Банкеръ Weekly



Peter Rolls - ING Bank Regional Director for Bulgaria to the Banker weekly

Mr. Rolls, how do you estimate the results of the financial sector and the economy development till the end of the year?
- I don't know, I can't give you a number. For a start we have elections in June. I guess something depends on how the elections go. For us, we are more concerned with the businesses of our clients, rather than any political orientation they have.

Do you think that after the elections there might be changes in the political priorities that may be undesirable for the foreign investors, for the economy as a whole?
- Even if you have a fabulous foreign investment environment, no matter what the country is, you will always find some foreign investor to complain. For me, what is important, is that as a country Bulgaria establishes for itself the type of foreign investor it wants, or the nature of the foreign investment that it wants and choses that.

Why did ING Group chose to have a branch in Bulgaria, but not a subsidiary? The Sofia Branch was established in Sofia in 1994. After seven years at the market, are there any chances for changing it into a bank?
- This is not in our plans. It is better for us to be a branch, because we are not limited for the amount of credits, which we launch. As a subsidiary we would be limited by the size of our capital. Normally it is easier to operate in other countries as a branch, than as a subsidiary. Take Poland for example. We started in Poland as a branch. Then the Polish authorities said we have to be a subsidiary. In the end we became something between a branch and a subsidiary, but we have to have some capital requirements.

What problems do you come across in your operation here?
- There are relatively few problems. There is a funny problem that you have here, and that is inflation is very low, interest rates are very low, which means that the banks are extremely competitive, so we have to fight extremely hard for even a very small business. And that is my problem. Because in 1996 - 1997 we didn't have to fight at all. In fact we have been pushed over by people who wanted us. And now we have to fight for them. If we have any problems, this could be one of these problems. The market is extremely competitive. There are too many banks in fact. There are too many banks all chasing the same business - but this is good for the clients. On the other side we, as ING Bank, have a credit portfolio something like EUR150MN, but a huge proportion of it, something like 60 - 65% of it is in local currency. The interbank market for local currency is very thin. So this makes it difficult, generally speaking, for banks to give a price to their lending, so to agree a cost to their client for the client to understand, because what we do not have is any rate at which banks borrow from each other in the local market, which anybody can check. A borrower of ours cannot easily check whether the rate we are giving him is a good rate, or a bad rate. It is not easy for him to do this. But this is not a problem - this is simply a matter of market development and market liquidity.

Do you see any significant problems that might occur in the banking sector?
- Not really. I think that the Central Bank is actually doing a very good job. Nowadays it has good reporting requirements of its banks. The only think I would say, I still believe there are still too many banks, so probably the banking sector needs to consolidate a little bit.

How do you think banking legislation should improve?
- Generally speaking the banking laws, such as they are, are adequate. What I think everybody in the banking community still feels uncertain about is the laws surrounding collateral security. ING Bank does not give anybody money if their collateral is a building. When the law allows us properly to take collateral and in the event of client not paying we can properly sell that collateral and get some money back, then may be we'll be interested.

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