Responsible Banking: ProCredit Bank Encourages its Clients to Join Forces

On May 9th, ProCredit Bank organized a conference and round of aided B2B meetings in the exsquisite Met hotel in Thessaloniki, Greece, titled: “Realizing the Potential of the Region- SMEs Join Forces” As part of the event, the 500 plus attendees from Greece, Georgia, Ukraine, Moldova, Serbia, Albania, Kosovo, Romania, Bulgaria, and Bosnia & Herzegovina witnessed the signing of the first European Fund for Strategic Investments InnovFin Guarantee between EIF and ProCredit Group, marked by the prescence of the Greek European Commissioner, Dimitris Avramopoulos.

“We at ProCredit are convinced that there is huge potential for business synergies across the region, and we are committed to creating opportunities to build and strengthen international business relationships,” said Borislav Kostadinov, Member of the Management Board, ProCredit Holding.

ProCredit boasts 11 banks in Europe, three in Latin America, and headquarters in Frankfurt. It has a thorough, fair and demanding training program for its staff and is supported by core shareholders IPC GmbH, ProCredit Staff Invest, KfW, the International Finance Corporation (IFC) and the DOEN foundation.

In terms of business, the Bank focuses on the layer of the economy that is key to achieving economic sustainability, social responsibility and political stability. “The layer that possesses the skills, passion and entrepreneurial drive to create jobs and generate the strong competitiveness that can bolster the underlying political economy of our countries: the small and medium enterprises,” said Mr. Kostadinov, adding that the Bank has been working with small and medium-sized businesses (SMEs) in the Balkans for 20 years now. “Our unparalleled level of connectedness gives us the stability we need in these days of economic fragility and political uncertainty,” he said.

Mr. Kostadinov went on to name some of the many benefits available to its clients: the German ProCredit Bank operates as a clearing hub for the whole group, keeping down costs for international money transfers for business; for business clients the undivided attention of a personal Business Client Adviser- there are currently 1,000 Business Client Advisers serving more than 95,000 SME clients; and 24/7 state-of-the-art automated banking centers where clients can not only deposit and withdraw cash, but also perform all other types of transaction at whatever time suits them best, without the need to wait in line.

ProCredit claims to have maintained its profitability even throughout the crisis years, earning an average return on equity of just under 10%. “Not only is our SME loan portfolio growing faster than ever, but we are also increasingly successful in mobilizing deposits from business clients. This is a sure sign of confidence in us as a strong and stable institution,” said Mr. Kostadinov.

To find out more about this confidence, GEORGIA TODAY spoke to one of ProCredit’s many clients, Gela Gogishvili, Head of the Supervisory Board of GMS GROUP, a group of medical distribution and hospital care companies. “We have been in the business of medical supply and equipment sales since 2004 and in hospital operation since 2007, later launching our own hospital in Tbilisi center (St. John the Merciful Private Clinic) with the help of ProCredit Bank,“ he said.

Throughout the one-day B2B and conference event in Thessaloniki, 18 Georgian companies represented by 27 businesspersons had the opportunity to meet with their Balkan counterparts to discuss new partnership potential.

Aiming to gradually develop the Georgian hospital sector by acquiring a referral hospital with strong ER, Emergency and Oncology profiles, Mr. Gogishvili’s company had nine meetings with various companies related to the medical business and in particular with medical furniture, equipment and pharmaceutical producers. “We set up future cooperation with those we met and since the meetings have already had follow up information exchange with most. Being customers of the same banking institution will certainly aid us in our future cooperation.“

I asked him what he considered as the greatest weakness in the development of the Georgian SME sector. “Lack of operational experience and management- especially financial- competence of Start-Ups, labor development... these are the biggest issues. But the sector is developing: business is growing and professionals and quality of operations is improving. Competition is a key developer and it can be seen increasingly in Georgia. Still, many more Start-Up SMEs should be launched and financed by financial institutions for better results.“

ProCredit is, of course, one such financial institution willing to bolster the development of the SME sector in Georgia. But the Bank makes it clear that it doesn’t give out loans without careful thought and strict adherance to its basic principles.

“We expect our clients to have a sound business model and to share or at least to appreciate our vision of sustainable development, both environmentally and socially, as one of the keys to the country’s growth and competitiveness,” said Mr. Kostadinov. “That implies that they should act responsibly towards their own neighborhood, their operating environment and society at large –pay their taxes, treat their employees with the necessary care and respect, and reinvest to replenish the natural resources that they inevitably use.”

GEORGIA TODAY asked what level of success ProCredit Bank demands from the clients it invests in. Mr Kostadinov was ready to reply: “We don’t expect constant success in business terms – we will attempt to structure our facilities in a way that will help them weather a storm or two if needed. Our close co-operation with European institutions such as the EIB and the EIF helps us to bring our clients’ businesses forward; it helps us to finance the further modernization of their companies. But although we’re committed to meeting their needs, we are conservative and pragmatic when it comes to lending, and when we put together a tailored credit and collateral offer, it’s the one best suited to clients’ long-term plans. Our low arrears rates are typically the envy of the industry in our markets. Over-indebtedness is one of the worst evils a bank can bring about, especially if a potentially successful business is deliberately bankrupted by the bank’s unrealistic target-setting or irresponsible bonus scheme. We are neither looking to constantly expand our client base, nor do we believe in growth for growth’s sake – we focus on quality, and on remaining true to ourselves and our principles.”

Following the daylong program of B2B meetings and fascinating presentations from a variety of speakers, including European Commissioner Dimitris Avramopoulos (“The Investment Plan for Europe comes to Greece”); Pier Luigi Gilibert, Chief Executive, EIF (“Fuelling innovation, competitiveness and economic growth – EIF’s role”); Christoph Freytag, Spokesman of the Management Board of ProCredit Bank Germany (“Fair and attractive banking services - how ProCredit Bank Germany adds value for ProCredit’s business clients”); and Dr Claus-Peter Zeitinger, Chairman of the Supervisory Board, ProCredit Bank (“’How to bake non-stereotype bankers?’ The ProCredit group’s training and staff development system”), the organizers treated the attendees to an evening of outdoor wining and dining at the Thessaloniki Nautical Club where guests were able to watch the sun set over the bay while enjoying numerous Greek specialties. After dark, all were excited to watch a bonanza 20-minute timed fireworks display accompanied by Beatles’ hits, a prelude to a similar event to be held by ProCredit Bank in Batumi on June 25th.

The Georgian delegation left Thessaloniki in high spirits, returning to their homeland with further motivation and determination to excel in their new business partnerships. We asked Mr. Gogishvili what message he would give to entrepreneurs wishing to start up an SME in Georgia. “Georgia is the right country to invest in, and now is right time to start a business here. The Georgian Government is actively pro- business development, assuring the proper business legislation and taxation, and minimizing bureaucracy,“ he said. “This is a very positive message for local and foreigner investors. Georgia is developing and becoming a very important hub for the connection of the Caucasus, Middle East and Asian markets to Europe.“

Between the Georgian Government and ProCredit Bank, I’d say Georgia’s on to a good thing!

Katie Ruth Davies

16 May 2016 19:46