Банкеръ Weekly

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FEELINGS BETWEEN BNB AND COMMERCIAL BANKS RAN HIGH BECAUSE OF ENCASHMENT

UBB AND DSK BANK SET UP THEIR OWN NETWORKS FOR SAFE-KEEPING OF BANKNOTES A heated debate was held between Martin Zaimov, Vice Governor of the Bulgarian National Bank (BNB), and the executive directors of United Bulgarian Bank (UBB) and DSK Bank - Stiliyan Vutev and Raiko Karagyuozov - at the cocktail after the general meeting of the Association of Commercial Banks (ACB) on March 19. The three bank executives were trying to reach an agreement about the services, which UBB and DSK Bank branches would be using at the central bank's regional structures.Their efforts to tune down emotions remained vain, and those present at the cocktail heard that Mr. Zaimov demanded from UBB and DSK Bank CEOs their categorical support for BNB's project to close down its regional branches in Bourgas, Rousse and Vratsa. Mr. Vutev and Mr. Karagyuozov withdrew after the debate without saying what they discussed with Mr. Zaimov. The two CEOs believe that BNB's policy of closing down its branch offices is correct, but the central bank should undertake by itself the negative effect of these measures.The BNB made a decision to shut down its regional branches in Vratsa, Bourgas and Rousse in the beginning of January 2002, and this caused a storm of protests on the part of municipal councillors and citizens. An avalanche of appeals against the projected measures followed. They were even signed by some heads of commercial banks' branches. Many MPs from the three regions joined in the attack.BNB's regional structures have been servicing so far encashment of commercial banks and firms, without having profits from these operations. The closing down of the central bank's regional branches will force the banks to organize the encashment between themselves, which is connected with considerable expenses for most of them. At the same time, however, a new market will be created - for trade in banknotes and for encashment services. Good profits could be made there, and some financial institutions are already preparing to gain a share on it.DSK Bank and UBB, for example, have begun to set up their own system for encashment services. DSK Bank has already built eight major encashment centres for supplying banknotes and coins to its branches and collecting the money from them. The credit institution has more than 1,100 local structures in the country, through which a considerable amount of banknotes go every day. The money is supplied on demand by 31 specialized armoured vehicles. In the beginning of March DSK Bank's Managemnt Board made a decision to buy eight more such vehicles.Encashment is a very expensive activity. A new armoured vehicle costs about BGN100,000 and a drive from Yambol to Bourgas is at least BGN400. These costs are at the expense of the branch, whose encashment is being serviced, DSK Bank's CEO Raiko Karagyuozov pointed out. How shall I make the head of the Bourgas branch not use the services of BNB's local structure, having in mind that it is located opposite our Bourgas branch.UBB, on its part, has set up 12 regional encashment centres, supplying its 140 branches and offices, as well as its 240 cash machines. The centres are also servicing UBB's big clients, such as the petrol stations of Shell and OMV, where considerable amounts of banknotes are collected every day. UBB's managers are considering a project for establishing a subsidiary, to be handling encashment services only, and in addition to its big clients would be offering such services to the smaller credit institutions in the country as well.

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