The new share issue, which was expected to raise €2.75bn and to begin trading on the Vienna and Prague exchanges on January 27, is part of Erste’s strategy to expand operations in the region’s middle market and retail franchises.
“We have a coherent market in the region and this is what differentiates us,” CEO Andreas Treichl told The Banker.
Following its acquisition of 61.9% of BCR for €3.75bn late last year, Erste Bank will expand its customer base by 2.8 million to 15.3 million customers in its five key markets in central and eastern Europe. “As a retail bank we believe it is important to have as many clients as possible,” Mr Treichl says. Erste has leading positions in the Czech Republic, Slovakia, and now Romania.
Mr Treichl is optimistic following the BCR purchase as he believes Romania has huge growth potential. Only 40% of the population has bank accounts.
Erste has also raised its earning targets and now plans to expand net profits by more than 20% annually between 2005 and 2009. With market capitalisation up from €2bn in 1997 to €14bn in 2006, the bank is on an accelerated growth path on many fronts.
SGX’S ISLAMIC INDEX
The Singapore Stock Exchange (SGX) is expected to launch an Islamic stock index this month as a preliminary move towards creating the first Asian Shariah market-traded fund by mid 2006. The new index has been developed with FTSE and UK-based Yasaar Research and is part of Singapore’s plan to establish itself as an Islamic financial centre. The SGX is also planning to launch the Joint Asian Derivatives Exchange, a joint venture with the Chicago Board of Trade, by the end of the third quarter this year.
Euronext is under pressure from shareholder Atticus Capital to revive merger talks with larger European rival Deutsche Börse. The US investment management firm also has a shareholding in the German exchange and expressed its opposition to Deutsche Börse’s attempt to take over the London Stock Exchange (LSE) last year. Euronext, another previous bidder, was reported to still harbour an interest in the LSE, for which Australia’s Macquarie Bank recently made an official bid.
HVB Group of Germany, now acquired by Italy’s Unicredit, has sold a portfolio of non-performing and sub-performing real-estate loans worth €2.2bn to US investment bank Goldman Sachs. The sale is in line with HVB’s strategy to reduce its real estate restructuring portfolio, which will be further reduced during the year, according to the German bank.
JPMorgan Chase is to sell its UK depository and clearing centre (DCC) to Deutsche Bank, expanding the German bank’s money market services. The DCC unit acquisition fits with Deutsche’s strategy to expand its transaction banking business, which reportedly has been increasingly successful in the past months.
FINANSBANK BIDDERS
Nine foreign banks have placed bids to acquire a large share in Turkey’s Finansbank. Five of the bidders are believed to be Dexia of Belgium, France’s Société Générale, ABM AMRO of the Netherlands, Germany’s Deutsche Bank, and Citigroup of the US. Finansbank, Turkey’s ninth largest bank in terms of assets, has 170 branches, 3,742 employees and $6.6bn in assets. The owners of the bank were expected to strike a deal with one of the foreign bidders by mid-February. Interest in Turkish banking has increased since the country began entry talks with the European Union last year, and there has been a burst of foreign bank acquisitions in the past 12 months.
Crédit Agricole, France’s biggest bank by Tier 1 capital, has agreed to buy a controlling stake in Cairo-listed Egyptian American Bank to expand into the fast-growing Egyptian economy and in anticipation of the liberalisation of the state-dominated banking system.
EGYPTIAN EXPANSION
EFG-Hermes, Egypt’s biggest investment bank, is buying 20% of Bank Audi, Lebanon’s second largest lender by assets, for $450m. The move is part of EFG-Hermes’ growth strategy in the Middle East. It is expanding across the region as demand for regional equities increases from Arab investors.
Total net private capital flows to emerging markets hit a record $358bn in 2005, a gain of $40bn on 2004 and well in excess of the 1996 record of $324bn. And the Washington-based Institute of International Finance (IIF) also forecasts that capital flows will continue this year to reach more modest levels of $322bn.
The IIF expects flows to Asia this year to account for 41% of the total, with China receiving nearly 70% of the region’s flows. The bank-owned think tank predicts that emerging Europe is likely to account for nearly 40% of total flows, with a marked strengthening of foreign direct investment being a key feature of developments in 2006.
The institute’s projections are based on forecasts of continuing US growth in gross domestic product (GDP) of 3.3% this year, along with eurozone and Japanese GDP growth forecast at 1.8% and 2.2% respectively.
