Банкеръ Weekly



Ms Georgieva, what were the decisions of the annual general meeting of FIB shareholders?
- In the first place, the majority shareholders were adamant they would not sell the credit institution. As a sign of their intention to continue developing it in the future they decided to set aside as reserves the entire 2007 profit of BGN51MN. In this way, the shareholders' equity will be raised and will enable the bank to be a competitive and stable institution.
For years you have been responsible for FIB's international operations. Do you feel reserve on the part of your foreign partners who have so far financed you?
- We do not face any reserve on the part of our traditional partners. The reason is they know us very well, they have effected many deals for us and they know our capabilities. Some of them have been already working with FIB for ten years, since the moment when in 1998 we took our first loan from abroad. And for not sounding groundless I'll tell you that in November 2007 when the crisis on international markets was already a fact, our bank managed to borrow a foreign syndicated loan, totalling EUR185MN, released to us by 22 banks, at an interest rate which was lower than that at which we were financed even before the crisis. But I'll repeat again these creditors were banks we have been in close business relations with for years on end.
Concerning banks which do not know us, it's very difficult to establish relations with them, let alone - take a loan. We don't have problems in Europe because almost all banks there know us. Currently, however, we are trying to set up relations with banks from the Middle East and we face difficulties here. In the first place - because we are the first Bulgarian bank they are confronted with. Secondly - they have no limits for our country and don't know anything about it. It's bad they identify Bulgaria with Europe, and Europe is in a crisis.
You said you were trying to establish business relations with banks from the Middle East. What did you mean?
- These are banks in Dubai, Abu Dhabi, Qatar, and other countries from that region, where there are huge quantities of free money. Bulgarian business has very rapidly developing relations with these countries. Moreover, having abundant free funds, many local banks participate in a number of financial consortia, which extend the syndicated credits. FIB is presently setting up correspondence relations with banks from the Middle East. A credit institution from the region even participates in the EUR185MN syndicated loan I told you about.
Are there any specifics of establishing business relations with banks from such countries?
- Their culture is quite different from that of Europeans. Don't forget that no matter how developed these countries are, habits and contacts in them are very much dependent on their religion. And when one goes to such a bank in order to negotiate and set up relations, that person should be very careful, especially if that person is a lady. Well, I did not wear a yashmak, of course...
As far as I remember in the beginning of 2008 FIB announced a programme for attracting a financial resource of EUR500MN. What is that programme and is it on the agenda now?
- The programme and the bank's project, connected with it, are intended for the Luxembourg Stock Exchange. The prospect in question is a kind of a third audit in our bank because it was carried out not only by our chartered certified accountants, but also by our lawyers in London. The programme projects to market a bond issue at an appropriate moment in 2008 and raise the bank's capital. These two things are bound together because if we launch a bond issue we'll need capital raise as well. Currently, however, it is very difficult to organize the launching of a bond issue. I'll tell you bluntly there are no other corporate securities in Europe with such a rating as our bank's. At the same time FIB urgently needs fresh money. Therefore, we decided to wait for the suitable moment when the market calms down and we'll be able to attract money at an acceptable price.
International markets do not offer financing at present or if they lend money, it is at incredibly high prices. That is why we preferred not to attract money from abroad even after we paid off in January a EUR200MN matured bond loan we had borrowed before. That was particularly important for us in order to show investors we were not dependent on international markets, and that if we look for money in the future it will be for the bank's development and not for meeting any urgent payments.
Do you have any assumptions about the length of the crisis on international market?
- Some claim it has just started. Others believe things will be all right by mid-summer. Still others say the crisis will calm down by the autumn. In short, nobody can tell you with absolute certainty.
In other words, banks in Bulgaria should entirely rely on the money they attract from Bulgarian citizens and firms. Is that so?
- Our market indeed becomes the main and the cheapest source of financing. After we made the promotion of the new deposits, bearing 7.5% and 6.66% interest rate, FIB's attracted money rose very quickly.
How quickly?
- This is information that I cannot reveal because one of the commitments the bank, being a public company, has made is to announce its current financial indicators to the Bulgarian Stock Exchange first.
Let me continue about the attracted funds. The resources that we attract did increase, but we did not raise the interest rates on all deposits and accounts so we don't have a considerable growth in the costs for serving our debts. Besides, interests on attracted money are growing everywhere in Europe. I visited London about three or four months ago and I saw an advertisement of one of the leading British banks publicizing a current account with a 6.7% annual interest rate.
Do you feel any difficulties in transactions with letters of credit and commercial financing of companies?
- No, just the opposite, since we joined the European Union many of the foreign partners of our customers no longer require confirmed letters of credits and some do not even require letters of credit. They work directly with the Bulgarian companies by accepting deferred payment for delivery of goods and services. But there are companies which are just stepping on the European market and letters of credit should be opened for them until their partners come to know them.
What is the longest period in which Bulgarian companies are able to get rescheduling of the payment of goods and services they supply from abroad?
- If the payment is made through a bank credit, the rescheduling may be up to seven years. This is particularly valid in the case of buyer credits which include a letter of credit.
What is a buyer credit?
- It is the so called credit of the buyer which I recommend that all importers of machines and equipment use. They take a credit from the bank and also sign a letter of credit, but they do not pay until the machine is installed and tested. This insures the importer against the need to make costs for something that may not be put in exploitation or may not be as efficient as written in the documentation. The credits I talk about are also very cheap, because as a rule suppliers' receivables on them are secured by the export credit agencies of the respective countries which reduces the risk of losses.
This was the type of credit used for one of the chair lifts in Bansko which was paid off long time ago. By the way, that was one of the gossips on the market - it said that FIB had big receivables from the companies which built and were exploiting the chair lifts in Bansko, but it was not true. I can confirm my statement with figures from the bank's crediting portfolio. Tourism and construction account for 4% and 6% respectively of all loans launched by the bank. Therefore, these rumours about Bansko are groundless and speculative. It is true that the financing of the chair lifts was a very big investment but it was paid off in three years from the revenues the equipment provided.
You know that the world crisis began with problems with mortgage loans. Do you think home crediting in Bulgaria is threatened by a problem of this kind?
- Since the US mortgage bonds crisis began, experts in the West have been claiming that mortgage crediting is a dirty word. However, at First Investment Bank we say that home credits are one of our priorities. Twenty-seven per cent of our crediting portfolio is directed towards individuals and half of that financing goes for construction loans. We think that mortgage crediting is a very perspective sector, because most of the people who borrow from us to buy houses are young and with a relatively high income. This is proven by the fact that for all these years receivables on mortgage loans that we have been collecting through the court are quite few.
Today FIB is entirely owned by Bulgarian shareholders. Do you miss the support of a big foreign shareholder? And does it result in losing competitive advantages on the domestic market?
- Right now we do not. Most large banks abroad are facing serious problems because they lost extremely large amounts of money in the crisis. The fact that our shareholders are Bulgarian people and companies allows us to be extremely flexible when we have to react to market situations or change our products or business plan. These are all things of great importance in order for a bank to be competitive. They happen with difficulty when a crediting institution is owned by a foreign investor. Our products are made by Bulgarians and are especially designed for our market - just like a custom suit. And when we need to use a western know-how, we attract as consultants the same companies whose services the large western banks use.

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