Banks from the Commonwealth of Independent States (CIS) dominate The Banker’s first analysis of the fastest growing banks in the European Bank for Reconstruction and Development’s (EBRD) ‘transition countries’. These CIS banks occupy 44 of the Top 50 places in this unique analysis of banks from the former Soviet bloc. The term ‘transition’ is used to describe those countries from central Europe and the republics of the former Soviet Union that are moving from rigid communist systems to more free-market, liberal economic systems.
The list is headed by Alliance Bank from Kazakhstan and also includes three other banks from Kazakhstan, eight from Belarus, 21 from Russia and five from the Ukraine. Of the 21 Russian banks only three, Promsvyazbank, MDM Financial Group and Nikoil IBG Bank, appeared in the Top 1000 World Banks listing in July – although a fourth, ZAO Raiffeisenbank Austria, appeared as a foreign-owned bank in the country listing only because its figures were consolidated into those of its parent, Raiffeisen Zentralbank Österreich (RZB).
Methodology
To evaluate the growth of individual banks in the transition countries, we examined the percentage change in Tier 1 capital, assets and pre-tax profit for the last financial reporting year (2003) from the previous year (2002) and also examined the change in the same parameters for the previous year (2002) over 2001. All percentage changes were calculated from data using the reporting currency for each country which eliminated exchange rate variances.
The object of examining the data for the past two years was intended to mitigate the effect of, say, a drop in profits in 2002 followed by a return to normal profit levels in 2003, which would be represented as a large percentage uplift in 2003 if we looked at 2003 alone. However, a negative percentage recorded the previous year would offset this.
To simplify the data further, each parameter was assigned an index between 125 and -125, these boundaries representing growth rates of greater than 225% and less than
-225%. The fastest growing banks were those with the highest positive totals. Where the overall index was the same, the final position in the list was decided by the aggregate index for the current financial year.
In all, the financial figures for some 460 banks were examined and a final list of 377 emerged following the exclusion of banks that had not yet submitted 2003 figures or for whom no previous year data was available. This listing follows the same principle as the Top 1000 listing in July, namely that it deals with consolidated figures for banks or banking groups with domestic or foreign subsidiaries. This means that well known banks in particular countries may not appear if they are owned by a bank in another country in the region that fully consolidates their figures.
The transition countries divide naturally into two groupings: central Europe, which comprises the Baltic States, Poland, Czech Republic, Slovakia, Hungary, Bulgaria, Romania, the former Yugoslav republics and Albania; and the CIS, which comprises the republics of the former Soviet Union including those in central Asia. In the total of 377 banks in the analysis, 164 were from central Europe and 213 from the CIS. Aggregate Tier 1 capital for the 377 banks was $53.1bn while aggregate assets were $548bn.
