We were the first to launch high interests on deposits and we were attacked

Mrs. Georgieva, for some time now there have been persistent rumours that FIBank is not doing well, even that it will go bankrupt. Why is that?

These rumours are certainly not true. We knew about them but we did not want to be the ones denying them. This is why I am glad that yesterday Mr. Rumen Simeonov, head of the Bank Supervision Department of the Bulgarian National Bank, explicitly stated that we are in excellent financial state.

Did you discuss the issue with the BNB governor Mr. Ivan Iskrov and with Rumen Simeonov?

We are constantly in touch. We turned to the Central Bank because the insinuations were spreading. They are in some internet blogs and forums but there is nothing official that would allow us to take legal action. This is why we asked BNB for support. They said: "Gladly. We know the bank well and we can officially state that everything is OK." But someone had to ask them, because they too can’t just come out and say - there is talk that...

Where did the rumours start?

According to our sources it all started from bg-mamma - a women’s forum about babies. From there the information jumped to other forums and blogs. That is how the tension accumulated. We shouldn’t forget that many investors have FIBank shares and share prices throughout the world are dropping. This is why people are concerned and susceptible to rumours.

And yet, who do you think is launching the rumours and why?

It is very difficult to say who. We believe that the main cause for the rumours is that we were the first to launch on the market deposit products at very good interest rates. We saw that interest rates all over the world were soaring, banks were not lending money to other banks like they did before the worldwide financial crisis, so we decided to be the first to offer a deposit with an interest of 6.66% - "Devilishly Decent Deposit". We attracted a lot of money with this product.

The money comes from financially literate clients, not from people who keep cash under the mattress. These deposits left other banks and each bank has its budgeted targets. Let’s take the branch of a certain bank in Yambol - they have a budgeted amount of attracted funds and when this money goes elsewhere the branch director doesn’t know what to do because his performance, his salary depend on that budget. It is quite possible that in their panic some bankers acted inadequately.

Is it true that your clients received letters offering them to move their deposits to another secure bank?

Something like that did happen. But I find it acceptable because this is open and therefore fair competition. When you write a letter and openly state: "This is who I am and I can offer you something better", that is OK. But when you spread completely concocted stories about instability, that is unfair competition.

Have you notified the authorities?

Yes, the rumours spread over the internet will be investigated and fines will be imposed to those who are found guilty. The other day, for example, someone in a website said that the bank’s capital adequacy ratio is low. I am not quite sure that whoever wrote that knows what the capital adequacy ratio stands for, but they wrote it right after we had published the information that our capital adequacy ratio is almost 14%. Many large banks throughout the world have a lower capital adequacy ratio. When I am meeting foreign bankers I give them this figure and they are impressed. It’s true, Bulgaria is a risky market and the requirement here is for 12%, but again 14% means a lot, it means a lot of lending opportunities. They, however, guarantee security.

I counted at least 8 rumours about First Investment Bank. There are probably more. The first one I heard, and I heard it as early as last year, is that you will be purchased by a foreign bank. Is this being negotiated?

You should be asking this question to Mr. Minev or Mr. Mutafchiev. They are the major shareholders in FIBank. I personally, as a manager of the bank, have meetings all the time. Just as an example, yesterday I had a meeting with people from Morgan Stanley.

Investment banks come to us with a list of large financial institutions who have expressed their interest in buying FIBank. After all, we are the sixth largest bank in Bulgaria. Interest has been demonstrated by large banks which are already on the Bulgarian market. Consolidation is happening all over the world, it is quite normal to see mergers. It is also quite normal that we generate such interest.

But if a large investor enters the bank, then all rumours will become completely groundless?

Yes, when Post Bank acquired DZI Bank, they immediately became the 5th largest bank in terms of assets. Bank mergers create stability, although at first it is difficult both for bank personnel and for clients. This happened with Bulbank when they merged with Hebros and Biohim.

Does this mean that a similar scenario is not impossible?

Yes.

The other rumour which started somewhere at the beginning of 2008 was that the majority shareholders – Tzeko Minev and Ivaylo Mutafchiev – have fallen out

Unlike many Bulgarians, they have worked in perfect balance ever since I first met them in 1989 when they were both working at Biohim. They have complementing personalities. Besides, they are very young and very rich but this has not changed their attitudes. Their feet are firmly on the ground and they know what they are doing. I have rarely met people who work so well in tandem. If one of them lacks something, the other one has it. So, falling out is out of the question.

There is talk that the prices in Bansko are falling and so are their investments.

They do not have investments in Bansko whose prices are falling. They own several hotels there. By the way, bank loans extended for construction and tourism form only 9% of our loan portfolio - 6% in construction and 3% in tourism.

We heard claims that you are having liquidity problems because of forthcoming bond payments.

We have no other payments forthcoming this year. In January we repaid a EUR 200-million bond - it was the first Eurobond in Bulgaria and it was for a period of 3 years. But with a Eurobond you know when you have to repay it and, naturally, we were prepared and we repaid it, which was a very significant sign for the international markets. We demonstrated that we are financially independent. Many banks, in Kazakhstan for example, are fully dependent on the international markets. They borrowed heavily and when the crisis struck, they were neither able to borrow again, nor to make their repayments. Their national bank interfered and they somehow handled the situation.

Because people don’t know much about Bulgaria, it was good for our country, for investors and for the bank to demonstrate that we are independent and that we are able to repay amidst the world-wide financial crisis.

There has been some tension in your branches. Are you capable of handling mass cash withdrawals if people come and ask for their money?

Yes, we are.

Those who feel insecure can withdraw their money, but they will lose the interest, as provided in the agreement for breaching the deposit terms and conditions. They should know this. There will be no loss for the bank because it turns out that the money was kept with us interest-free. This is why we want to warn our clients that they will be losing their interest because of rumours.

There’s this saying - you kill a fly and a bank with a newspaper. Now they are trying to do this with rumours. Why don’t we see any official information against FIBank in any of the newspapers? Because the rumours are just that - they are not true. Indeed, some people are withdrawing their money. We have everything organised, we have more cash ready. But some people are so frightened – like this morning this guy came up to me and said, "Yesterday I could not withdraw money from my card." I told him, "Please, come with me, I will withdraw money from my card and you will see that everything is all right." I did and then I put him through to the Card Payments department. It’s not that I don’t understand those people. If for some reason a transaction did not go through, and they have heard the rumours, it’s understandable that they are not feeling comfortable.

They are probably reacting because you only just implemented your new IT system and this always involves certain difficulties.

We have been working on the new IT system for two years and we could not, having invested so much money in it, to withhold it any further. Besides, we had hired contractors to perform the installation. We had to do it. Probably the launch coincided with the rumours, but it had been planned well in advance. Many people ask me, why did you change the system? Well, the old one dated back to 1993, when FIBank was founded. It had been upgraded but could not provide high quality service or process large numbers of clients. It sometimes got blocked or backlogged. Can you imagine what a huge task it is to migrate all the information from the old system to the new one? We have over half a million clients. I recently heard about another bank – their system was out for a whole 6 hours. I personally was in a bank in Germany when they just stopped working and said, "The system is out". Outages occur everywhere.

Quite probably it was on purpose that the rumours spread just when we were changing the core banking system. And then, when a client sees that something doesn’t go as expected, they immediately start wondering whether the rumours aren’t true. I am not accusing them, people fell victim to those rumours.