THE SHARES OF DSK BANK ARE AN EXPENSIVE REMEDY FOR THE STOCK EXCHANGE
Svetoslav Gavrijsky, Goevernor of BNB, to the BANKER weeklyMr. Gavrijsky, immediately after the euro banknotes were launched on the market, some local economists hurried to propose that Bulgaria should adopt the euro as its official currency. Is there such a possibility?- It would be useless trying to introduce the euro unilaterally without having the support of the European Central Bank. We have already discussed the matter with its representatives and they told us such a move on the part of Bulgaria would not be supported. So, I don't see any point in discussing the issue any further.After the recent developments in Argentina many questions were put regarding the future of the currency board arrangement in Bulgaria. Is there a threat of that kind for our country?- Despite all debates, we arrived at a conclusion that the currency board arrangement should be preserved in Bulgaria. It is clear for everyone that no currency exchange rate exists (either fixed or floating) that could play the role of a remedy to the economy. At the same time, the 5-year successful functioning of the currency board in our country has shown that the economy can develop under reasonable fiscal and structural policies. If the incumbent Government follows the same direction I do not see any reason to discuss the currency board. It is true that this arrangement should be dropped sometime. As far as the Bulgarian Cabinet and the Bulgarian National Bank (BNB) are concerned, they have a clear vision as to when this should happen. Our policy is targeted towards Bulgaria's accession to the European Union, the European Currency Union and the introduction of the euro as a national currency. Then the country will automatically drop the currency board.Do you think it would be wise to speed up the privatisation of Biochim Commercial Bank and of DSK Bank, having in mind that more than 80% of the Bulgarian bank system's assets are already held by foreign capitals?- I wouldn't say that we are in a hurry to sell these two financial institutions. I have personally instisted that no deadlines for their privatisation should be fixed in the agreement with the International Monetary Fund (IMF). My opinion regarding DSK Bank is that it still needs restructuring and significant investments in order to make it a really operational commercial bank.As far as Biochim is concerned, it could be privatised if a good investor appears. The Board of Directors of the Bulgarian Consolidation Company (BCC) has set requirements, directing its sale to a buyer (either Bulgarian or a foreign one) would will be able to develop it. There is some talk that the set minimum purchase price of BGN95MN for participation in the privatisation tender for the bank is too high and somewhat prohibitive. According to me, the wide-spread opninion that Biochim is in a grave state and has endless problems, and that the bank should be sold in order to save it, has to be dropped out as this is not at all true. The bank is in a very good state. With the exception of DSK Bank, Biochim is the third largest local credit institution with good opportunities for development, and I don't see why it should not be sold at a sufficiently good price.Is it logical to float some of DSK Bank's shares for sale on the stock exchange against compensation instruments prior to finding a strategic investor for it?- On my insistance, the issue was discussed with the IMF Mission and was included in the agreement with the Fund. It is true there are diverse opinions on the matter within BCC's BoD. However, the view that it is not necessary to float 25% of DSK Bank's shares for sale on the stock exchange prevails. Rather, a strategy should be worked out for its sale as a whole when a strategic investor appears. I don't believe it would be wise to sell shares in DSK Bank against compensation instruments to unknown investors only in order to assist the development of the stock exchange.Do you have apprehensions that the banks, purchased by foreign investors, are pursuing a policy of refusing crediting?- I cannot claim they are following such a policy. The significant amount of resources, concentrated in the banks so far, allowed them to receive proceeds, covering their expenses, without taking big risks. But now they will have to reconsider their policy, as the 1-2% interest rates abroad would hardly ensure then the sufficient incomes. Does the BNB possess instruments for encouraging the banks to credit the Bulgarian economy?- We do not have any specific instruments for the purpose. We can only reduce the amounts of the required obligatory minimum reserves to be kept at the BNB. The amounts are a percentage of the funds, attracted by the banks. At its recent session BNB's Management Board made a decision, revoking the required minimum reserves for accounts and deposits whose terms are longer than 2 years. This enables the banks to attract long-term financial resources and use them for extending credits at lower interest rates.Why did you decide to close BNB's branch offices in Rousse, Bourgas and Vratsa?- The central bank's Management Board had been discussing this issue for a long time. We finally came to the conslusion that it would be more easier for the BNB to work with a smaller number of branch offices in a small country like Bulgaria. The decision caused protests on the part of regional governors and politicians. However, our decision was based on economic reasons and primarily on the volume of work at the individual branch offices. Therefore, we began closing some of the inefficient ones back in 2001, starting with that in Haskovo. Now it was time to close down the branch offices in Rousse, Vratsa and Bourgas. We may continue to close down offices in the years to come.