Sophia Kassidova in "The Sound of Money" forum: BDB responded with ambitious and correct measures to the coronavirus crisis
In this year's edition of the specialized financial conference "The Sound of Money" Sophia Kassidova, responsible for the strategic development and planning at BDB, presented the guarantee programs in support of employees and businesses in difficulty due to the COVID-19 pandemic. For them, the bank received a special mandate from the government to form and manage instruments through the commercial banks.
Under the first program supporting employees on unpaid leave and self-employed, since the start at the end of April over BGN 28 million have been granted. The maximum value of the interest-free loan is BGN 4,500; the repayment period is 5 years, with a grace period of a minimum of 6 months and a maximum of 24 months. The number of requests received so far is about 13 thousand with an average value of about BGN 4,100. Two thirds are from persons employed under an employment contract, and the rest - from self-employed. The partner banks have accepted the program very well and 10 of them are already participating in it, said Sophia Kassidova.
The second program, aimed at SMEs, is open to companies with up to 250 employees and working in all sectors of the economy, including those most affected by the pandemic. The guarantee program, which has a budget of BGN 500 million, supports working capital financing for companies in difficulty. Applications for it are already accepted by the first bank to sign an agreement - BACB. The number of partner banks is expected to reach 10.
BDB covers 80% of the collateral on the principal and interest on the loans provided by the commercial banks. The collateral from the borrower is only 20%, which is a great relief for companies. On the other hand, it is also a type of indirect assistance for the commercial banks that use credit facilities from the guarantee coverage by BDB.
In response to a question during the discussion, Kassidova explained that these anti-crisis measures could be extended if there were a second wave of the pandemic, but this was a matter of political decision. The product is structured in such a way that the financial agreements should be signed with the commercial banks by the end of 2020.
Ekaterina Kirilova, a member of the Management Board of UniCredit Bulbank, who also took part in the discussion, noted that the cooperation with BDB on these guarantee programs was impressive to enable commercial banks to carry out this mediation according to all rules. She also assessed BDB’s campaign through which the information reaches the people as very successful.
During the conversation, the role of state-owned development banks was also discussed, and Sophia Kassidova pointed out that it was they, which were a flexible and effective tool for governments to create anti-crisis programs such as the ones that had already been launched. Almost all development banks in the European Union have joined the measures to reduce the effects of the quarantine measures. At such moments, their role as a partner, not a competitor of commercial banks, is clearly visible. Development banks are those that can guarantee businesses get loans when they are most in need, as explained by Kassidova.
What do development banks do when there is no crisis? They create various flexible tools for implementing government policies. As an example, she gave the Program for energy efficiency of multifamily residential buildings, which BDB implements. A very important role, for example, is the support for startups, fintech companies, innovations, which even in a calm economic environment do not have good access to finance. The role of development banks is to fill such niches in the structure of markets. However, the strategy of the Bulgarian Development Bank is not only that, as explained by Kassidova - it can be as big as the ideas and ambitions of the government are.