The Banker unveils its latest listing – the Top 100 banks in the EBRD transition countries – and finds Russia’s state-owned banks leading the pack.
Russia leads The Banker’s new Top 100 listing of banks from the 27 ‘transition’ countries, as designated by the European Bank for Reconstruction and Development (EBRD). The term ‘transition’ is used to describe those countries from central and eastern Europe and the republics of the former Soviet Union (CIS) which are moving from rigid communist systems to more free market, liberal economic systems.
Eight of these countries from central and eastern Europe are due to become members of the EU on May 1. All, with the exception of Slovenia, were members of the former Soviet bloc and have required radical reorganisation of their external trade towards western Europe, as well as major structural and institutional reforms over the past decade or more.
This so-called ‘EBRD’ listing provides a useful guide to the banks that come within the sphere of operations of the European Bank and, by definition, includes Russian banks in the grouping. The aggregate Tier 1 capital for this Top 100 listing amounts to $36bn. This contrasts with the $32bn recorded by the 50 banks in our South East Europe listing (see page 72) which is dominated by Greece and Turkey but also includes banks from three countries (Bulgaria, Romania and Serbia & Montenegro) included in the ‘EBRD’ listing.
Russia has the most banks in the list with 30 which command 34.1% of the aggregate Tier 1 capital. Poland is second with 14 banks and 24.6% of aggregate capital, Hungary is third with 11 banks but only 8.1% of aggregate capital while the Czech Republic with only seven representatives claims 10.4% of aggregate capital. The category ‘Others’ includes banks from Belarus, Estonia, Latvia and Uzbekistan (two each), and Lithuania and Serbia & Montenegro (one each).
Top of class
The Top 10 was headed by Sberbank and Vneshtorgbank, the two state-owned Russian banks. Four Polish banks occupy prominent positions, led by Bank Pekao in 3rd place and Bank Handlowy in 4th (owned by Unicredito Italiano and Citigroup respectively).
Of the top 20 banks, 12 are owned by Western banks, and of the remaining eight, measures are in hand to privatise at least two (PKO Bank Polski and Banca Comerciala Romana – see page 83) where the governments concerned are openly looking for a foreign buyer.
The Top 100 listing, compiled from financial year-end December 31, 2002 figures, has only seven banks with Tier 1 capital over $1bn and only two banks with assets of more than $20bn. This demonstrates the relatively small size of the institutions in the region.
While Russia’s Sberbank is a large bank with assets of $34.2bn the other Russian banks are small by comparison with the two next largest Russians, Vneshtorgbank with $7.3bn and Gazprombank with $4.9bn in assets.
The Top 100 has banks from 17 out of the 27 transition countries. Extending the listing to a Top 200 would only add representation from three more countries (Bosnia & Herzogovina, Macedonia and Moldova) indicative of the undeveloped or fragmentary nature of the banking systems in the remaining countries.
The banking systems in all these countries were originally state run. Institutional reform paved the way for banking reform. Privatisation resulted in the majority of banks in central and eastern Europe being owned, directly or indirectly, by western European or American banks. Similar penetration into the CIS has not yet occurred although subsidiaries of Western banks are operating there.
