Independents stay ahead of the pack, acquisitions continue apace and rationalisation is under way.

As banks from predominantly western Europe further increase their dominant role in the region, our listing this year is headed by two banks that have retained their independence, the expansionist National Savings and Commercial Bank (OTP Bank) from Hungary and Poland’s majority state-owned PKO Bank Polski.

OTP Bank’s acquisitions in the first part of this year were covered in the August issue of The Banker (p14) but it has since announced an agreement to acquire Crnogorska Komercijalna Bank in Montenegro and is considering taking over Bulgaria’s DZI Bank. It also remains one of the final two contenders to acquire the Romanian Savings Bank (at 53 in the current listing) in the last major act in the privatisation of the Romanian banking sector, but has ruled itself out of the tender process for the sale of BAWAG PSK in Austria.

Retail remains the driver for banking sector growth, with household credit growing as a percentage of GDP but nevertheless remaining relatively low at between 14% and 15% for the region compared with figures in excess of 50% for western Europe. This potential for further growth is the continued attraction for western European banks.

Static capital

Aggregate Tier 1 capital for the Top 100 remained static at $38.18bn (2004: $38.21bn) while aggregate assets grew 4.9% to $499bn and aggregate pre-tax profits rose by 10.4% to $9.7bn. Growth rates were not apparently as strong this year but reflect movement from a more stable and higher base, coming on the heels of growth rates of 29.2%, 30.2% and 64% for these parameters last year.

It also reflects a degree of rationalisation in the sector with a foreign parent merging together two or more subsidiaries in a country, as has started to happen following UniCredit’s acquisition of HypoVereinsbank (HVB). The realignment of UniCredit’s CEE assets, with the exception of those in Poland, through Bank Austria-Creditanstalt was discussed in last month’s issue (p15). In Croatia, UniCredit has again divested itself of Splitska Banka to Société Générale. It originally had to sell the bank to HVB as a regulatory condition when it acquired Zagreback Banka.

Changing hands

Seventy-seven banks in this years listing are majority or wholly owned by banks (72) or by banking consortia/non-banking institutions (five). Of the remaining 23 banks in the list, the sale of Romanian Savings Bank (CEC) to either OTP Bank or the National Bank of Greece is in the final stages, and the sale of Banca Comerciala Romana to Erste Bank, in the largest deal in central European history (€3.7bn), was completed in the middle of this year. The finalisation of the sale of Vojvodjanska banka in Serbia to National Bank of Greece, the only one of three remaining suitors to file a binding bid, will bring the curtain down on the central European privatisation process.

Foreign banks hold significant minority shareholdings in some of the other independent banks on the list, such as Bank Ochrony Srodowiska in Poland, in which Skandinaviska Enskilda Banken holds a 47.5% share, and Nova Ljubljanska Banka in Slovenia, in which KBC has a 34% holding. It is understood that KBC is considering divesting itself of the latter shareholding.

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