“A person’s reputation and authority are among his/her biggest assets. If one is in a dilemma or is tempted, he/she should let go of any “advantages” arising from corruption schemes. Good reputation pays off a lot more in the long run”, commented Levon Hampartzoumian, Chairman of the Management Board and Chief Executive Officer of UniCredit Bulbank, during the 2015 Youth Economic Forum, organized by UNWE. He was invited as a guest lecturer in the panel “The banking sector and the business”, together with docent Daniela Bobeva, a former Deputy Prime Minister of Bulgaria.

The two answered the questions of university students on topics regarding the challenges that Bulgaria has to face, where to invest, should we expect an increase of foreign investments, are the banks ready to support the business, are the excessive regulations of the banking sector a problem, what is their attitude towards laziness and corruption, etc.

Bulgaria’s economy grows with about 2% every year. This growth is felt only by the most economically active people in the country, those who have a well-developed business, a good job and a good salary, Hampartzoumian said. He added that there is a great difference between the conditions of these people and the conditions of the uneducated or poorly educated people, whose group is not a small one. In no way can the latter feel that growth. “Theirs, and also our problem, is not the fact that at a certain moment part of the people are unemployed, but that there are groups of people who are unemployable – who cannot be hired because they do not have the necessary knowledge and skills and they do not put their efforts into acquiring them. This is a problem for the economy, because we live together with that group of people“, the banker said.

The deep reforms are a political suicide

The solutions to the challenges which we encounter today in Bulgaria cannot happen by issuing a decree with a couple of actions and by adopting laws. An overall reforming of the systems is needed, said Levon Hampartzoumian. But according to his opinion, the politician who dares to do it will be reached by political death. He gave as an example the fact that Israel’s healthcare system, which is considered one of the best in the world, has a smaller number of hospitals than Bulgaria. “Imagine what would happen if a politician proposes to shut down even half of our hospitals. We need politicians with statesmanlike way of thinking and politically suicidal tendencies in order for the real reforms to be done”, Hampartzoumian commented.

Every change encounters resistance – that was the idea which the university students present at the forum and the two lecturers shared. According to Hampartzoumian, the business, the people, the youth and all the groups have to be a part of the public pressure for the implementation of reforms and changes.

In the last 18 years Bulgaria had a very stable monetary regime and that is visible from the fact that our country answers all the numerical convergent criteria, Daniela Bobeva commented. According to her opinion, a problem for the investments is the fact that “now nobody is making investments”, also worldwide.

Excessive regulation or liberalization in the banking business

The university students were interested as to whether the excessive regulation of the banking sector is an obstacle or creates conditions for more safety. “After each crisis, rules are being written down in order to prevent the same type of crisis from re-appearing, that is a normal process”, Levon Hampartzoumian said. He drew to the attention of the university students the fact that there is a difference in the business model of the typical for Bulgaria purely commercial banks which attract deposits and grant loans to citizens and companies and the investment banks of the West which make riskier investments not as creditors but as direct co-shareholders in various businesses.

"Conservative management of their depositors’ money is expected from the banks. We cannot perform better than our clients. Good clients are the key to the sustainable business of every bank. The essence of our business is the selling and buying of trust”, Levon Hampartzoumian said.

To the question what would happen if there were no banks, Levon Hampartzoumian answered that probably that niche will be filled by some other system, which nonetheless, can prove to be more expensive and non-effective. He recalled that in the beginning of the transition, when there was no well-developed banking system in the country, the financial brokerage was performed in currency exchange offices, in shadowy pawn shops, etc. “Surely a rich uncle, a moneylender or a rich husband/wife can also be an alternative to the banks, but you can see for yourselves that those are not sustainable business models”, Hampartzoumian added.

According to Daniela Bobeva there is big potential in the country for the development of the financial brokerage. The indebtedness of households towards banks is only 34%, which is the lowest level after Latvia in the whole EU, she said. Bobeva noted that, despite the historically low levels of the loan interests nowadays, lending is not growing.

The low taxes myth

According to Hampartzoumian, the low taxes in the country are a myth, as we also have many hidden administrative as well as other indirect taxes. For example, our education is free of charge, but if a person wants his/her child to study in a good place, to have a quality education, they must pay additionally; if he/she wants safety, the security companies are bigger than the army; if he/she wants a quality healthcare system, he/she must pay again, because the one that is for free is of no use. According to him, we also have a corruption tax, which makes systems ineffective: “Corruption is everywhere in the world. It is very important that the corruption potential of the processes is reduced, so that there are no incentives for one to enter into such schemes. The electronic government will be useful for a more transparent management model”.

A question by a university student as to whether, according to the lecturers, laziness is a factor in the Bulgarian economy aroused interest at the end of the discussion.

"The better the linear dependence between the efforts put and the result – recognition, profit, remuneration, etc., the more a person is induced to give the best of himself/herself. I believe that you will be developing in such an environment”, Levon Hampartzoumian noted.

"In previous years, various generations lived for a long time in conditions where laziness was tolerated, but your generation was born not to be lazy. In your case, this cannot happen. With this flow of information, of possibilities, today there is no room for laziness”, Daniela Bobeva said.

The university students also asked whether one should or should not take out a loan. “To take out a loan means to take from your future income. If you have confidence in your income and clear plans how to achieve it, then you can take out a loan without worrying. It is very important to have a clear goal what the loan will be used for and how you will repay it”, Hampartzoumian answered.

More information for media:

UniCredit Bulbank, Identity & Communications Department

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

Magdalena Ivanova, Phone: + 359 2 9232 528, nbhebmfob/jwbopwbAvojdsfejuhspvq/ch