UBB IS THE PEARL IN THE BALKAN CROWN OF THE NATIONAL BANK OF GREECE
Apostolos Tamvakakis, Vice Chairman of the National Bank of Greece, to the BANKER weeklyMr. Tamvakakis, a considerable part of the investments of the National Bank of Greece in the Balkans over the last few years were in risky regions. What is the present assessment of their efficiency?- As a whole our investments in the region show quite satisfactory results. United Bulgaria Bank (UBB) is obviously the pearl in the crown of the central bank of Greece. We are developing very well in Bulgaria, even better than we expected. UBB has good indicators. Our leasing company Interlease, as well as the representative office of the investment bank - Eteva-Bulgaria - are profit-makers. The bank is operating well in all three market segments. Moreover, we don't have any whatsoever problems with the managerial teams, which is something very important to us. We are glad that people here are so good professionals.We have four branch offices in Albania where the results are good, too. Our operations there are mainly connected with management of deposits as are the common practices of most banks in Albania. We intend to expand our presence there by opening another two or three branch offices.We set foot in Romania in 1995. The National Bank of Greece opened a branch office in Bucharest, which is developing well. It's a public secret that we want to expand our opearyins there in order to gain an umbrella' over retail banking in the Balkans. Our next step in that direction is a matter of time and we believe this could be done within 12 months. So, we are operating satisfactory even in Romania.We are preparing to open a branch office in Serbia. We have already received an approval from the Serbian central bank and we hope to start operations by the year-end. I don't think we'll buy another bank there. We'll rather try to expand our structures there. In my opinion, it's entirely possible to have about 30 branch offices in Serbia.In Macedonia we own Economic Bank, which is currently experiencing problems due to the political situation in the country over tha last 7-8 months. We are glad that the conflict between the Slavonic and the Albanian ethnic communities have calmed down. I believe the country will soon go back to normal rails. I'd like to mention that despite of the problems which Economic Bank faced this year and the inevitable losses we'll suffer, the National Bank of Greece has undertaken a commitment to that country. We raised the shareholders' equity by some DEM10MN and we'll increase it again next year if necessary. Our problem in Macedonia is that in the present situation we cannot stick to the international accounting standards, and we are obliged to do that because the National Bank of Greece quotes on the New York Stock Exchnage - we have to set aside very big provisions. Therefore, we'll suffer some losses. Thanks God, we communicate very well with our co-investors - the European Bank for Reconstruction and Development and the International financial Corporation - and we are unianimous in our plans for developing long-term business in that country.Did you suffer losses from the conflict in Macedonia?- Yes, greater than we expected. But this is not someting we shall not be able to cope with.What are your targets for next year regarding UBB and the other banks in the region?- Usually, we don't make public our targets, but I'll tell you something in general regarding all our investments outside Greece. Of course, there are some specifics, depending on the concrete cases. The minimum return on investments that we require is 12% for three years. In the case with UBB we are very near that target. Another condition is to achieve return on the assets exceeding 1.8%, which is the average for the international markets and not only for Bulgaria. The third consition is for an interest spread below 2.2%, but this also does not concern Bulgaria, becasue the net interest spred here is higher than 2.2%, as we require, as the market is operating in a different situation. Last, but not least is that the efficiency coefficient - the ratio between operational expenditures and the aggregate opeational proceeds - should not exceed 65 per cent. These are the four major targets we aim to realize when expanding outside Greece, independently if we oprate in London or in Bulgaria. Of course, the difference between the countries themselves should be taken into consideration. I have to say hat the importance of the international network in the bank group of the National Bank of Greece regarding the aggregate net profit before taxation is increasing each year. Last year, for example, the share of the international network in the group's total profits prior taxation amounted to 5.6 per cent. This year we expect the share to go up to 10-11%, and reach 15% in 2002. We project is at 20% by end-2003. Every year we aim to increase our proceeds from operations outside Greece.Do you intend to participate in the privatisation of Biochim commercial bank?- No, we have already sufficiently big presence in Bulgaria. We have a strategy to fulfill in UBB and the purchase of another bank would not be to our interest, as it would probably delay the implementation of our strategic aims. We trust very much UBB's personnel and its managerial team. I think we improve each year our positions regarding the market share. But I believe the question is not only about teh market share. Next months you'll probably see difference in our operation on the market. Our attitude will be more aggressive, especially in the banking services to citizens and in the new products we'll offer.What changes do you think are necessary in the busienss climate and legislation in Bulgaria in order to attract more foreign investments?- I would not like to go into details as I don't think I'm an expert in the sphere of Bulgarian legislation. However, I could mention two things. The first one is that the more the macroeconomic indicators are maintained and controlled, the better it is for the economy as a whole. The demand for financial products goes up then, too. The second thing is that there should be a well operating legal system. This is a gradual process and the conditions are improving each year. They cannot be changed right away. The fact that proper decisions are made about the country's legislative and fiscal system, and that the financial sector is operating well, is good.