Банкеръ Weekly

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A BULGARIAN BANK IS THE ONE THAT CREDITS BULGARIAN PEOPLE

Peter Harold, Executive Director of BiochimMr. Harold, before being appointed Executive Director of Biochim Commercial Bank you had for many years been responsible for the liquidity and the big international companies in Bank Austria. You are probably used to serving companies that work with billions of dollars and euros. Do you think you can find such customers in Bulgaria too?- In Bulgaria, through their own offices or subsidiaries, there are lots of international companies that are customers of Bank Austria both in Austria and in other countries where we have subsidiary banks. I think this is one of the great advantages of Bank Austria - to offer its services through an international network all over the world. This is an important part of the bank's business and our task is to constantly develop our share of the market of corporate bank services. Our other goal is to expand our positions on the individual services market. In your opinion, which are the biggest challenges facing banks in the Eastern European countries and particularly the challenges that Bulgarian banks will have to cope with after the country joins the European Union?- When I look at the salaries paid in Bulgaria and the other countries in Central and Eastern Europe, I note that they are very much below the level in Western Europe. In this aspect, countries from Central and Eastern Europe have an advantage. On the other hand, the equipment and the machines used in Central and Eastern Europe need to be modernized. In fact, quality and price are the most important indicators in the international competition. In the countries that are to join the EU, salaries will inevitably go up, so if the companies want to be competitive, they need to invest in more modern machines and technologies...But I asked you about the banks?- I will tell you about them, too. But before that I want to say that one of your country's incentives to become a member of the EU is the free flow of goods and capitals which the Union guarantees within its borders. Therefore, every company sees united Europe as one market with hundreds of millions of customers. After the country joins the EU, there are no legal obstacles for a company to attract these customers. After joining the EU Bulgaria will be able to implement many big projects prepared by international companies and banks should be ready to attract these companies as their clients.A bank like Biochim is about to face the following challenges: we have to be a Bulgarian bank, which means also that our employees should speak Bulgarian. Those who do not know your language will have to learn it.We should watch what needs people in the country have and offer products that meet their requirements. Because in Bulgaria you have to serve Bulgarian people. It is very easy to lend USD800MN to finance the construction of a 50 km part of a highway and then collect the interests on the loan. But in this case you are not a Bulgarian bank. We work in a different manner, we try to finance the individuals and the economy of the state in which we are present. We want to act local and think global. For me, this is the key to success.Isn't there a danger that after Bulgaria joins the EU many local companies will lose their markets and will become unable to pay off the credits borrowed?- When making a decision about its future growth, every company should answer these questions: which are its major markets and in which area of the business is its strength concentrated? Also, what is its main market when the company is a small one? And what is it when it is medium-sized or large? If small and medium-sized enterprises are able to answer these questions and concentrate on their strong positions, they will succeed. We are aware of the risks that we take by crediting, so before we launch a credit we analyse the expected cash flows, the business plan of the company, the collateral.Do you know that in Bulgaria there are successful businessmen who are not able to write down a business plan by themselves? What are you doing with such a customer? Has he a chance to borrow money from Biochim?- In the talks with such businessmen, a great role is played by the bank's relationship managers. They are people who must speak the language of the potential borrowers, must know their business, their problems, their development plans, and the condition of the respective market. In the course of their conversation with a potential customer they have to understand whether he knows his competitors, their weak and their strong points, whether he knows how to improve his company's weaknesses, and whether at all he has an idea about investing the bank credit. Eventually, relationship managers must be able to get a full idea about the businessman in one or two conversations, and if they decide that he is reliable, to fill in the forms and write the business plan with him. Was that your manner when you were a member of the Management Board of the Croatian Splitska Banka?- Yes, it was.What differences and similarities are there in the business conditions in Croatia and Bulgaria?- The advantage of Bulgaria is that you are an applicant for EU membership, while Croatia just wants to become an applicant. I know that in the end of February 2004 representatives of Croatia have had talks in Brussels about what measures the government should take in order to become an EU applicant. What Brussels recommended was that Croatia learn from the experience of countries like Bulgaria.If we compare the countries in terms of their fortune, the average annual amount of the gross domestic product (GDP) per capita in Bulgaria is EUR2,110 (according to the guide that Bank Austria issues every year), and in Croatia it is EUR5,410. But in countries such as Germany and Austria, it is EUR25,000. Therefore, both Bulgaria and Croatia have to walk a long road until they reach that level.Here is another comparison. For Croatia and Bulgaria, tourism is of great importance. Bulgaria has the Black Sea and Croatia - the Adriatic. But whereas tourists from Italy, Austria, or Germany can reach the Croatian resorts in two or three hours by car, they need to take a plane to come to Bulgaria. So, Bulgarian resorts are visited by different groups of tourists, which means that you have to offer services with different quality.What do you mean?- You should try to attract tourists who can afford staying at four- or five-star hotels and who would visit your country not just in the summer but also in the autumn and winter - to play golf, for example. For this purpose, however, you should invest in improving your infrastructure, so that you can facilitate the access of the foreigners to your tourist sites. The fact that Bulgaria is an applicant to join the EU gives it an advantage, because it has greater access to financing from European funds.It is known that you play golf. Did you learn the game first or the banking business?- First I learned the banking business. Golf is just for relaxation. But I have heard your colleagues saying that golf is an integral part of the everyday life of big banks' managers. Is that true?- Yes, it is true.Where are most deals made in the West - in the office or on the golf ground?- Like I already told you, in Biochim I am responsible for the large multinational companies and for the liquidity. I prefer to negotiate and sign deals in the bank. When I play golf, I do it for pleasure, not for business.

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