The Germany-based bank Varengold, which specializes in debt financing for fintech and nichе export oriented trade companies, opened up a branch in Sofia, Bulgaria. This is the third location of Varengold after Hamburg and London, and it will serve as a hub for the operations in the whole region. The Bulgarian office will mainly provide its products to marketplace banking solutions.
“It is already visible that the Southeastern European region will play a major role in the development of the fintech sector. We’ll see it growing in the next two to three years and this is why Varengold wanted to set a foot in Bulgaria”, Sergey Panteleev, General Manager of Varengold Sofia, told Trending Topics. According to Frank Otten, member of Varengold Bank’s board, the office in Sofia already has promising projects in the pipeline.
Focus on Lending Platforms
The key pillar of the local business of Varengold Sofia will be the financing of companies in the domain of marketplace banking and more specifically peer2peer lending platforms. Varengolds typical approach is not to fund the company providing the platform but to finance the marketplace. “Simply by providing significantly more favourable terms and conditions to borrowers, improving the access to capital for consumers, and companies and also making raising funds more affordable”, Panteleev explained. According to him, these products and services account for 50% of the bank’s business.
Varengold might be an interesting partner for local startups working in this domain as would help them scale their business through financial investments. The current problem of local digital P2P lending platforms in their early stage of development, however, seems to be rather the dominance of offering over demand, industry insiders explained Trending Topics.
The other half of Varengolds business is in traditional commercial banking. Together with the head office in London, the local branch will also offer products to international trade-oriented companies.
Compact and forward thinking
In a way Varengold is a rather small and boutique financial institution with a team of 70 between three offices. The headquartered in Hamburg bank was started in 1995 but it attained its full-banking license five years ago. Varengold’s assets at the end of the second quarter of 2018 are €665M. It is a rather small player on every market it operates.
Last year Varengold announced its plans to expand to Bulgaria after the local investment Intermediary Euro-Finance, part of the public company Eurohold, acquired almost 10% of the bank for €1.65M. According to the leading local publication Capital.bg the bank’s reputation has suffered in Western Europe in the past years, and this might be a possible reason for Varengold to look at Bulgaria.“
In any case, the presence of a bank willing to work closely with fintech companies right now is a good sign for the ecosystem.