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“Why Sofia?” with Sergey Panteleev, General Manager of Varengold Bank Sofia Branch


Germany-based Varengold Bank opened a branch in Sofia at the end of 2018, following its strategy to expand its business in the fast-growing economies in Southeast Europe (SEE). The branch in Sofia will serve as a hub from which Varengold will operate across the entire SEE region. The bank’s mission is to support and finance online marketplaces, predominantly Peer-to-Peer (P2P) lending platforms, that provide consumers and companies with faster, easier and more affordable loans and financial solutions than those offered by established banks. As such, Varengold Bank’s goal is to become the preferred partner of Fintechs in the area of Marketplace Banking. Additionally, it supports foreign trade-oriented companies in niche markets by providing transaction/commercial banking services.


The team of Varengold Bank’s Sofia Branch is comprised of experts in the field of banking and technology. Its General Manager, Sergey Panteleev, has 12-year’s experience in corporate and investment banking and structured finance. 

Sergey Panteleev tells us what makes Sofia a place to establish a successful SEE regional center. 

Varengold opened its office in Sofia nine months ago as part of the Bank’s expansion in Southeastern Europe. Why Sofia?

I could mention more than a dozen reasons, but let me give you three: Firstly, Sofia boasts a wide range of highly-educated professionals across almost every sector of the economy, but especially in the fields of IT, ICT, Tech and Finance. Secondly, as international rankings confirm, the city is among the most business-friendly in Europe thanks to an ecosystem that is entrepreneurial, startup-friendly, innovative, and generally strong in R&D. Last, but not least, Sofia is very competitive in terms of cost effectiveness. Also, let’s not forget the advantages that almost everyone takes for granted: The EU membership and the low currency risk. At Varengold Bank, we believe that with its strategic location, Sofia is the perfect starting point for our expansion in Southeast Europe (SEE). The city will serve as a hub for our operations across the whole region, which in our view will continue to outperform the average growth rate in the EU. We are happy that we are here and we are looking forward to accelerating the development of the region further with our projects.

In June, Varengold acquired 20% of the Sofia-based peer-to-peer (P2P) lending platform Klear. What do you expect from the investment and how do you see the Fintech sector in Sofia and the region?

Klear is on its way from start-up to scale-up, and the partnership with Varengold Bank will help it expand its business across Bulgaria and SEE much faster. Regarding the local and regional outlook for the FinTech sector, we see potential for huge growth. SEE markets are not yet disrupted by many challengers from the international FinTech scene, as their focus remains on more mature Western European banking markets. However, this is likely to change over the next 2-3 years. On top, we will continue to feel the impact of local and regional FinTech businesses that are accelerating their operations quite rapidly.

In front of this backdrop, P2P lending platforms are becoming more and more user-friendly and are constantly gaining the trust of borrowers and investors from Bulgaria and Central and Eastern Europe (CEE). According to their websites, iuvo and Klear, the two main P2P lending platforms operating in BG, have raised over €70m in investments alone. This is a triple-digit growth compared to the same period last year. P2P lending is the segment that has penetrated more than any other alternative financial tool in BG, followed by crowdfunding. We can see a similarly positive trend in all of the SEE countries. In fact, according to the 4th European Alternative Finance Benchmarking Report, SEE is the fastest growing regional market in the EU in terms of volume of funds accumulated through alternative finance, including P2P lending (a growth of over 357% y-on-y). Yes, the sector is starting from a low level, but,we strongly believe it has a huge potential and we are looking forward to building mutually beneficial partnerships with FinTechs in the region, especially with P2P and marketplace platforms.

How much does the investment climate in Bulgaria stand out in comparison with progress made in other countries in the region?

From a FinTech’s point of view, Bulgaria holds the leading position in the region. It’s the second most innovative upper-middle income country in the world after China, according to the Global Innovation Index 2017. It is also the most innovation-efficient country and the top innovation achiever in SEE. Needless to say, this has a strong positive impact on the development of the local FinTech sector. With 70 enterprises in 2017, Bulgaria has the highest number of FinTech companies in SEE – twice as many as all other SEE countries together, actually, if we exclude Romania. Looking beyond SEE, Bulgaria even has the largest number of FinTech companies in the whole CEE region. Not least, Bulgaria ranks #1 in Europe in terms of IT-certified specialists per capita and 8th in the world in total ICT specialists, outperforming countries with much larger populations.

Certainly, a lot of work has yet to be done in order to catch up with the more developed countries in CEE, but at the same time we should not discount our country’s successes and its unique advantages. From our point of view, the biggest advantage is the highly-skilled human capital, and we have to make it our top priority to preserve and develop this invaluable talent pool.

What are the advantages of investing in Sofia?

Sofia is among the leading cities in SEE in terms of employment, public infrastructure, cost and standard of living, education, and economic growth. Our capital is actually one of the European cities with the highest growth of GDP per capita. The bulk of investments is directed towards high value-added operations in the fields of R&D, Innovation, Biotech and other advanced technologies. It’s very smart to give these sectors top-priority in the country’s overall economic development strategy.

Sofia is also an important ICT centre with over 50.000 people employed in the sector, which is dominated by global leaders like SAP, VMware, Bosch Software Innovations, Atos, IBM, HP, and Cisco. They all have significant development centers in Sofia. These centers will draw in more companies and talented individuals, with academies and schools following in their wake. It’s an upward spiral, really. The rising tide lifts all boats, including the ones Varengold Bank is interested in.

What sort of difficulties have you faced so far? What would you point out specifically in terms of business climate improvement for investors who are already operating in Sofia?

There is one thing that we lack here in Sofia and Bulgaria as a whole: e-services. All government and municipal services should be accessible online. As mentioned before, Sofia is the IT capital of Bulgaria. Hence the development and adoption of such services shouldn’t be too difficult. Such a move would suit Sofia’s innovation strategy for smart specialization and would enhance the competitiveness of the city’s economy. I recognize that some important steps in that direction have already been taken. However, as long as government and municipal services are not accessible through our smartphones, we’re not there yet. And as long as that’s the case, we won’t benefit from the economic advantages that an easier and faster communication and collaboration with the local authorities would yield.

I prefer not to complain about a shortage of talent because it’s practically inevitable during periods of economic boom. Pretty much all we can do is continue to keep investing in high value-added sectors so talents will find attractive opportunities to pursue and reasons to stay. Compared to many other cities in Europe, Sofia is doing quite well in that regard and that fact played an important role in the decision to open a Varengold Bank branch right here.

How do you estimate the overall business climate in Sofia today?

As I mentioned, Sofia is definitely an attractive place to invest in. Varengold Bank’s decision to set foot here is just another proof of that. Sofia has an investment-grade rating assigned by the big international rating agencies and is doing increasingly well in a growing number of international rankings. As a case in point, it ranks 9th in business friendliness among large cities worldwide, according to 2018 FDI Intelligence Global Cities of the Future. This fact speaks for itself.

Judging from your business experience, do you think that local and foreign investors see our capital as a more or less homogeneous business area, or are there still a lot of hurdles?

In my view, foreign investors that scrutinize Sofia with regards to its qualities as a place to do 

business will soon recognize its competitive advantages, especially when it comes to so-called brain businesses, i.e. IT, Software, ICT, Telecommunications, Medicine, Biotechnology, FinTech and so on. Much of Bulgaria’s brain businesses and knowledge staff are concentrated here, as are most of its national and international university branches.

What would you point out specifically in terms of business climate improvement for investors who are already operating in Sofia?

I think Sofia has already reached its full potential in terms of employment of local people. Sofia has the highest labor participation rate and the lowest unemployment rate in Bulgaria, and even surpasses the EU average. This requires a new approach and a new attitude towards Bulgarian expats and foreign citizens. We need to create initiatives for attracting talented labor from abroad. Due to some of its competitive advantages, Sofia is proving to be an increasingly strong magnet for foreign well-educated and enterprising people that make the city their new home. These people are valuable assets and we need to ensure that their new life here will be pleasant. This includes making it easier for them to move here, improving their access to accommodation and public transport, enhancing the quality of our schools, maintaining a vibrant cultural life, and much more.

What needs to be improved in order to increase the number of new investors both from Bulgaria and abroad?

With its innovation strategy for smart specialization and the strengths I have mentioned before, Sofia has a huge potential to become one of the smartest, if not THE smartest, city in Europe. Perhaps we should make “Sofia – The smartest city in Europe” our explicit goal. At least, I think it’s a cause we can all get behind. By financing new FinTech solutions that improve people’s experiences and their quality of life, Varengold Bank is already making an important contribution.

When you look at Sofia and the country as a whole, as an investor, what attracts or surprises you most?

I am most surprised by the sheer number of talented and creative people we have here. It’s a joy to work with and alongside them.

How do you feel about Sofia as a place to live?

Sofia is a welcoming city full of contrasts: On one side, you will find ancient history and culture. On the other, you will find that its citizens are open-minded and forward-looking, not to mention creative and talented. It’s a particularly attractive mixture for Bulgarians and foreigners alike. 

The population of Sofia is constantly growing, which means that more and more people find plenty of reasons to stay or relocate their lives and families here.

For example, take Loic Le Pichoux, CEO and co-founder of Klear, the P2P lending platform Varengold Bank has recently built a partnership with. He used to be the CEO of the Bulgarian

subsidiary of a leading international financial institution. Then he decided to set up Klear in Bulgaria and to continue living in Sofia. There is a tendency for more and more people like Loic to migrate here. And this is not just a temporary, one-time enthusiasm. Foreigners like the vibrant entrepreneurial, dynamic and business spirit of the city that makes living and working here an intriguing and useful experience. Not least, the rise of tourism also confirms Sofia’s attractiveness for people from around the world and different walks of life.

Name your top favorite things in Sofia.

I love the historic centre and its good vibe and multicultural environment, especially the little romantic yards, spots, galleries, restaurants and cafes that you find while walking around. That’s where you can find and meet the creative and talented people I mentioned earlier. Walking and jogging in the city parks and climbing Vitosha mountain are also among my favorite pastimes.