Банкеръ Weekly



The branches of foreign banks in Bulgaria have always been subject of envy on the part of most managers of local credit institutions. And not a single time have bankers accused the Bulgarian National Bank (BNB) of allowing creation of conditions for unfair competition on the Bulgarian market. These branches give several significant privileges to their foreign owners. The minimum capital deposit of BGN10MN, which is obligatory for the opening of any Bulgarian bank, is not required for setting up a branch of a foreign bank.A very important advantage to the branches of foreign banks is that unlike the Bulgarian financial institutions they are not legally restricted as to the size of credits released by them. This circumstance attracts like a magnet big corporative clients. It's not fortuitous that the National Bank of Greece retained its branch in Sofia after purchasing United Bulgarain Bank (UBB), the second largest local bank, and operated several big credit deals through it.Some structures of foreign banks in Bulgaria have one more privilege as well. The deposits of their clients are ensured under European legislation where the guarantee is EUR20MN and not BGN10,000 as is the case in Bulgaria. Such an extra is offered by the local branches of Alfa Bank, Pireaus Bank, and the National Bank of Greece, and was until recently offered by the branch of HypoVereinsbank (which, however, acquired the status of an independent bank on December 18, 2001). Deposits in the branches of ING Bank and Citibank are guaranteed in compliance with Bulgarian legislation. Their clients, however, can be absolutely sure about their money as both credit institutions are world leaders in the financial sector.To cut a long story short: there are many advantages for a foreign financial institution to open a branch and not a bank in Bulgaria. This is confirmed by the financial performance of the seven branches of foreign banks in this country. The aggregate number of their balance sheet value was BGN856.3MN in end-November. Private and corporate deposits in foreign banks' local branches totalled BGN461.6MN, and they allocated loans amounting to BGN581.2MN. In other words, the above-mentioned branches are a real power on the Bulgarian market and each financial manager should take them into consideration.ING Bank, HypoVereinsbank (Bulgaria), and Citibank are the leaders among the local branches of foreign banks. Of them ING Bank has been present for the longest time on our market. The branch launched operations in Bulgaria in 1996, offering services to corporative clients only in the beginning. Its break onto the market came in the same year when a considerable part of the money which the firms were withdrawing from bankrupting banks were deposited into it. The branch continued to develop its services intended for companies and works with most of the big enterprises in Bulgaria. It has financed Neftochim and alloted an investment loan of about USD15MN to the Rousse Shipyard. As of the beginning of 2001 ING Bank's branch has turned its attention to citizens as well. However, its managers prefer to service mainly the employees of companies, which are clients of the branch. It ensures immediate payments by the Multicash system and offers debit cards, whose holders can use overdraft depending on their monthly remuneration. However, the ceiling of this short-term unsecured loan is BGN1,500.ING Bank's branch offers housing credits as well, whose size cannot be less than BGN20,000. They are repayable in three to ten years. From the beginning of 2001 till end-November the loans allocated to citizens increased from BGN900,000 to BGN1.5MN, and the credits to companies went up from BGN140MN to BGN199.7MN.The branch was developing quite successfully under the management of its Executive Director Peter Rolls. In the Janury 1 - June 30, 2001 period the balance sheet value of the Dutch division rose from BGN263.8MN to BGN306.7MN. In July, however, Mr. Rolls was moved to Ireland to head ING Bank's branch in Dublin. His position in Bulgaria was overtaken by Jan Wilem Overwater, who had worked for ING Bank in Malaysia, Indonesia, Brazil, the Netherlans, and the Czech Republic. However, the replacement in the management of the branch was succeeded by a decrease in its market share, probably a temporary one. According to data, its balance sheet value dropped to BGN265.1MNBGN from June to end-November, and attracted deposits from citizens and companies declined from BGN201.6MN to BGN171.2MN.The branch of Citibank had literally forced its way onto the Bulgarian market. The Bulgarian National Bank (BNB) licensed it to carry out bank operations on June 22, 2000, and it immediately undertook the servicing of the USD70MN loan, allocated by the US Citibank to the N-plant of Kozlodoui. The branch ended the year with assets of BGN125.8MN and the credits released by it reached BGN68.8MN. According to the Manager Plamen Ilchev, the structure he heads is working mainly with the big Bulgarain and foreign companies operating in Bulgaria.Through the branch of Citibank its clients in Bulgaria can use all products of the biggest private international financial group Citicorp, in which in addition to Citibank are the investment financial giant Salomon Smith Barney and the insurance group Travellers. The credit for their attraction to the Bulgarian market goes entirely to the incumbent Manager of the branch Plamen Ilchev, whose banking career began in 1982 at BULBANK. Mr. Ilchev climbed on all steps of the hierarchy and in 1987 headed its branch in London, holding the position till 1991 when he moved to the European Bank for Reconstruction and Development, where he was promoted to the post of executive director. In 1996 Mr. Ilchev was elected Vice Governor of the BNB. He left the position in mid-1997 and since then his fortune has been bound with Citibank. From November 1997 till September 1998 he was a Vice President of its subsidiaries in Warsaw and Moscow. In October 1998 he assumed the management of Citibank's branch in Sofia and in July 2000 quite logically headed it.In end-November the assets of the branch totalled BGN182.6MN, the companies' deposits in it amounted to BGN109.2MN, and the credits extended by it reached BGN103.2MN.HypoVereinsbank (Bulgaria) is the only one of the 7 branches of foreign banks, which was licensed as a bank by the BNB. Thus, the third largest banking group in Europe - HypoVereinsbank Group - affirmed its presence in Bulgaria. In the beginning of 2001 the assets of the structure, managed by Lyudmil Gachev, amounted to BGN137.6MN and reached BGN166.8MN by end-November.The Sofia branch of the Munich-based HypoVereinsbank (Bulgaria) was set up in September 1995. In the beginning of 2001 HypoVereinsbank purchased Bank Austria Kreditanstalt, entrusting to it the management of all its structures in Eastern Europe. In that way its Sofia branch went under Austrian control and its new patrons were granted a licence by the BNB to turn it into a bank with a capital of BGN29MN. It has 60 employees on pay-roll now.Lyudmil Gachev went through all these transformations as the immutable head of the Sofia branch of HypoVereinsbank (Bulgaria). He will be appointed Executive Director of the bank, to be called HVB Bulgaria. This will be an acknowledgement of his managerial skills. The branch headed by him works with private firms mainly. From June to November 2001 the credits extended by the branch went up from BGN106.3MN to BGN115.9MN, and the deposits of citizens and companies rose from BGN60.3MN to BGN70.7MN. Currently, HVB Bulgaria has branch offices in Rousse and Bourgas, and in 2002 will open a second branch office in Sofia. However, the Greek banks were the first to enter the Bulgarian market. The branch office of Piraeus Bank was the pioneer. It bears this name since mid-2000 when Piraeus Bank, dominated by the Vardinoyanis family, swallowed Hiosbank. The latter was licensed to open a branch in Bulgaria as early as in March 1993. The Greek bank is ambitious to expand its operations on the Bulgarian market. However, it failed to buy BULBANK and UBB in 2002 and directed its attention to First Investment Bank afterwards, but also run upon the rocks there.Pireaus Bank should obviously be content with its presence on the Bulgarian market through its Sofia office, which is headed by four managers - Yohanis Tzirigakis, Margaritta Petrova-Karidi, Jasmina Ouzounova, and Silva Ivanova. The branch is mainly servicing Greek companies operating in Bulgaria. In end-November its balance sheet value amounted to BGN70.3MN, the credits released by it totalled BGN61.2MN, and the deposits of citizens were BGN37.7MN.The branch office of Alfa Bank succeeded the structure of the Jonian and People's Bank of Greece, which was acquired by Alfa Bank in 2000. Alfa Bank is the second largest Bank in Greece and is controlled by the Kostopoulos family. Its Sofia branch, managed by Anastasios Stefis and Urania-Anna-Smaragdi, cannot boast of any particular successes so far. In end-November 2001 its balance sheet value did not exceed BGN44.2MN, and deposits of citizens and companies - mainly Greek - amounted to some BGN25.8MN.In November 2001 Alfa Bank announced it would merge with the top credit institution in our Southern neighbour country - the National Bank of Greece. This presupposes that Alfa Bank's Sofia branch will become a part of the structure of the united megabank and will be probably subordinated to the branch of the National Bank of Greece, which has been operating in Bulgaria since March 1995. The Manager of that branch, Christos Katzanis, is the foreign banker with the longest experience in Bulgaria. In 1992 he prepared the establishment of Hiosbank's branch in this country, and in the autumn of 1993 he settled permanantly in Bulgaria. Mr. Katzanis managed the branch office of the first foreign bank in Bulgaria till November 1995 and became a chief regional director of Global Finance afterwards. In March 1997 he assumed the same position for the Balkan region at the National Bank of Greece. He is co-managing its Bulgarian branch together with Konstantinos Bratos, Atanasios Panagopoulos and Sutirios Topaldzikidis. The balance sheet value of the bank structure was BGN84.8MN in end-November, up from BGN76.4MN in September 2001. Within those two months the credits allocated by the branch rose from BGN64.5MN to BGN71.6MN. Private and corporate deposits totalled BGN37.9MN in end-November.The performance of the only branch of a Turkish bank is much more modest than that of the other six branches of foreign banks in Bulgaria.Ziraat Bank's branch opened doors in Sofia on June 26, 1998. In end-November 2001 its assets totalled BGN42.5MN, the deposits attracted from citizens and firms amounted to BGN12.1MN, and the credits released by it were just BGN759,000. The branch is managed by Janer Akar and his deputy Fatma Shenel.

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