2011-07-06 Le Monde: The Banks and the Bad Apples

by Alexandre Lévy, Western Balkans Printed in Le Monde 03 July 2011 edition

Since the beginning of the Greek crisis, the issue of bank stability and in particular of the bank system in the neighboring countries had been raised insistently. An issue even more pertinent if we take into account the fact that Greece is one of the most important investors in the region, notably in this sector. So, in Bulgaria at least five important banks are headquartered in Athens (United Bulgarian Bank, Postbank, Piraeus Bank Bulgaria, Emporiki Bank Bulgaria and Alpha Bank Sofia), representing nearly 30% of the sector. And since the start of the crisis, those responsible have been busy with reassuring the public opinion and the social political class, particularly after concerns expressed publically in March, 2010 by Finance Minister, Simeon Djankov, about the possibility of siphoning of local funds by their parent bank.

Nevertheless, before the Greek crisis, these foreign investments were seen as beneficial. And, if we are to believe American diplomatic reports, this foreign presence (Greek, but also Austrian and Italian) in the bank sector was even the reason the latter was relatively spared by the bad local practices. “The largest, safest and cleanest are the foreign-owned banks. The new international owners introduced good banking practices and improved the quality of banking services,” Ambassador Beyrle wrote in a cable, dated November 12, 2006, revealed by the Bulgarian partner of Wikileaks, the sites Bivol et Balkanleaks from Sofia. That's why the American diplomat further says that the Bulgarian banking sector is “healthy” in general and is “in its strongest position since the banking crisis of 1996.” With the noted exception of several banks, called by Ambassador Beyrle “bad apples.” There are half a dozen Bulgarian bank establishments, which, according to the Americans, must be observed over suspicions of ties with local and international mafia groups and their alleged money laundering activities. However, among these “bad apples” one can find, again according to Ambassador Beyrle, several major players in the sector: First Investment Bank (FIB), Corporate Commercial Bank, International Asset Bank, Economic and Investment Bank, DZI Bank, Investbank, Central Cooperative Bank and Sofia Municipal bank…

It is clear that five years after the American cable, with few exceptions, these banks are still there and are doing very well, particularly due to their relationship with the power, says the local partner of Wikileaks. "The bad apples were not only kept in the basket by the law enforcement authorities, but there is even a government commitment to sugarcoat them," writes the Bivol site. Its front-man, Atanas Tchobanov, confirms that he has contacted those concerned before the publication of the American cable - so they can comment on the prose of the Ambassador. Only two banks have reacted - the International Asset Bank and FIB. In the first case, in an email sent to Mr Tchobanov, the CEO of the bank has vigorously denied the accusations. In the second, more unusual response, the head of the FIB press service has sent a statement to the Bulgarian media to explain that his institution deems "unnecessary to respond to false and defamatory statements of Mr. Tchobanov, but wishes to inform the media about this unhealthy attempt to discredit Bulgaria and to attack its banking system.” In its infancy FIB received particular support by the European Bank for Reconstruction and Development (EBRD). Nevertheless, in 2005, the European establishment assigned all its assets to the two Bulgarian owners of FIB, Tseko Minev and Ivailo Mutafchiev.