Financial news

The government emptied some BGN 300 mln  from its accounts in local commercial banks between May 6-15, pushing upwards the interest rate that the banks charge on each other's BGN deposits. The balance sheet of the central bank's Issue Department shows that the government deposits jumped by BGN 389 mln during the cited period. A representative of the Bulgarian National Bank (BNB) said tax revenue accounted for some BGN 80 mln of the cash influx while the remainder was probably withdrawn from the commercial banks. The finance ministry's press office confirmed the withdrawal but refused to cite hard figures. The depletion of the liquidity of the financial institutions is prompted by the controversial insistence of the International Monetary Fund that domestic lending should be dampened. The resource suctioned off in May comprises 5% of the local banks' liquid assets and is only the beginning. A rough estimate of the effect from similar measures mapped out for the remainder of 2004 shows that the government could cash as much as 1 bln levs from its bank accounts or over 15% of the sector's liquid assets. BNB reps said that if all the measures are implemented, interests rates could edge up by 0.5%. But the banks are likely to offset the rate gain for their own account in a bid to maintain their competitiveness. Many bankers confided that they would opt to rein in the lower-yield commercial lending and not consumer or home purchase credits. The official rationale of the lending clampdown is that it would limit borrowers' access to idle resources, cooling sales of imported goods and easing the c/a deficit which has kept the IMF on its toes. But many economists think the IMF is hyperventilating and that although the c/a gap widened to 9% of GDP at one point, the correlation between the swell and the domestic lending boom is far from straightforward. The opponents of the current shock tactics argue that they will choke off investment and commercial lending, slowing down the economic growth.

Deputy Minister of Transport and Communications Mr. Nedelcho Nedelchev announced that by the end of May offers for the issue of three mobile communicatios licenses, providing the UMTS service would be made. We expect the Government's decision on the matter within the next two months, Mr. Nedelchev added. The first tender is going to be announced in the beginning of 2005. Except MobilTel and Globul, BTC is also expected to apply for the license.

Inward investment in Bulgaria's industrial sector will edge up by 5.3% in 2004, found an investment sentiment survey conducted by the National Statistical Institute in April. The public industrial sector is expected to ingest 53% more investment this year than it did in 2004 with the bulk of the cash burned up by the energy companies.The public sector is forecast to incur 47% of the overall cost of the acquisition of long-term fixed assets in 2004.Investment in the private sector is seen falling 17% in 2004.

Privatization

Bulgartabac is establishing a fund for its laid-off employees. The money in the fund will be used to compensate the employees who are going to be dismissed before and after the privatization of the factories, Deputy Prime Minister Ms. Lidia Shuleva announced. The fund will be registered as a foundation and will be financed by the holding’s profit, by donors and by European programmes. The companies from the holding have old debts in the amount of BGN 4.7 million.

Companies

Prime minister Simeon Saxe-Coburg-Gotha placed the cornerstone of a new logistic terminal to be built by Dutch Royal Frans Maas Group near Bulgaria's Sofia Airport. The company has invested EUR 15 million in the project, which makes the Netherlands the biggest foreign investor in Bulgaria. According to Mr. Sax-Coburg-Gotha, 2004 will be the year of greenfield investment. Royal Frans Maas Group is a public company, listed on the Amsterdam Stock Exchange. It has 214 affiliates in 32 states and an annual turnover of over EUR 1 billion. The consultant in this project is UK-based Vector Management Limited, represented in Bulgaria by Vector Management Bulgaria.

Austria's Wiener Staedtische and Germany's HUK Coburg, the two principal shareholders in local insurance group Balgaski Imoti, have held the first annual meetings of the companies since taking charge. The general insurance arm of Balgarski Imoti posted gross premium income of 11.093 mln levs in 2003, placing 12th on this market segment with a 2% share. Premium revenue is up 15% from 2002, when it stood at 9.622 mln levs, while profit topped 19,000 levs. Balgarski Imoti's reinsurance partners have retained premiums worth 8 mln levs. According to the Financial Supervision Commission, the insurance claim rate was measured at 51.4% while the claims total reached 3.4 mln levs.  The life insurance division of the group reported gross premiums of 1.655 mln levs, ranking 8th in its business niche with a market share of 2.21%. The shareholders of the general and life insurance arms of the company decided to withhold dividend and reinvest the entire 2003 profit. KPMG Bulgaria remains as the group's auditor in 2004. Wiener Staedtische owns 70.3% of the Balgarski Imoti group, HUK Coburg controls 26% with 1.85% each held by group founders Dancho Djikov and Angel Kraichev.

Bulgarian State Railways (BDZ) are going to repair 3620 of their carriages, using the cash generated by the private placement of a EUR 30 million bond, Deputy Prime Minister Mr. Nikolay Vasilev announced. One foreign and four local institutions have submitted applications for subscription of bonds. Ministry of transport is going to list on BSE – Sofia corporate bonds of other companies as well, such as Navigation Maritime Bulgare, Bulgarian River Navigation and Bulgarian Posts.

Commission on Protection of Competition – Sofia approved the merger between Aptechno Sofia and Aptechno Burgas. The procedure will be implemented through merger of the Burgas-based company into the Sofia-based one. The total market share of both companies is 4.03 per cent, calculated on the basis of the medicines sold by them in Bulgaria. The local wholesale market of medicines is highly competitive – 238 companies are operating on it.

GBS-Pleven JSC, a construction subsidiary of Glavbolgarstroy JSC, will construct a 800,000 euro business building in the center of Pleven, Central Northern Bulgaria, executive director Tosho Garchev told Dnevnik. The 3,050 sq m Gloria Palace project will be financed with own funds and will get underway by late May. GBS-Pleven is serving as main contractor in a 6 mln euro ISPA-backed landfill project in Sevlievo and has been subcontracted in several hotel construction on the coast.

ProCredit Bank, the Bulgarian micro-finance bank of EBRD, IFC, DEG, Commerzbank and IMI, inaugurates today an office in Sofia's Mladost 3 borough, its sixth unit in the Bulgarian capital. ProCredit Bank operates 29 branches throughout the country.

Currently Bank Consolidation Company (BCC) is leading final negotiations with representatives of UniCredito, Bank Austria Kreditanschtalt and OTP Bank on the draft agreements, with which are going to be transferred the debts of the bank holding to the Ministry of Finance as a representative of the State. The three foreign institutions are buyers of the last privatized banks in Bulgaria – Bulbank, CB Biochim and DSK Bank. The draft agreements were sent to the new owners in the end of February. The final texts are going to be ready by the middle of June, was reported from BCC.

Port Lom is  expected to register a profit of BGN 50 000 for a third consecutive month, the port's Deputy Director Ms. Dora Velkova announced. Since the beginning of May this year, 47 000 tons of cargos have been discharged in the port.  5-6 ships arrive every day, Ms. Velkova added. The good work allows the losses from the previous year, accumulated by the former management of the port, to be eliminated.

Nine companies are going to receive subsidies for export, Ministry of Agriculture and Forests reported. United Milk Company JSC is going to receive a subsidy for export of 105 tons dairy products to Lebanon. Agrocommerce 98 and Balkan-commerce 95 are approved to export  lamb’s meat. Subsidies for export of canned fruit and vegetables, of chicken and eggs to Macedonia and Switzerland were also approved.

US-based Ropa Bulgaria Holding LLC, represented by Mr. Venelin Gachev, has brought in a claim to join Chimco’s insolvency legal procedures, initiated by the company’s main creditors – Bulgargas and NEC. The claim was registered in Vratza District Court on April 27 2004, but the court refused to list the foreign claimants in the process, Ms. Penka Alexandrova, Chairperson of the membership leading the case announced.

On May 27 and 28, 2004 in Brussels Bojidar Danev, the chairman of BIA, is going to take part in an international round table about communications where participants will be new joined to EU countries.

Europe

General Electric Co. and Honeywell International Inc. will argue next week that European Union regulators ``ignored evidence'' and ``committed errors of fact and assessment'' when they scuttled their proposed $47 billion merger in 2001, according to court documents obtained by Bloomberg News.
The companies are challenging EU Competition Commissioner Mario Monti's decision to block the merger of the two U.S. companies after it had been approved by U.S. regulators. The hearings before the European Court of First Instance in Luxembourg, the EU's second-highest tribunal, are the first public test of antitrust theories that have been rejected by U.S. regulators, the companies say in the documents. The commission's allegations about the anti-competitive effects of the combination ``do not have any legal, economic or factual basis,'' General Electric argues in the documents. The Brussels-based regulatory arm of the EU blocked the merger after finding that General Electric, the world's biggest maker of aircraft engines, could restrict competition by pressuring airplane makers to buy its engines and Honeywell's cockpit gear. The reasoning was criticized by lawyers who said it broadened the regulator's power to block mergers where conglomerates enter new or related industries. ``The commission has made a convincing case,'' said Karel Van Miert, who for five years was Europe's competition commissioner. ``I'd be astonished if the court comes to a different conclusion.'' The companies will hold separate hearings next week -- Honeywell on Tuesday and General Electric on Thursday. A court opinion is expected later this year and a final judgment may come next year.

USA

Air Canada plans to resume negotiations this morning with the Canadian Auto Workers union, the lone holdout in the insolvent carrier's effort to gain wage and benefit concessions from its nine labor groups.
Union and company officials are scheduled to sit down at 10:30 a.m. in Toronto after talks yesterday failed to produce an agreement. There's still a ``huge gap'' in bargaining positions, union leader Buzz Hargrove said last night at a press conference. Deutsche Bank AG has threatened to withdraw a C$850 million ($615 million) financing unless all of the airline's labor groups agree to yield C$200 million more in savings so Air Canada can meet a C$1.1 billion cost-cut target. Without the Deutsche financing, the Montreal-based carrier might be liquidated. The company, Canada's largest airline, wants an additional C$45 million in concessions from the CAW, which represents 5,000 reservations and call-center workers. The union says its members shouldn't have to cede more than C$18.3 million.

Asia

Statistics show that fixed assets investment came close to 9  billion yuan (1.1 billion US dollars) in north China's Shanxi province in the first three months. The figure was up 42.3 percent from the corresponding period last year, or 6.2 percentage points higher in growth rate than the year-before period, according to official statistics. The province's fixed assets investment concentrated in urban areas, accounting for over 80 percent of the total or reaching 7.5 billion yuan (904 million US dollars), up 48.8 percent from a year earlier. According to the province's statistics, fixed assets investment from the state sector increased by a moderate rate of 17.5 per cent in the first three months, compared with a surge in fixed assets investment from the non-state sector, or increasing by 63.5 percent in the period.

God Resurrection (Spasov day)

The holiday is not fixed and is celebrated 40 days after Easter, always on Thursday. According to the New Testament, for 40 days after his resurrection, Jesus remains on the Earth to preach his studies and to talk with his apostles, moving among them as a god man. On the 40th day in the surrounding of his disciples in the foot of Eleon mountain near Vitania, where Lazar resurrected, Jesus was resurrecting in the heavens. Bulgarians call Spasov day the holiday of God Resurrection. Spasov day is related to a great extend with the cult of the dead people. Spasov day is also a holiday of the Bulgarian bread producers and confectioners.