The bank deposits statistics, according to which the savings have increased, is a typical case that can be viewed as "the bottle is half empty or half full". This was said by Levon Hampartzoumian, Chair of the Management Board and Chief Executive Officer of UniCredit Bulbank, in "More of the Day" on the Bulgarian National Television last night. He was invited to comment on current topics such as the increase of bank deposits, the loan and deposit interest rates, the forthcoming asset quality review and the role of reforms in strengthening the feeling of stability and predictability of the environment.

"On one hand, the savings are a reserve that is immediately available to people to use if they trust the environment, which will result in growth. On the other hand, this means also that the people feel fairly insecure, they find the environment unpredictable and prefer to save – what we call "savings against a rainy day", the banker commented.

As regards the currently low deposit interest rates, he pointed out the fact that the interest rates are low globally. "You should not view the deposit interest rates as motivation for savings. The motivation behind the savings in the banks and the increase of the deposits is different – this money is kept safe. There is no such safety in a jar and the likelihood for the money in it to be eaten by mice, to be lost in a fire, or to be stolen is higher", Hampartzoumian said.

The banker reminded that currently the interest rates on all groups of credit products are lower than in 2006-2008. "The interest rate is only one of the components when you consider taking a loan. Before the crisis, when the interest rates were higher than now, you know what enthusiasm there was for loans – due to the EU accession, due to the real estate boom. People felt confident enough in themselves and in the future to take loans", the banker said.

According to him, of great importance for people's confidence is the realization of the institutional reforms in our country. "What we do with the judicial system, health care, pensions, etc. needs to make people trustful enough to tell themselves – yes, we will invest and consume."

Asked by the host whether the measures taken with regard to the "CCB lesson" are sufficient to close that page of the Bulgarian banking history, Hampartzoumian explained that "the care for the stability of the system and its maintenance in good health is a task that never ends". According to him, the efforts of the society and of the responsible institutions in the strictly regulated banking business should never cease. "I think that now both the regulator and the executive of the state, that is the Ministry of Finance and the government, are doing what is necessary to secure that the situation is monitored much more professionally than before", Hampartzoumian said.

He confirmed that the banks were now in preparation for the asset quality review. "The asset review will be one more quality stamp. UniCredit Bulbank has already passed a similar test as part of the Pan-European test. At that time Bulgaria happened to be among the selected countries. However, in general, we should not be afraid of such stress tests in the system. Because this is not a verdict. This is just a more in-depth examination. If the system is found to be weak in some aspects, respective prescriptions and terms for remedy or avoidance of such faults are given. So don't expect that you will simply wake up one morning and hear about some bombastic results", Hampartzoumian said.

The explanation given by the banker to the question why the foreign investors avoid Bulgaria is that the appetite for investments in this part of Europe is generally lower than it was 7-10 years ago. "We are a small market. We have to be something like the Netherlands, Singapore, the Baltic states. It is a problem if, at an international level, Bulgaria is not talked about as a stable place with an effective administration, with easy procedures, with qualified workforce", the banker explained. He noted that "regretfully most of the investments that we see are in sectors in which the people are fairly low-qualified; the most qualified ones we lose abroad and we have a real demographic problem." In his words, this problem will get seriously worse if we do not invest as soon as possible in improvements of the education system.

As regards the adoption of the euro, Hampartzoumian said that he did not see any reason why the Baltic states would be successful in that and we would not. "We need to get ready as quickly as possible to walk the path to the Eurozone. I think that both the government and BNB are aware of that." He reminded that that euro could be deemed to have replaced the Bulgarian lev as early as 1997 and the adjustment of the prices in line with the euro happened long ago.

The host Dimitar Tsonev invited his guest to comment the latest rankings of The Heritage Foundation and The Wall Street Journal about the economic freedom, in which ranking Bulgaria occupies a lower position, as well as the Misery Index by Prof. Steve Hanke, where we are in the middle among 90 countries. Hampartzoumian explained that the rankings are based on a series of assumptions – some more credible than others – which lump separate countries together according to set criteria. According to him, in any event it is good for us to have progress on all these criteria, because we are talking about surveys that are recognized internationally. "The final investment decision of an investor is never based only on such rankings", Hampartzoumian explained. "You may be a very beautiful and intelligent person, but if you put on a messy suit, you too will feel bad and people too will misjudge you. Such rankings are the cosmetics that a country or an economy may wear in order to demonstrate its strengths. We cannot solve a problem with rankings. They are tools for identification of a problem, if any, but not for solving it", the banker thinks. He underlined that here in Bulgaria we may be fairly poor, but we are still part of the most developed part of humanity.

More information for media:

UniCredit Bulbank, Identity & Communications Department

Viktoria Blajeva, Phone: + 359 2 9264 993, wjlj/ebwjepwbAvojdsfejuhspvq/ch