Банкеръ Weekly



Alexander Sabotinov, Executive Director of Raiffeisen Investment (Bulgaria) to the BANKER weekly

Mr. Sabotinov, it's not a secret that Raiffeisen Investment (Bulgaria) is carrying out preliminary research on Biochim comercial bank and Central Cooperative Bank (CCB). Does the Austrian Raiffeisen Zentral Bank intend to bid for the purchase of any of these two financial institutions?
- If the Government invites a tender for Biochim's privatisation in September, Raiffeisen Zentral Bank will try to acquire the State's share in it. Austrian bankers believe that Biochim is the better option as it has a well-developed branch network, an excellent system of internal information and international payment, and a well-trained personnel.
CCB's operation is very close to that of Raiffeisen Zentral Bank in the sphere of agriculture and small-size business. Regretfully, however, the ownership of the Bulgarian credit institution's capital is fragmented, its credit portfolio is not balanced, and is management is far from the best.
In order to illustrate the seriousness of Raiffeisen Zentral Bank's intentions, I'll recall that about two months ago it bought the state-owned Banca Agricola in Romania, which brought USD15MN to Romania's Government. The purchase price was low as the financial institution was in a grave situation and only part of its liabilities were undertaken by the State. I am an optimist concerning the successful divestment of Biochim and the substantial revenues it could bring to the budget.

Will Raiffeisen Zentral Bank unify Biochim's strutures with those of Raiffeisenbank (Bulgaria) if it buys the Bulgarian credit institution?
- Biochim's independence will be kept initially. It will remain a separate juristic person with independent management up to the moment when it is ascertained that the two banks are at one and the same level in management and quality of operations. However, Austrian bankers' principle policy is to effect all bank deals in Easten Europe - acqusitions and mergers - through a spectial company which is 100% their ownership.

Which are the other projects that you are currently participating in?
- We are now trying to win three donor packages. One of them is offered by the World Bank and is aimed at researching the business climate in Bulgaria. The other one is for feasibility studies on the construction of six waste dumps in this country using western technologies. The third one has been ordered by the Finance Ministry and is on the encouragement of foreign investment in Bulgaria.

How would you assess the enterprises in whose privatisation Raiffeisen Investment (Bulgaria) was a consultant?
- Most of them are developing at a fairly good pace. In leisure industry, for example, hotels and holiday villages are being renewed. My advice to the owners of the Roussalka holiday village (which was privatized by a tender) would be to attract a strategic investor, as there are not a few problems in the northern-most Bulgarian resort.
In my opinion, the problems of the Goroubso ore mines are being exaggerated by the mass media. Twe of the companies there were in liquidation back at the start of the divestment procedures. Goroubso-Madan (purchased by the Turkish-Russian consortium Rodopa Investment) really has a big problem regarding the overdue back wages. During the time of the privatisation when we were consulting the Privatisation Agency on the deal, the companies' liabilities and especially those accrued from unpaid wages to workers, increased drastically. Due to the delay, some of the liabilities were not included in the privatisation documentation and remained to be settled for the State. That is why Rodopa Investment's requirement that the budget should pay at least the overdue wages, is reasonable.

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