Our listing reveals that retail continues to drive banking sector growth, while low household credit levels remain enticing to western European institutions.

Our listing of the Top 100 banks in Central Europe is again headed by the same two banks as last year, namely OTP Bank (National Savings and Commercial Bank) from Hungary and the majority state-owned PKO Bank Polski. 2006 was a quieter year for OTP on the acquisition front as it was frustrated in its attempt to buy the Romanian Savings Bank, losing out to the National Bank of Greece late last year. It also saw another potential acquisition target, DZI Bank, acquired by EFG Eurobank.

Retail continues to be the driver for banking sector growth with household credit as a percentage of GDP, while growing, remaining relatively low for the region compared with figures for western Europe. This potential for further growth is the continued attraction for western European banks.

Aggregate Tier 1 capital for the Top 100 increased to $49.41bn (2005: $38.18bn), a rise of 29.4%, while aggregate assets grew 35.5% to $676.3bn and aggregate pre-tax profits rose by 33.0% to $12.9bn. Growth rates increased strongly during 2006, reflecting buoyancy in central European economies, and further developments in consumer lending.

Seventy-eight banks in this year’s listing are majority or wholly-owned by banks (74) or by banking consortia/non-banking institutions (4) from outside the region. Of the remaining 22 banks in the list the Romanian Savings Bank (CEC) has yet to publish financial data for financial year 2006 at the end of which it too became foreign-owned. It is not counted as such in the current list as the figures that represent it are from the previous financial year.

Sector consolidation

This year has seen further consolidation of the UniCredit-HypoVereinsbank subsidiaries in the various countries of central Europe. In Bulgaria, Bulbank, HVB Biochim and Hebros Bank have been merged to form UniCredit Bulbank which will be one of the largest banks, if not the largest, in Bulgaria, while in Slovakia, UniBanka and HVB Bank Slovakia have merged to form UniCredit UniBanka. In September, Zivnostenská banka and HVB Bank Czech Republic complete their merger although their combined might is unlikely to affect the situation in the Czech Republic where Ceskoslovensko obchodni banka, Céska Sporitelna and Komercni banka control approximately 60% of the banking assets and in most sectors have a combined market share of more than 60%.

In Poland, the merger between Bank Pekao and those parts of Bank BPH that it retains under the agreement with the National Bank of Poland is complete but the sale process for the rump of Bank BPH is ongoing.

The continued rationalisation of foreign banks holdings in central Europe means that some familiar names in this year’s list will not appear next year, providing the opportunity for some of the smaller banks to make the listing. However, these smaller banks now appear to be targets for foreign acquisition, all the available bigger fish having been landed.

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