• Mr. Stilian Vatev, Chairman Of UBB’s Board Of Directors And Chief Executive Officer gave and interview for Capital Weekly

UBB is one of the banks with traditions in consolidations, having also in mind its upcoming potential merger with Postbank (provided this happens at head offices’ level in Greece). It was founded in 1992 through the merger of 22 Bulgarian regional commercial banks and is currently still the largest consolidation project in the Bulgarian banking sector throughout its new history. It is property of the Greek National Bank of Greece. As of the end of last year it ranked fourth largest bank with assets amounting to BGN 6.348 bn.

In Capital Weekly’s general charting it occupies sixth place. The bank reports good results in the criteria for loans to deposits ratio (3^rd place) and conservative policy for loan portfolio provisioning, which is a good sign regarding lack of bad surprises (3^rd place). The net interest margin also facilitates its better overall performance. The capital to assets ratio contributes to that as well and it also provides an idea about the total capital adequacy level by ranking the bank 5^th in terms of this indicator. Its assets shrinkage, however, by nearly 15% drags it downwards in the chart by this indicator – 22^nd place. The return on assets and equity is not in its favour either (20^th place). The cost of financing for UBB is not among its advantages (16^th place), nor is its credit rating which is quite logical considering the fact that it is a Greek bank’s property.

How do you assess the past year from the point of view of Bulgarian banks – which were the main challenges and how did they cope with them?

The Y2012 performance of the Bulgarian banking sector has once and for all corroborated the fact that our banking system has withstood the shock of the Y2009 crisis and to top it all –it keeps maintaining some of the best liquidity and capital adequacy ratios in Europe and across the world. It is true that the sector’s profits have dropped drastically due to the non-performing loans, resulting from the crisis, but this is mostly at the expense of the shareholders and has in no way undermined the system’s stability and the confidence of the millions of bank clients. It is not too pleasant but I can’t escape repeating that in the meantime the crisis swept away whole banking systems in some European countries, and in other cases large and renowned banks were compelled to seek state support in order to survive.

As for UBB Y2012, apart from the fact it marked an anniversary, was not among the most successful ones in terms of financial performance, which is explicable. The good news is that we mark Y2012 as the final of the last three crisis years and from here onwards we’re going to launch our usual market activity with new and ambitious business goals.

What are your expectations for the sector’s development in 2013?

We cannot expect miracles just because the banks will persist in following the business’ and households’ demands. Unfortunately, the projections for economic growth in 2013 are still too modest – due to the latest political events the growth projected for this year has been adjusted downwards to 1%, which is not impressive. I keep on insisting that the lack of domestic consumption and economic activity in Bulgaria are due not so much to specific economic factors and restrictions, as to the major psychological distress from the crisis in both the businesses and the households. It holds true that the greatest damage has been suffered by the small and medium enterprises but their recovery depends mostly on the establishment of a less eventful business environment, predictable by at least a couple of years ahead and more optimistic expectations. Even at present there are plenty of programs for stimulating small and medium enterprises but their utilization is being performed at a rather slow pace. In other words and referring to Bulgaria, in particular, there is no need for additional funds or the like to be sought to stimulate consumption, employment and hence – growth - but something much simpler and cheaper –good business conditions and government predictability.

Which are the three most important trends for the Bulgarian banking sector in y2013?

I’m convinced that in general Y2013 will be better for the sector not just when it comes to financial results. As I have already pointed out, what I expect from banks, among which UBB as well, is to be able more actively and quickly to re-focus their work from the crisis consequences and internal restructuring to active banking intermediation, in response to the needs of the economy and growth.

In particular, I expect some significant changes in the sector’s structure – for example, change of ownership or consolidation of some of the smaller Bulgarian banks, new events in this direction are not ruled out either. In my opinion, some consolidation of the sector will be useful, considering the limited market and the large number of banking institutions.

What is your bank’s activity focused on during this year?

UBB’s focus for Y2013 is to put an end to the three-year stagnation, we will aggressively return on the market with an active credit policy and new banking products. Naturally, I can’t help mentioning also the announced merger of UBB and Postbank which is currently frozen due to reasons beyond our control. Nevertheless, it would not have impacted our Y2013 business goals due to the nature and time needed for this initiative.