By Ivan Madzharov - Money

The crisis might force banks to reconsider their policy.
Credit institutions in Bulgaria gradually specialize and abandon the old-fashioned concept of one bank providing all services. They offer a comprehensive bundle but through its subsidiaries.
A change If three or four years ago car and machine loans were financed by banks, at present this is done by their leasing companies. Leaving mortgage finance apart, special purpose loans are hardly granted at all. Specialists in the sector expect that before long banks will allocate consumer lending to the jet loans subdivision.
The modern principle stipulates that all activities such as leasing, factoring etc. are separated from the bank and transferred to subsidiaries, explained for Money the CEO of IBANK Peter Andronov. According to him there is serious economic logic behind all these actions. The main purpose is cost optimization and client need satisfaction, he added.
Sectors
At present leasing is closest to the classical form of banking – it is a specific loan type secured by an asset. It is used both by companies and individuals, but the volume of work is considerable and due to that it had better be taken away from the bank counter, explain leasing companies.
There are activities, however, which is not appropriate to outsource. In the words of Peter Andronov, it is not logical to allocate mortgage lending outside the bank. In general specialization begins in the parent companies themselves. Structures are set up in such a way that they have the lowest administrative expenses and best reporting, bankers further explain. They are categorical, however, that whatever happens over the following years, banks will not go back to the old organizational structure, when all procedures were carried out by Head Office.
The Future
Analysts believe that the specialization of the financial institutions became necessary due to the large volume of credit applications over the last few years. The onset of the crisis and the credit craze wearing off, they believe, might make banks reconsider this tendency and go back to the old model. What will happen in reality, however, will solely depend on the economic development and duration of the crisis.