Mr. Marinos Vathis, President of the Executive Board at Vojvodjanska banka speaks for Profit magazine.

1.Mr. Vathis, where were you born, and educated? What was the path of your career before you became President of the Executive Board of Vojvodjanska banka?

I was born and raised in Athens,Greece. I spent several years in the United Kingdom where I studied, firstly economics at the City of London Polytechnic and afterwards I concluded two postgraduate programs in Monetary Economics and International Business and Finance at the Universities of Kent and Reading respectively. Through my career path I have developed a wide range of expertise in credit, leading restructuring projects, being involved in bank turnarounds in challenging financial situations in the UK, France and the SEE region. I was appointed president of the Executive Board of Vojvodjanska banka in 2010 coming from the position of the Head of International Corporate Banking in NBG. During my professional career, I have worked as the NBG General Manager in the United Kingdom and in France. I began my career in 1986 at Midland Bank, which was soon after was acquired by HSBC. After 12 years at HSBC, one of the largest international banking organizations, I can safely say that I was privileged enough to have followed one of the best “schools” in corporate banking. Since then, I have held several directorial positions in commercial banking of which, 13 years in international CEO positions.

2.In Serbia, at the helm of Vojvodjanska bankaa.d. Novi Sad, you came in July 2010. What were your expectations, and did they, and to what extent, differ from the actual situation that you found in the Bank?

NBG acquired Vojvodjanska banka three years before I came, so the process of mergering the two banks had already started and major improvements had already happened. Since all subsidiaries report on a regular basis to the Group, I had most of the relevant information at the very beginning of my arrival, therefore I knew that under the prevailing market conditions at the time, there wasn’t much one could do to turn the bank around. I was wrong. I found an excellent team who trusted me and shared my vision. Together, after three years of very hard work and complete devotion, we managed to turn VB into a profitable organization. But the biggest surprise came from the country itself, and its people. I never expected to feel at home so quickly and this is thanks to this beautiful country and its beautiful people.

3.Vojvodjanska banka has a long tradition in Serbia; when and how did it merge with the National Bank of Greece?

With a 146-year long tradition,Vojvodjanska banka represents one of the most recognized local brands in the country. Following the acquisition, we went through a major restructuring which resulted in significantly increasing efficiency, hence our results today. We introduced innovations and improved products and services for our clients. Thanks to these tangible improvements, we are proud to say that VB is again at the forefront of the banking sector, and again a bank of choice for our clients.

4.In your opinion, how is the banking market in Serbia currently functioning, compared to neighboring countries?

Given the size of the banking sector, one can argue that the number of operating banks is excessive. Nevertheless, it is the market which always determines what is needed and what it is not, therefore if the number is large, the market will balance it out either through consolidation, or by exiting. Banks in Serbia, as a result of the regulator’s design of the sector, are extremely well capitalized. If you consider that prime European banks have a capital adequacy ratio of between 8 to 10%,and here the average is close to 22%, it is an indication of how well capitalized Serbian banks are, but this is also an indicator as to why the banks do not post large profits. Furthermore, what we have seen is that banks in Serbia, although some 80% of them are members of large European Groups, offer rather simple products wrapped up better and better every year but nonetheless,they are simple products. Therefore, we believe that there is space for significant improvement, towards a higher level of sophistication. Having said that, one must admit that the sector is steady and healthy with no significant turbulence, which should offer great comfort to the citizens.

5.Where do you see the growth potential in the Serbian market, both in terms of your bank, and in terms of business operations in the country?

Definitely, small and medium sized enterprises are the backbone of every market oriented economy, and so they are also in Serbia, and as such,they represent one of the most important sectors for all banks. Small business clients are getting more of our attention, especially with this new wave of entrepreneurship we are witnessing in Serbia. We have specially dedicated teams in Vojvodjanska banka which are in daily contact with these types of clients, trying to assist them and provide them the best possible service. We remain committed in the following period to increase lending to attractive domestic business segments; to keep up with technological change and evolving customer demands and to continue to innovate to keep customers motivated to cooperate with our Bank.

6.Last year was a year with positive results in all business segments for Vojvodjanska banka. What were you especially focused on in the last year and what are the results in the first half of 2016, and the plans for the following period?

In 2015, the bank continued with positive results in all business segments reaching an operating result of 11.8 million EUR, over 62% more than in 2014. The trend of successful operations remained in 2016; in the first six months of 2016 the bank reached profit after taxes of RSD 365 million. The bank also managed to increase total assets by RSD 4 billion from December 2015 and currently has over RSD 124 billion.As a self-funded bank with a capital adequacy ratio safely above the regulatory threshold, the bank focused on lending to small and medium-sized enterprises and retail operations. Confirmation of our strong liquidity is once again proven by our strong deposit base. Our total deposits increased by RSD 3.3 billion or 3.3% since December 2015, thus allowing us to nurture the growth of the bank’s future placements to clients. The lending volume continued to grow with a maintained market share of almost five percent in retail loans, with expectations for further growth in the current year. Our focus will be on retail clients who were deprived of some wishes and dreams for a long time and now we can help them fulfill all these by providing them better access to finance. We will also pay special attention to entrepreneurs, who are developing innovative ideas and helping the Serbian economy to revive itself. As the bank is traditionally oriented towards Vojvodina, by nature of its history, we will offer new tailor made agro products to agricultural companies in Serbia. Younger clients challenged us to give the best we have and to go beyond our limits, let’s say, so I am really happy about this new segment we started to offer recently to young people in this country.

7. In 2015, you continued to record positive results in all business segments, what was the net profit that you achieved?

In 2015,Vojvodjanska banka continued with positive results in all business segments, reaching a profit of RSD 34.5 million.The trend of successful operations remained in 2016; in the first six months of 2016 the bank reached profit after taxes of RSD 365 million.

8. Compared to the previous year, have better conditions been created for both retail and corporate lending?

Due to the financial crisis in the past few years, all banks became more careful when approving lending facilities, which slowed down the rate of lending expansion. This lead to excess liquidity, which had two consequences; the significant decrease of interest rates, and due to budgetary reasons, the gradual relaxation of credit assessment. However, things started to change from early 2015 and we have witnessed positive factors such as GDP growth, a stable country credit rating, decrease of the key interest rate both by the NBS in Serbia and by the ECB on the European market followed by the additional cuts of EURIBOR and LIBOR on the interbank market. All these contributed to a more favorable lending environment for clients. Despite this, we continued to follow our prudent credit policy which has supported our financial health during the crisis years. We continue to aim to grow, however not at the expense of our credit quality, but rather by improving our products and services, which form the basis of being able to satisfy our million-plus client base.

9. Your bank is known for constant business innovations. What are the latest products which you are able to offer to clients?

Vojvodjanska banka has introduced several innovative products in all business segments so I will name the most recent ones: retail consumer loans (a cash loan with a bonus for loyal customers, a short term loan with a fixed interest rate), cards (pre-paid cards for younger segment, self-service of electronic payment of bills thru ATMs), mortgage loans (secured consumer loans, new housing loans), deposits (payroll packages, bonus time deposits), promotional overdrafts and a range of deposit products for the small business banking segment and finally insurance products for private individuals.

10.In difficult economic conditions, Vojvodjanska banka maintained a high level of liquidity. Did you maintain the loan-to-deposit ratio, and in what percent?

We are a self-funded bank with excess liquidity, solely financed from deposits of our clients. Our loan to deposit ratio is stable at 80%. Our constant aim is to have a healthy balance between the use of our deposits and capital so as to have the highest possible return without endangering our clients’ and our shareholders’ wealth.

11. In 2015, the NBS implemented Special Diagnostic Studies (SDS) so as to establish the status of the banking system in Serbia. What is the position that your bank has on the market according to the NBS assessment?

The NBS performed these tests in order to verify the healthiness of the banking system and to assess the adequacy of the banks’ accounting policies and provisions. Vojvodjanska banka was one of the best performers on the market and I am really proud of this fact.

12. For a couple of years now, non-performing loans have represented a large problem for the local market. What is the situation in your bank when it comes to the NPL level?

The overall level of NPLs in Serbia has remained high, with the total gross NPLs of EUR 3.3 billion and a NPL ratio of 20.2% in the banking sector, in the first half of 2016. Nevertheless, the NPLs ratio in Vojvodjanska banka is well below market average, while provision coverage reached 74 percent at the end of June 2016. We managed to keep it stable due to the fact we have a strict risk policy and a strong team that analyses and understands the operations of our diverse clients, so as to avoid problems or not to encumber clients stemming from their inability to service their loans. I am optimistic that following the new strategy formed by the government and the NBS, we will see the level of NPLs dropping. This will release liquidity to the banks which in turn will be more eager to direct it back to the healthy part of the real economy.

13.Vojvodjanska banka has been the official bank of the Olympic Committee of Serbia for already 16 years. The Olympic Games in Rio are behind us; in your opinion have our Olympians fulfilled your expectations?

Absolutely.We are proud to be, for the fourth consecutive Olympic cycle, the official bank of the Olympic Team of Serbia. The bank actively supports true values, the Olympic spirit and professional sport.At the beginning of the year, we decided to additionally support five Olympians so as they could prepare themselves in the best possible way for the Olympic Games in Rio. We are especially proud of Andrea Arsović, team member in archery, Marko Novaković and Nebojša Grujić kayakers, Anja Crevar, team member in swimming and Slobodan Nikić, water polo player. The importance of cooperation with the OCS for us can be seen in a specially designed product of the bank; apart from general support, we have a donation Olympic credit card from which a portion of funds is allocated for the Olympic team.

14. How large a business network does Vojvodjanska banka have, how many regions does it contain and how many branches do you have in the entire country? What are your plans in terms of opening new branches in the following period?

We have the fourth largest network in Serbia, covering the entire territory of the country with 106 branches in five regions: Belgrade, central and south Serbia, south and north Vojvodina. We also have four main contact points for our corporate clients, regional business centers in Belgrade, Novi Sad, Kragujevac and Subotica. The client base of Vojvodjanska banka is like a family tradition. This is why we have maintained our footprint; our size in terms of assets should not explain why we have the fourth largest network. We have kept it because it is a tradition and we want to be there to cater to our historical clients and future generations. For us, the human connection is the most important, therefore service for us is paramount. This is what we are trying to do to maintain our service in a period where things are changing, with automation, or lack of human relationship, and we have decided to give our clients this, if they want to speak with a representative directly.

15. In your bank, special attention goes to CSR activities. Your bank is the first company in Serbia whose employees have successfully completed the voluntary educational program for the Serbian sing language. Tell us something more about that, and about other projects which you had, and have in plan for the future period?

We strongly believe that we have to bring back to the society a portion of what has given to us. We have always been supportive of projects important for the community. Vojvodjanska banka supports the social inclusion of young people without parental care continuously and in 2016 we are giving them even stronger and direct support and assistance with the aim to achieve more tangible results for these young people without parental care. We have become the general donor of the “Budi svoj” Project implemented by the foundation “Uključi se", while the Ministry of Labor, Employment, Veteran and Social Affairs is the project’s strategic partner, and the Ministry of Youth and Sports has also given its support. As you mentioned, the bank initiated the project of voluntary Serbian sign language courses for bank’s employees. Our current results are: over 70 employees voluntary finished the course; 17 branches in 12 cities are labeled with a specially designed sticker indicating that communication is adjusted to the deaf and hearing impaired persons.

16. You have recently signed an agreement on business cooperation with the gallery of Matica srpska. What is the significance of signing this agreement, both for Vojvodjanska banka and Matica srpska?

We have three pillars in our CSR strategy. Supporting culture is one of them and our contribution is reflected in cooperation with the gallery of Matica Srpska. We have provided significant financial resources intended for the second phase of facade refurbishment referring to the complete reconstruction of the entrance, while the professional team of the gallery is evaluating the collection of pieces of art owned by Vojvodjanska banka. We are proud owners of exquisite paintings, including a few pieces of Serbian cultural heritage. I can exclusively announce the opening of our exhibition on October 21^st at the Gallery of Matica Srpska where a selected number of paintings will be exhibited for ten days and will be available to the public, with entry free of charge.

17. How do you spend your free time, in what way do you manage to relieve yourself of everyday stress? If you had the chance, would you change something in your career to date?

I wouldn’t change anything in my career. I love the fact that through my job I have had the opportunity to live in different countries, to meet interesting people, to learn how all kinds of products are produced and to learn what it means to be strong or weak financially. The latter, has been a great social lesson for me.

In my free time, I combine walking, cycling and driving in order to discover the hidden gems of Serbian cities and the countryside.