BANKSERVICE REINVESTS ITS BGN906,000 PROFIT
The shareholders of Bankservice Plc - the company maintaining interbank settlements in Bulgaria - observed the years-old rule to raise its equity capital by the size of its annual profit. It was BGN906,000 for 2005 and the general meeting of Tuesday, May 2, 2006 made a decision to set it aside as general additional reserves. Bankservice is in fact among the few companies in this country, not aimed to bring profit to its owners, but established in order to provide vital services for their operation. Its shareholders are the Bulgarian National Bank (BNB) and all commercial banks in the country which wouldn't be able to effect transfers without that company. The maintenance of such a system for settlements needs constant modernisation of computers, servers and the software for their operation. That requires huge investments and therefore Bankservice which is one of the top developers of finance-related software in Bulgaria does not distribute dividends to its owners.
The second rule, uncharacteristic for most commercial companies, which is steadily observed in Bankservice, is that the concrete size of shareholder participation is updated at regular intervals according to four criteria - number and size of settlements effected by one bank, number of its branch offices, and size of its equity capital. No change of the rules or replacements in the BoD were made at the general meeting on Tuesday. By definition it is chaired by BNB's Vice Governor in charge of the central bank's banking department. Currently, this is Dimiter Kostov. Alexander Tsintsarski is the company's CEO, and Lyubomir Tsekov is Executive Director. The other six BoD members are heads of commercial banks and until the next annual general meeting their names will be as follows: Violina Marinova, CEO of DSK Bank, Stiliyan Vutev, CEO of United Bulgarian Bank (UBB), Momchil Andreev, Executive Director of Raiffeisenbank (Bulgaria), Lyudmil Gachev, Executive Director of HEBROSBANK, Yordan Skorchev, Executive Director of First Investment Bank (FIB), and Stanislav Georgiev, member of BULBANK's Management Board.
Several statistical data are indicative of the volume of work done by Bankservice. In 2005 the BISERA system, maintained by the company, effected 45,120,000 settlements, worth a total of BGN62.95BN. This amount is considerably higher than Bulgaria's gross domestic product (GDP). The average daily number of transfers effected through BISERA was 178,350, worth a total of BGN249MN.
Bankservice maintains as well the SEBRA system for budget payments, servicing all state-run institutions. The number of settlements effected through it in 2005 was 2,24,000, worth BGN12.33BN.
These facts clearly show that if the networks maintained by Bankservice stop functioning for just a day or two, that would result in a complete financial havoc in the country, panic among commercial banks' clients, and even a general crisis. Therefore, the BNB Act explicitly stipulates that Bankservice is responsible for the security of the settlement system in this country. Some financiers even claim that the damages from a terrorist act would be even less than those inflicted by an eventual blocking of the networks, maintained by it.