Банкеръ Weekly



The excitement connected with the forthcoming precautionary agreement with the International Monetary Fund (IMF) and the latter's requirement for reducing the growth of crediting pushed to the background the problem with the sale of Borika EOOD, whose sole owner is the Bulgarian National Bank (BNB). And it was the central bank's wish to part with the national debit and credit cards operator that caused discords in the banking sector back in the autumn of 2003 when the managers of credit institutions split in two. Some defended the idea that Borika should be sold to Bankservice, the company in charge of interbank settlements system BISERA in Bulgaria, whose shareholders are the BNB and 28 commercial banks. The bankers' motives were that in this way all credit institutions which are Borika's direct clients will be able to control the company's operation. At the same time, the central bank will also have the opportunity to supervise Borika's work, and will thus fulfil one of its main functions, i.e. see to the troublefree operation of the payment system in the country. However, the possibility of selling Borika to Bankservice found opponents. For instance, the owner of ROSEXIMBANK and DZI Emil Kyulev said that if Borika was to be sold, it should be purchased by a private investor and not by a company in which the BNB or another state-run structure is a shareholder. Mr. Kyulev and the Executive Direcor of ROSEXIMBANK Vladimir Vladimirov proposed that commercial banks should set up a new, entirely private company for the purchase of Borika.In the end of 2003 the two groups united around the stance that the managers of the national card operator should work out a strategy for its development, to be discussed by commercial banks and the BNB. Only after approving it the central banks should invite a procedure for the sale of Borika EOOD. In end-April 2004 the above-mentioned strategy (for the 2004-2008 period) was already a fact. It is presently considered by commercial banks. Two things become clear from it. Firstly, the company is operating at a profit, that has been rising each year (in the end of 2003 its money on deposits - BGN4.68MN - was more than a third of its balance sheet value). Secondly, in order to ensure troublefree servicing of payments with debit cards Borika EOOD needs huge investments, which should be made by the end of 2008. According to the strategy for the development of the company till then, about EUR6.1MN should be invested in improvement of its info networks, maintaining payments in debit and credit cards. However, Borika should make other investments as well, which are not less urgent than the above-mentioned and cannot be covered by the company's proceeds. Smart cards are to be introduced and a building should be purchased to accommodate Borika's head office after the BNB sells the company. According to preliminary estimates, these two projects will swallow at least EUR10MN. That money could be ensured either by a long-term credit or through increasing Borika's equity capital.All above-mentioned factors will be taken into consideration by the BNB when preparing a scheme for Borika's sale. According to some experts, the central bank will ask for a price of about BGN8MN for 100% of the national card operator.

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