Mr. Bedford, we understand you are working with the Bulgarian First Investment Bank on a major international project. Would you tell our readers more details about it?
- IFC, a member of the World Bank Group, has been working closely with Fibank during the past year to increase their capacity in corporate governance and risk management. As the Bank looked forward to continued growth they realized that improving in these two areas would help to insure this was done in a risk averse way through increased transparency, better understanding of the risk factors involved in decision making, and an overall more robust organization able to assess and manage all risk areas. This will help the Bank to continue to be stable and able to better withstand possible future shocks.

Are you satisfied with the results you and your partner have achieved so far here in Bulgaria?
- The results with Fibank have been exceptional and we are lucky to have a partner as engaged as they are. They were already one of the more advanced banks in Bulgaria, but with the ambition to go from good to great and be on par with the best internationally. For us to have a partner like this who have bought into this strategy and is willing to not just talk, but also put their resources behind the process shows a long term commitment to continued excellence and lays the foundation to ongoing improvement.

Where else have you carried out similar projects? Tell us about the more interesting of them.
- IFC works globally in many different markets which allows us to truly understand both what is the best practice and how to adapt this for different markets. We have recently been working with several banks in your neighbor Romania to develop comprehensive in house training programs for their SME bankers and improve their economic capital models to help them better allocate their resources. When working in more mature markets, like Bulgaria, I always find the most interesting work is to uncover a profitable niche that competitors are not working in, such as value chain financing or green bonds, and help our partners successfully enter this market. This can both help the economy grow and our banking partners extend their reach.

What is new in banking, which good banking practices are the Bulgarian banks still lacking, and would you work with them towards their acquisition?
- There are still some gaps in fully implementing the Basel principles. Specifically fully understanding the implications of economic capital decisions and the implementation of robust Internal Capital Adequacy Assessment Process (ICAAP) models, which can be used in a strategic manner rather than just to fulfill a regulatory requirement. The sector also needs to take advantage of more modern practices in SME banking, as this is a market which will be key to the future of the best banks. This includes both an overall improvement of the SME Banking approach, but also entering new areas such as gender finance, non-financial services, and climate change. IFC can certainly help support banks to improve their capacity in all of these areas.

Would you define the Bulgarian banking system as stable, and which are its positive sides?
- I would categorize the system as stable, as it is well capitalized and sufficiently liquid. The resilience of the system after the stress of 2014 underscores the underlying strength.

Banks in our country are preparing for the upcoming asset quality review (AQR) and the subsequent stress tests. Their managers are apprehensive that this may slow down lending. Is there such a threat, do you think?
- There are two parts to this issue, the amount of resources diverted away from day to day operations during the process itself and the business decisions which need to be made as a result of the tests which may affect lending choices.
While the AQR is a time consuming activity those banks that have already have the relevant data available and have instituted more advances scenarios for their stress testing are at an advantage, as much of the work is done. Those banks that are not prepared though will find that their core business of lending might be disrupted with resources now involved in the AQR process. Similarly, those banks, such as Fibank, which have already been using more advanced risk assessments in their lending decision should face less disruption as a result of the tests, as they already are taking a more robust approach to risk mitigation in their strategy. Some banks though that have not properly assessed the riskiness of their loan book may find that they will have to make some real changes to their strategy, including their lending practices, to ensure they have sufficient quality even under more robust stress scenarios.
Overall, the review will be an important step to maintain the credibility of the financial sector in Bulgaria.

What new IFC projects are currently under preparation?
- IFC engages in countries like Bulgaria selectively in projects with high added value and visible long term developmental impact. IFC portfolio in Bulgaria spreads across various sectors, including infra, retail, heavy industry, gas extraction and distribution, etc. We will continue to support innovative and sustainable projects that Bulgarian private sector develops.

About IFC
IFC, a member of the World Bank Group, is the largest global development institution focused on the private sector in emerging markets. Working with more than 2,000 businesses worldwide, we use our capital, expertise, and influence, to create opportunity where it’s needed most. In FY15, our long-term investments in developing countries rose to nearly $18 billion, helping the private sector play an essential role in the global effort to end extreme poverty and boost shared prosperity. For more information, visit www.ifc.org.

IFC in Bulgaria
Bulgaria became a member of IFC in 1991. Since then, IFC's investment in Bulgaria totaled $956.2 billion, including $224.3 million in funds mobilized from our partners, in 40 projects across a variety of sectors. In addition, IFC has supported trade flows of $326 million through its trade finance program. Our committed investment portfolio in Bulgaria as of 30 June 2015 is $194.1 million. IFC’s role in Bulgaria is changing in light of the country’s EU membership and the growing availability of private financing. IFC’s focus has centered on areas such as infrastructure, renewable energy and agriculture. IFC also invested in the financial markets, general manufacturing, retail, oil and gas. For more information, visit www.ifc.org/eca

Mr. Garth Bedford
Garth Bedford joined IFC with 15 years of banking experience. He is currently based in Istanbul as the Program Head for the Europe and Central Asia Banking Advisory Program, tasked with improving risk management, NPL management, and SME Banking skills of banks in the region. He started his career in the USA as a regional manager for a commercial bank and subsequently has worked in Europe, Asia, and Africa to improve access to finance globally. Garth has a strong background in commercial banking, with a focus on operational and credit risk management. Garth contributed to the financial market development worldwide serving as Managing Director of financial institutions in Azerbaijan and Afghanistan, and as an expert supporting bank development globally. Garth is a Canadian national and holds an MBA from McGill University in Canada.