Interview with Christo Mihailovsky for Bulgarian National Radio on May 19, 2021

Date created: 19-May-2021

Christo Mihailovsky, the Executive Director of BCRA - Credit Rating Agency AD gave an interview for the Horizon channel of Bulgarian National Radio (BNR) on May 19, 2021, regarding the situation with the Bulgarian Development Bank. He commented that according to the analysed public data, the BDB does not fulfil its mission.

"The total number of companies in Bulgaria is about 420 thousand, of which the companies that received financing represent 0.17%. They cannot be small and medium-sized enterprises” – comment by Christo Mihailovsky, CEO of the BCRA – Credit Rating Agency in an interview for BNR regarding the activity of the Bulgarian Development Bank (BDB).

"Our analysis shows that the BDB reported a loss of BGN 100 million in 2020, and the non-performing loans amount to BGN 30 million.“

Mr. Mihailovsky recalled that the Bank was established in 1999 on the model of Germany and the Republic of Korea, countries that successfully stimulate the export-oriented small- and medium-sized enterprises.

"Such banks perform well in the Republic of Korea and Germany. I cannot say if the model is successful in Bulgaria. Does the BDB fulfil its mission - I don't think so.”

“The legislative amendments made in 2008 expanded and diluted the main purpose of BDB”, Mihailovsky said.

"The Bank's focus on assisting the small and medium-sized enterprises has been gradually disappearing. And then come the lending to these 8 companies”.

Christo Mihailovsky focused on the four companies out of a total of eight beneficiaries of large amounts, financed by over BGN 500 million, which are considered to be related to Delyan Peevsky.

"The BDB’s priority is the lending to small- and medium-sized enterprises, as a medium-sized enterprise stipulates revenues up to BGN 100 million by definition. According to public information, the revenues of Blagoevgrad-BT exceeded BGN 140 million at the time the company was granted the credit, i.e. it has not been in the priority activities of the Bank. Here we have a clear violation of the BDB Act."

According to the Law on Credit Institutions, a maximum of 25% of the capital of a given bank can be used to finance related parties, Mihailovsky explained.

"In the middle of 2019, the BDB's capital was a little over BGN 800 million, and in the considered case we see financing over BGN 500 million. In fact, the financing exceeded 60% of the Bank's capital, if the public information is true and the related parties are proven. We see a violation of the BDB Statute and other regulations, as well as gaps in the supervision by BNB and other bodies. More importantly, the Bank is not fulfilling its mission."

You can listen to the full interview of Marta Mladenova in Bulgarian at the following link on BNR site: