07.11.2023 Iliya Karanikolov to Forbes magazine: Trust – a key factor for a good partnership

"Bulgarian Development Bank has an important transformative role in the life of small and medium-sized enterprises, startups, and innovations. So far, the BDB Group has supported more than 26 thousand companies and the financing we have provided to the market amounts to BGN 7.3 billion," the Executive Director of BDB, Iliya Karanikolov, said in an interview with Forbes magazine. And more:

My career in the banking sector started more than 15 years ago. In 2007, commercial banks started developing attractive products aimed at companies with projects under the first European programmes. This was the year I got the opportunity to join one of the big banks and help the team shape the right environment and products for their customers. It was extremely challenging because at that time the banks did not have the know-how and portfolio of financial instruments and products for bridge financing that we have now. Things didn't always happen easily. The entire course of my career has subsequently been connected with overcoming many challenges and solving tasks that initially seemed impossible to implement. However, the results achieved have given me strong job satisfaction and have been a driving force and my main motivation to keep going.

Money is the only system of shared trust; how do you decide who to trust?

Banks are a very complex and regulated system. Like a puzzle in which each piece has its place in decision-making. And yes, we have to be analytical, including being psychologists. When we trust a business, we evaluate not only its indicators and opportunities for future development, but we try to understand its motives and desire to realize the idea and the support it expects from the bank. As a development bank, we also aim to support projects that are relatively riskier or insufficiently attractive for commercial banks. Trust is among the key factors to build a good business partnership.

BDB is not only a financial institution. It is much more than that. Because it has an important transforming role in the life of small and medium-sized enterprises, startups, and innovations. When do you say to yourself – this makes a lot of sense?

As a counter-cyclical bank, BDB has to find niches for development where there is potential. Ones where commercial banks still find it difficult to enter or do not see enough market demand. If 10 years ago only companies with at least 3 completed financial years were financed, now companies with only one year behind them can receive a loan. Among our most inspiring customers are those who have not found support from commercial banks, but the drive to develop their idea and achieve their goals has motivated them to keep looking for financing. They make us feel great satisfaction in our work.

BDB has recently been approved by the European Commission as an InvestEU Implementing Partner. Could you tell us a little more?

This is one of the bank's great successes. Our satisfaction and enthusiasm for the accreditation is also shared by the local market, because for the first time commercial banks will have access to a resource that has not been offered by a Bulgarian bank until now. We are talking about over BGN 2 billion. We managed to pass the entire accreditation process, because of which a significant part of our internal regulatory framework was updated or created from scratch. We have built new systems for selecting partner banks, for reporting, for monitoring, etc. I am proud to be part of the team that achieved this success.

What role does BDB play in promoting economic growth and the development of the entrepreneurial environment in Bulgaria?

The bank has been an active player in the entrepreneurial scene since its establishment almost 25 years ago. During this period, the BDB Group has supported over 26,000 companies and the financing we have provided to the market amounts to BGN 7.3 billion. If we compare it with the current gross domestic product, this is about 4.5% of it. We supported enterprises in the country in some of their most critical moments. In the period of 2008-2009, BDB provided resources to commercial banks below market rates for more attractive financing of SMEs. We had a company liquidity program. The bank was also an active participant in the implementation of national market support measures during the pandemic – both for companies and citizens. In reality, it implements government policies in times of crisis, always multiplying and expanding public support.

Your name has been associated with strong leadership and innovation. What are your plans and vision for the future of the bank and the financial environment in Bulgaria?

My vision for BDB is a strategy of actions to make it increasingly sought after by customers and commercial banks and offering products that have their place in the market. Including those that create opportunities for the development of various segments of the economy. Currently, banks in Bulgaria are extremely well capitalized and in excellent condition. They have some of the best performance indicators in Europe. Their profits grow while they strive to support their customers. That is, the increase in interest rates is transferred to customers as slowly as possible, thus trying to protect them from economic shocks. In this environment, banks act absolutely responsibly. The Bulgarian National Bank, for its part, strives to manage potential risks and take preventive measures to control the expansion of the market so that, if necessary, banks are sufficiently well capitalized to be able to meet the expectations of stability and continue their activities to support businesses. This is how BDB works. We are actively preparing for the eurozone and all related projects are at an advanced stage.

What advice would you give to young professionals in the financial sector who are now starting from scratch? What is most important for them to succeed?

The most important thing is to put their energy and passion to be persistent in achieving the set goals and open to getting a lot of knowledge. The financial sector is a constantly changing environment, in which sometimes even we as professionals find it a bit difficult to respond to all the changes – in regulatory frameworks, risk management, assessment of borrowers, etc. In general, the responsibility of banks is great in their participation in the rapidly changing economic environment. So young professionals will have to face the challenges by being responsible and proactive.

Success breeds ambition; what do you want to achieve from now on?

Ambition knows no bounds. During my professional life, I have gone through quite difficult moments both in the bank and in the state administration, including in my work on the accession of Bulgaria to the EU and especially in the creation of the Fund of Funds. And whenever you think things are back to normal, it turns out that every next step you have to take is a new challenge. You have to be even more active, especially innovative and give your best to succeed. At the moment, all my aspirations are related to BDB being a successful, sustainable, efficient and recognizable bank.