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Consolidation takes hold in central and eastern Europe

Central and eastern Europe was dominated by consolidation and recovery this year which has had a significant impact on the top 25, with some departures, some new entrants and some surging into the fastest movers list.
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There were two departures from the 2011 top 25 banks in central and eastern Europe (CEE), both based in Russia. Bank of Moscow was dropped temporarily from the entire Top 1000, because it has not published 2010 results. It may now be bought out by VTB, which would lead to its permanent removal from the ranking. And International Industrial Bank had its licence revoked in late 2010 due to default on its liabilities and alleged accounting irregularities.

This allowed Ak Bars Bank and Sviaz Bank, also both Russian, into the CEE top 25. These were both new entrants to the Top 1000 as a whole, and some of the names on the new entrants list were recovery stories rather than new faces. Both Sviaz Bank and Ukraine’s Prominvestbank were rescued by Russian state development bank Vnesheconombank at the height of the crisis, and have now recapitalised sufficiently to re-enter the top 1000.

Other Russian new entrants have joined thanks to improved data provision, including Ak Bars and Bank of Khanty-Mansiysk. The latter was purchased at the end of 2010 by Nomos Bank, the fastest growing private sector bank by Tier 1 capital in the CEE region, and will disappear from next year’s ranking if consolidated accounts are published. After jumping 100 places this year, Nomos looks set to continue its rise, following a $700m initial public offering (IPO) in London in April 2011.

Another Russian new entrant is Orient Express Bank, which also appeared in the highest movers list. This is the new vehicle of Igor Kim, former owner of URSA Bank before its merger with MDM in 2009. Orient Express has expanded aggressively, purchasing entire Russian retail loan portfolios from Morgan Stanley and Santander in 2010, and seems a likely candidate for IPO or strategic sale.

Outside Russia, the balance sheet merger of Getin and Noble Banks in Poland, both majority-owned by Polish entrepreneur Leszek Carnecki, has brought the combined Getin Noble in at 926th. And a prediction made in August 2010, when The Banker examined the 200 banks 'bubbling under' the Top 1000, has come to pass – Kazakhstan’s Kaspi Bank enters at 972nd.

The two Belarusian banks in the top 25, Belarusbank and Belagroprombank, were both among the highest movers – and Belarus recorded the third highest asset growth of any country. These two banks are both state-owned and their expansion was part of a fiscal stimulus that proved unsustainable. A surging current account deficit forced a 56% devaluation of the Belarusian rouble in May 2011. This will hit the ranking of Belarus banks next year (because our ranking is compiled in dollars) and could well damage their asset quality.

Top 25 CEE banks
CEE highest movers

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