Банкеръ Weekly



The general meeting of United Bulgarian Bank (UBB), held on May 29, voted for keeping the credit institution's entire 2005 profit in its Reserve Fund. UBB is in fact yet another big domestic bank which is not distributing dividends for the past year and is using its profit to increase its equity capital in order to be able to continue its credit expansion. The reason is that the aggregate amount of released loans directly depends on the size of the credit institution's equity capital. The bigger it is, the more loans it can allocate. And practice has already shown that the aggressive allocation of credits is the most efficient way to expand market positions. Therefore, many banks, UBB included, are inclined to violate the BNB-set crediting limits and deposit in the central bank an additional amount of obligatory minimum reserves in order to be able not restrict the volume of released loans. Of course, that is connected with additional expenses, but in the case of UBB they are entirely justified as the constantly increasing crediting portfolio considerably raises its proceeds.
According to the report, presented to the general meeting by the bank's executive directors Radka Toncheva and Christos Katzanis, the credit institution's 2005 net profit from interest totalled BGN180.5MN, marking a 33.9% increase year-on-year. Almost half of that amount - 48.1% - is accounted for by proceeds from credits, allocated to citizens. Proceeds from interest on loans to firms have a little higher share - 48.9 per cent.
The general meeting of shareholders on May 29 approved the report of UBB's managers about its operation in 2005, the report on its revenues and expenditures, and the report of the auditing company Deloitte Audit OOD. It will be checking and certifying the bank's reports in 2006 as well.
In order to be exact we should recall that 99% of UBB's shares are owned by National Bank of Greece (NGB). Therefore, the development of the Bulgarian credit institution entirely depends on it. The shareholders voted for the three incumbent executive directors - Stiliyan Vutev, Radka Toncheva, and Christos Katzanis - to be re-elected for another 3-year mandate. Efstatios Arapoglu - BoD Chairman and CEO of NGB - was relieved from UBB's BoD due to his great pressure of work at NBG. No new BoD member was appointed to succeed him. Instead, UBB's shareholders decided to change the bank's statutes, reducing the BoD team members from nine to eight.

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