Loads of Business Loans During A Financial Crisis
Monday, 25 August, 2008
A record high – BGN 3.2 billion were lent to the business in Bulgaria from the commercial banks in the second quarter of 2008, according to data of BNB, Pari Daily reported. Despite the fact that 2006 and 2007 were the golden years for the credit institutions around the world, the Bulgarian banks had never lent more than BGN 2.96 billion in a single quarter.
The strangest thing about this record is the fact that it comes in a moment of a global financial crisis. According to Assen Yagodin, Executive Director and Member of BD with Eurobank EFG, the most probable explanation for this phenomenon is the speed, which the sector has gathered over the last few months. He also thinks that the vacuum, made from the expectations of the end of 2007 and beginning of 2008, has been released and people needed funds.
The companies from the commerce segment have received the biggest part of theloans – BGN 975 million, followed by the real estate sector – BGN 501 million, and the construction sector - BGN 485.6 million. The analysis shows that there is a decrease of the financing of hotels and construction. Levon Hampartzoumian, CEO of UniCredit Bulbank, said that there was a global tendency in the real estate policy over the last few months, as he thinks that in Bulgaria the biggest problem was the holiday destinations property.
Even if the growth of lending were to drop before the end of the year, the banks would have given a lot more loans compared with 2007. According to Stoyan Dinchiyski, Executive Director with BACB, the rapid growth could not go on forever, and if there were panic when it eventually stopped, the Bulgarian economy would be endangered. Peter Andronov, CEO of EIBank, thinks that the massive lending could have negative effect on the Bulgarian economy, and that the percentage of bad loans would grow.
Violina Marinova, CEO of DSK Bank and CEO of ABB (Association of Banks in Bulgaria), pays attention to the fact that there is a rapid growth in the household lending – BGN 1.64 billion in the last quarter.
Source : http://www.focus-fen.net/