Banks in Bulgaria have started the race to attract clients with an appetite for European Union subsidies. On September 27, Bulgaria and the European Commission signed the official documents for approval of the operational programme Development of the Competitiveness of Bulgarian Economy, the first Bulgarian operational programme that was officially endorsed by the EC. The funds under this programme amount to 1.1 billion euro for a seven-year period. On November 27, it is expected that Bulgaria and the EC will sign the documents for two more operational programmes: Transport and Environment. The first accounts for more than two billion euro that should be allocated by 2013 and the second for 1.2 billion euro.
On November 14 the Regional Development and Public Works Ministry was scheduled to launch the Regional Development Programme. In total, Bulgaria will receive funds under seven EU operational programmes for the period 2007-2013. All seven programmes have been approved by the EC: Transport, Regional Development, Environment, Development of the Competitiveness of Bulgarian Economy, Development of Human Recourses, Administrative Capacity and Technical Assistance. The programmes will be financed by two EU funds – the Cohesion Fund and the European Regional Development Fund. Bulgaria is expected to have access to seven billion euro over the period, which will make the competition among banks even more intensive.
With all that money at stake various banks have launched products targeting small and medium enterprises. Among the first was International Asset bank (IABank) who, in July this year, signed a package deal for strategic co-operation with the Bulgarian Association of Agencies for Regional Development and Business Centres. The agreement was in support of small and medium companies and municipalities in EU finds allocation. The bank has signed an agreement with the State Agriculture Fund (SAF), according to which the bank will grant advance loans to farmers who will receive EU subsidies.
With IABank setting the trend, most banks soon followed and launched their own products aimed at farmers. The basis for that was the agreement signed in June between 21 commercial banks and the Government to support farmers in accordance with European Union’s Common Agricultural Policy and Common Fisheries Policy.
Four months later, a half-an-hour “walk” through the websites of some banks showed that the potential of the EU operational programmes have been seriously taken into account by the financial institutions. Each bank has taken a separate approach in “targeting” potential candidates for EU subsidies.
In the case of Raiffeisenbank Bulgaria (RB) a separate unit has been set up with the aim of offering products for obtaining EU subsidies. On November 9 the bank announced the launch of its latest unit called European Funds. The unit is aimed at small and medium enterprises and provides bank financing of up to 100 per cent of the value of applicants’ projects.
Two weeks before RB, DSK Bank also launched its own unit with the purpose of facilitating the process of applying for EU fund’s resources. The new subsidiary is called DSK – Bul Project Ltd. Again applicants can apply to receive up to 100 per cent of the pre-project activities’ value, with a term of up to 60 months.
First Investment Bank’s (FIBank) has focused is exclusively on farmers. Following its agreements with the Ministry of Agriculture (MA) and the SAF, the bank performs intermediary functions and provides financial aid to the farmers. FIBank provides access to the EU’s Special accession program in the field of agriculture and rural development – SAPARD.
On October 6, United Bulgarian Bank (UBB) launched its latest product aimed at farmers. Again this was a result of the agreement UBB signed with the MA and the SAF. According to its own data, UBB has a 33 per cent market share when it comes to granting loans to farmers.
Investbank also has a credit line aimed at farmers whose projects have been approved by the SAF.
For now, Investbank seems to be the only bank granting loans to farmers on the bases of an agreement signed with the Ministry of Labour and Social Policy (MLSP).
Investbank seemed to have taken into account the EC approval of the Human Resource Development Operational Programme in October. Through the programme Bulgaria will now be able to receive financing from the European Social Fund for the first time. The MLSP will manage the funds of the programme. The first projects under the first scheme of the programme will be financed with 46 million euro. Under another scheme, called Qualification Services and Training for Employed Persons Scheme, implemented by the Employment Agency (part of MLSP), 650 projects worth 36 million euro were submitted by October 1.
