Nadia Koshinska, Director of "Small and medium-sized Enterprises" in First Investment Bank for "Pari" weekly

Naiden Nedyalkov took the interview

In the last year everyone talks that the bank financing of companies turned into mirage. Is this true or is just a trade myth?

It is more likely a trade myth. It is a fact that as a result of the negative economic prognosis during the last months we raised the criteria for financing and the requirements for our debtors but we have not stopped crediting. It is also a fact that some entrepreneurs considered more suitable to postpone the investment projects for a better business environment which led to relative decrease of demands for investment credits. In the search and approval of credits for working capital there is no significant change in the last year.

Will you tell us in detail more about the credit line of KFW which Fibank distributed between the SMEs in Bulgaria?

First Investment Bank offers corporate financing under credit line to the German investment bank KFW. These credits are developed mainly for SMEs and are limited to EUR 250 000 and in the credit line there are still fresh funds for putting into use by the Bulgarian business. The German bank in cooperation with the Bank for Development to the Council of Europe granted a credit line to Fibank after detailed inspection and approval by the European Commission. Under this credit line Fibank grants long-term financing for different investment projects, including buying and renovation of production and warehouse sites, plant, machinery and equipment, transport vehicles, as well as construction or renovation of production and warehouse basis, including starting business. Funds are also granted for purchase of agricultural land, agricultural machines and inventory. Companies with investment projects, approved to receive funding from the European Funds, including the Rural development program are also eligible for application for such a credit.  

Most of the people think that banks finance new business only by means of outside credit lines. Is this impression correct?

These impressions are caused by the fact that the signing of specific credit lines is announced in the mass media in most of the cases with the possibility to popularize the possibility for financing and inform as many companies as possible for the favourable conditions of the credit line. There is a maximum amount of each and every credit and the purpose is to limit the credit exposition so that a maximum amount of entrepreneurs could receive credit. In respect of the starting business, the outside credit lines are particularly useful because they give the possibility for the debtor to repay the loan over a longer period of time, provide a gratis period for servicing the principal which in most of the cases is determining for the project as a whole.

Outside the scope of credit lines with the purpose of relieving the conditions for crediting, Fibank works very successfully under the guarantee schemes in cooperation with Bulgarian Export Insurance Agency (BAEZ), Municipality Guarantee Fund (OGF) for SMEs to Sofia Municipality and soon enough the frame agreement with the National Guarantee Fund AD shall be concluded.

The percentage of bad credits during the first two months of 2009 has increased drastically namely because of the corporate sector. I am aware that this does not affect Fibank and is caused by other banks but as a person from this business you may suggest which are the areas of business with bad credits.

Currently debtors from the construction industry, transport services, textile and sewing industry probably experience certain problems with paying out credits but I consider that most of the problematic expositions could be brought back in the group of regularly paid credit expositions by means of adequate restructuring of the payment plans.  

Are there segments of the market that you are willing and reluctant to finance?

There are not privileged lines of business in the credit policy of Fibank AD i.e. financing is available to all companies and projects from all sectors of the economy of the country as well as agriculture as long as they can show the financial potential to service the credit for which they apply. Two years on we evaluate the risk of construction of residential and office buildings very carefully and in a sense we could say that we refrained from financing them based on our prognosis for development of the line of business.