Банкеръ Weekly



WE ARE READY TO TAKE PART IN BANK PRIVATISATIONJohn Chomel-Doe, EBRD Director for BulgariaMr. Chomel-Doe, has EBRD's Board of Directors already appoved its investment strategy for Bulgaria?- The approval of the investment strategy is a long process. It began in September and I can gladly confirm that the strategy was approved by EBRD's BoD on December 4. Within a few days it will be published on our INTERNET website. Which projects will the EBRD pay a special attention to in 2002?- Our main purpose is to support the fulfillment of the Government's priorities. We have specified three spheres, for whose development we believe we could significantly contribute. The first one is infrastructure, including the energy sector, telecommunications, and municipal central heating, transport and water supply. The second key sphere is the financial sector where there is a wide field for operation. We have already made quite a lot for the acquisition of shares in banks. We have launched many credit lines and we are now principally ready to assist the consolidation in the sector. We also assist privatisation by stimulating the banks to increase crediting and offer new products - not only banking, but also leasing, pension insurance and general insurance, etc. I should include the development of the capital market as well.The third field, that will be a priority for the EBRD is the encouragement of the private sector. In other words - everything regarding the finalization of the privatisation process in the industrial sector, the attraction of foreign direct investments, and the improvement of the business climate in the country.Some time ago the question of EBRD issuing bonds in order to promote the development of the Bulgarian capital market was considered. Do you have any specific intentions in that direction?- We are discussing the idea that EBRD launches a bond issue, denominated in Bulgarian leva.What will be the issue's size?- Media informed that the EBRD would issue BGL-denominated bonds, worth BGL1BN, which is a bit exaggerated. In fact quite a lot of zeros should be deleted from that amount. The size of the bond issue will be within several million leva, but we have not specified the exact amount yet. We should first reach an agreement with the Finance Minister and the Minister of Economy. We should not launch a very large issue, as it might push the Government's paper out of the market. We should also negotiate with the Cabinet the appropriate moment for launching the issue. It is exceptionally important to decide first of all on what the money would be spent. We don't see much point in collecting BGL10, 20 or 30 million if we would not be able to use it. We are presently assessing the opportunities, offered by the market, for utilization of the money. We have many ideas, one of which is to launch the money to local banks. Thus we'll give them an opportunity to offer more long-term crediting to their clients. The EBRD will not only stimulate the capital markets by such an issue, but will also assist the banks' development by increasing their role of directing more funds to the economy and offering various kinds of long-term financing to their clients.How will the financial instruments, offered by you, attract the banks' attention? Will the interest rates be reduced?- They'll probably have a longer maturity than the banks can afford. If a bank now wants to lend a medium-term loan to a client, it is simply not in a position to do this.If things go on well, we'll offer a long-term BG leva resource to the banks. We'll probably launch a 10-year issue, but once again I'd like to stress that this is just an idea. If all preparatory procedures are completed in the first quarter of next year and if the market situation is advantageous, we'll launch the issue by mid-2002.How do you assess the Bulgarian Eurobonds issue that was launched in mid-November?- It was very successful. The moment for launching it was very appropriate. This was an excellent performance both for the Government and for Bulgaria. The issue was managed very professionally. In addition, it attracted the attention to Bulgaria in a very favourable way.Which Bulgarian banks need rstructuring and reorganization at present?- The two state-run banks, liable to privatisation. We have declared to the Cabinet that we are ready to assist their divestiture. There are several ways to do that in the pre-privatisation phase. At this stage, prior selling a bank to a strategic investor, we could purchase a share of its capital, provide consultancy services, and start restructuring the financial insitutution in order to make it more attractive to strategic investors.How do you look on the divestment of DSK Bank?- It is possible to do something like pre-privatisation of DSK Bank. It is a very big and successful financial institution, and we are experienecd in the divestment of saving banks in the region. We intend to make a presentation to the Government, to the bank, and to the Bank Consolidation Company by the year-end, showing our previous experience in Central and Eastern Europe, and how DSK Bank should be properly structured according to us. We'll offer our assistance and wait for the response.Do you intend to sell your stakes in First Investment Bank and in BNP-Paribas (Bulgaria)? Isn't it uncustomary for the EBRD to participate for such a long period in credit institutions?- For the time being we do not have any particular intentions to sell our shares in these two banks. When the right moment comes we'll divest ourselves of our present stakes in order to assist the construction and management of other developing institutions.

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