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Victoria Mindova

€ 31 million took the Bulgarian Development Bank from its big brother, the Black Sea Trade and Development Bank. The contract was prepared in eight weeks and according to representatives of both banks, the rapid completion of the transaction is due to the high professional standards imposed by the two financial organizations.

The funds are expected to finance small and medium enterprises in the country, which are the backbone of the Bulgarian economy currently. The President of the Bulgarian Development Bank Assen Yagodin and the head of the Black Sea Trade and Development Bank Andrei Kondakov, who seemed equally happy with the new deal, signed the contract in Thessaloniki. They stressed that the two financial institutions enjoy excellent cooperation, and intend to continue to work together in the future.

The Greek Minister of Development, Competitiveness and Shipping Michalis Chrysohoidis attended the event. He wished neighbouring Greece soon to open a development bank to enjoy as beneficial cooperation with the Black Sea Trade and Development Bank as the Bulgarian bank.

The contract between the two banks was signed on the eve of the Thessaloniki International Fair within the business forum "Development Banks: Their role in economic development." The business event was initiated by the Black Sea Trade and Development Bank and the Greek Ministry of Development, Competitiveness and Shipping and his Minister was an honoured representative of the event. The topic is of present interest, because not only Bulgaria in the face of its development bank has acquired new resources to finance the local economy but also for Greece, which is willing to draw valuable experience from other states, which use development banks as another tool for achieving positive economic growth.
 
The forum representatives of financial institutions supporting the economic development from Bulgaria, Germany, Austria, Croatia and China attended the forum. They shared their experience in the field, thus outlining the basic framework and what the new development bank, which Minister Chrysohoidis is willing to establish in Greece, should be. Liquidity problems of the Greek banks are not secret any longer and now the financial circles are seeking the fastest and most effective ways to gain their independence from the European Central Bank. More than a year, it has been the only bank accepting the devaluated Greek government bonds and as a mother of a grown-up child, tried to wean the Greek banks from its help.

The establishment of a Greek development bank to provide funds to the commercial banks in the country probably will not solve the problem of liquidity in this sector, but could improve its condition somewhat. This is the main conclusion GRReporter made after the forum. It was confirmed after face-to-face conversations with some of the foreign representatives from the banking sector, who stressed that the establishment and proper coordination of a development and investment bank is not an easy task. No one was willing to forecast that such an initiative would succeed one hundred percent, but it became clear that a bank of this type would significantly contribute to improving the economic environment in case some basic conditions are met. The first and perhaps most important of them is its independence from the political system in the country. It should act in full transparency and customer choice should be as impartial as possible. The second condition is to provide competent management, which in principle applies to all enterprises, whether public or private. The third condition is to create the right regulatory environment in which to establish the activity of the institution.

The manager of the Black Sea Trade and Development Bank Andrei Kondakov opened the forum. He stressed that the institution he represents aims at promoting regional cooperation. The projects it funds are related mainly to small and medium enterprises and the public sector. In addition to medium-term targeted funding of perspective institutions, the Bank specializes in raising capital to increase its efficiency. Regardless of its name, the Black Sea Trade and Development Bank has a much broader impact that extends in much of Eurasia and the Bank's authority capital reaches € 3.3 billion.

After the hosts’ speeches, the Vice President of the European Investment Bank Matthias Kollatz-Aachen was also invited to present the experience of the major European institution. He said that in times of crisis, the bank develops a different type of funding policy for troubled countries. If the ECB focuses on the financing of public projects in countries outside the economic turmoil, in countries with financial difficulties because of the crisis, it focuses mainly on corporate funding and small and medium enterprises. These enterprises have no easy access to finances in a period of economic instability but they are important pillar for employment, which requires redirecting the funding policy according to the economic conditions. Such is the EIB policy to Greece, where about 96% of the companies in the country could be defined small and medium enterprises.