Central and Eastern Europe (CEE) continues to be the fastest growing
banking market in the world as the foreign-owned banks that dominate
the region expand their franchises in growing economies. The dual
effect of strong economic growth in the region, combined with largely
underbanked markets, especially retail, provide a healthy platform for
growth. And EU accession next year for many states adds a further
stimulus.
Last year saw dramatic expansion in Tier One capital and assets for the
Top 100 CEE listing. Aggregate Tier One capital rose 23.8% to $24.34bn
and aggregate total assets rose 21.1% to $299.4bn. This trend looks set
to continue and to be profitable. Bank Austria Creditanstalt, with a
presence in 11 countries, saw pre-tax profits in the CEE rise by 36% in
the first six months of 2003 to E156m.
Heading this year’s Top 100 Central and Eastern European listing is
Bank Pekao, owned by Unicredito Italiano, with Tier One capital of
$1.5bn. Bank Handlowy is second, with Czech bank Ceskoslovenská
obchodní banka third, ending last year’s domination of the Polish banks
in the top three. Bank Przemyslowo-Handlowy in Poland moves down one
place into fourth.
The Czech Republic, Lithuania, Romania, Serbia and Montenegro all
gained an extra bank in the Top 100 this year while Croatia, Bulgaria,
Hungary, Latvia and Slovenia all lost one.
Lion’s share
Poland continues to be the country with the biggest share (38% of
the total Tier One capital of $24.3bn) and PKO Bank Polski is top in
assets with $21.3bn. This is interesting because PKO Bank Polski is the
only bank in the Top 10 that is not foreign-owned. Poland also
has the highest number of banks in the listing at 22, followed by
Hungary with 15 and Croatia, Slovakia and the Czech Republic all with
nine.
Mergers in 2002 saw Nordea Bank Polska take over LG Petro Bank and
Raiffeisen Bank in Romania absorb Banca Agricola. Abanka in Slovenia
merged with Bank Vipa and HVB Bank Bulgaria merged with Bank
Biochim.
In late September this year, Austria’s Erste Bank won the tender for
the privatisation of Hungary’s Postabank és Takarékpénztár for E399.4m,
which will make it the second largest retail bank in Hungary in terms
of clients. With Postabank’s 150 branches, 2000 post offices and strong
client base, Erste has increased its overall regional client base to 12
million. However, cross-border acquisitions are not limited to non-CEE
takeovers, with the recent purchase by Hungary’s OTP Bank of DSK Bank
in Bulgaria giving the bank a bigger representation and opportunities
in the Bulgarian market.
New Top 100 arrivals are Slovakia’s Istrobanka at 92, owned by Bank für
Arbeit und Wirtschaft in Austria; Bulgaria’s Bank Biochim at 88, which
appears due to the merger with HVB Bank Bulgaria; and LUKAS Bank in
Poland at 99, which is indirectly owned by Crédit Agricole in
France.
Outlook positive
With more than two-thirds (69 banks) of the CEE Top 100
foreign-owned and more and more interest in the region, the outlook for
banking in the CEE is very positive. Further consolidation looks likely
as the smaller banks are acquired and the major players build market
share. The price of entry into the Top 100, however, is rising sharply.
As a guide, the threshold of entry or minimum Tier One capital was $27m
last year and $39m this year. Next year it is bound to be higher still.
