ONLY THE STRONGEST WILL SURVIVE AT THE FINANCIAL MARKET
In the beginning of the new millenium the balance of strength at the Bulgarian banking sector has undergone substantial change. About two thirds of it are controlled by foreign capitals and their share will keep growing.
The uncompromising redistribution at the financial market in Bulgaria is going to start in 2001 and it will be in favour of the banks, which have a more substantial amount of free funds, larger network of branches and well-off shareholders ready to support them financially at any time. Such potential for the time being have only the big Bulgarian banks, controlled by foreign investors.
BULBANK, DSK Bank, UBB, HEBROSBANK and FIB have gained the reputation of the best and most stable banks during the last two years. Should the methodology did not include the balance-sheet number indicator, the list of market leaders would not have changed. In 2001 however, it will undergo certain changes. They are predetermined by the race for redistribution of the market. The most aggressive players are expected to be BULBANK, UBB, Post Bank, SG EXPRESSBANK and FIB.
These five institutions have the necessary capital for strong increase of their credit portfolios, and their management teams showed their intent in getting more active even last year. Besides, the mentioned banks have a well trained staff, up-to-date information systems and well developed network of branches, which is a good basis for thier transactions increase and thus their fees and commissions income growth. The managers of privatised banks have no other choice - their new shareholders expect them to provide substantial profit.
Raiffeisenbank (Bulgaria) and BNP Paribas will also join the leaders group if they manage to double their profit in 2001. It depends on whether the new management teams of both banks will be able to urgently start operating as a team and get a notion of the local environment.
BIOCHIM will not be a threat in the struggle for the credit market, until the Bank Consolidation Company decides whether it will sell it to HEBROSBANK or will initiate a new privatisation procedure. In the first case this would mean further consolidation of HEBROSBANK and BIOCHIM. The obvious next step will be the restructuring of the new institution - a process that will last for at least a year, thus not allowing the bank to actively participate on the market.
NEFTINVESTBANK and Bulgaria Invest Bank, which assets already exceed BGL100MN have also showed their intention for growth. Although their management is entirely Bulgarian, these two banks are also controlled by foreign capitals. More than two thirds of NEFTINVESTBANK's shares are owned by off-shore companies, and 79.26% of Bulgaria Invest Bank's capital is owned by Allianz Bulgaria Holding, which on its part is controlled by the German insurance giant Allianz.
Economic and Investment Bank (EIB)and ROSSEXIMBANK also have their chances for expanding their share. EIB managed to fast increase its assets and network of branches by acquiring the bancrupt Economic Bank. ROSSEXIMBANK is about to follow it with the forthcoming purchasing of MINERALBANK. The lasting business success of both institution from this moment onwards will to a big extent depend on the political situation in the country after the elections.
The 13 small banks have already started incurring losses in the competition with the bigger ones. In 2000 the total amount of their balance-sheet number has dropped by 18.5%, and the amount of attracted funds from individuals and companies - by 34.76%. The loans they have launched have dropped by 2.13%. Figures show that this year the gap between big and small banks will increase and this will be for the account of the latter. They do not have the substantial financial reserves, and in order to keep their market positions will have to obtain foreign credit lines, and this is subject to considerable expenses. The other possibility to sustain competition is to attract new investors or to merge. Most managers and credit institutions shareholders know this, but most of them think that private Bulgarian capitals will hardly merge. So the fate of the banks, controlled by Bulgarian companies, is to become 'boutiques' which will be servicing mainly the business of their shareholders and will almost totally depend on their financial health.