN. During the following three months the bank's managers Tsvetan Vassilev, James Howie, and Ivan Konstantinov, continued to expand the market niche. In end-September the bank's balance sheet value reached BGL43.3MN, and the credits extended to private firms totalled BGL15.1MN, against citizens and companies' deposits of BGL17.4MN.In end-May 2001 Corporative Bank bought the building at Garibaldi square in Sofia, where the bank of the Bulgarian legendary financier Atanas Bourov was located. Three months later Corporative Bank's head office moved there.In July Tsvetan Vassilev succeeded to sell the 19.43% package of the credit institution in Central Cooperative Bank (CCB), gaining from the deal some BGL315,000, i.e. BGL0.10 per share. Four months later the Bulgarian Consolidation Company sold its 32.8% stake in CCB at a profit of BGL0.13 per share.One of the purposes of Corporative Bank's policy is to establish itself on the currently emerging local market for management of affluent citizens' and firms' free financial resources. In addition, the bank's managers intend to quickly develop its business, trying to acquire the assets of the bankrupt BALKANBANK. In order to accomplish this, however, they will have to overcome ROSEXIMBANK's competition.First East International Bank (FEIB) succeeded to resist the competitive pressure and retain its market share. From June till end-September 2001 its balance sheet value rose from BGL72MN to BGL78.4MN, while private and corporate deposits went up from BGL31.4MN to BGL34.8MN. The bank's managerial team headed by Anna Sabeva has concentrated its efforts on services to companies, controlled by Troud i Capital holding and by Stara Planina Hold (the former Central Privatisaation Fund, managed by Evgeni Ouzounov, former executive director of FEIB and deputy governor of the BNB from June 1996 till June 1997). FEIB has extended 450 credits for turnover capital, totalling BGL39.8MN. Eleven investment loans exceeding BGL5.3MN have been allocated as well. The bank expands its presence on the debit and credit cards market, having sold more than 25,570 pieces at end-September and 150,000 payments were effected by them. FEIB is also developing operations in cheques. It issued cheques for over USD3MN within the first three quarters of 2001.Although FEIB's market share on the local finance and credit sector is not great, the CEO Anna Sabeva has managed to set up a stable basis for its future successful development.