In 1999, UniCredit (then known as Unicredito Italiano) was not only forging itself into becoming one of Italy’s largest banks through domestic mergers, it was also embarking on an ambitious plan of expansion into central and eastern Europe. Five years on, it has crafted a genuine second home market with a network stretching across seven countries, from Poland, where it controls Bank Pekao, the largest privately-owned bank, to Turkey, where it has a 50/50 banking partnership with the Koç Group.
With the 53% acquisition of Bank Pekao in 1999, followed quickly by purchases in Slovakia and Bulgaria in 2000 and then in Croatia, Romania and Turkey in 2002, UniCredit snatched the narrow window of opportunity available to build what it calls its New Europe division, which it regards as a powerhouse for future growth. The new division produced 16% of the group’s total revenues in 2003 and division head Paolo Fiorentino believes there are a lot more opportunities for restructuring and growth. He notes that the 12 countries of ‘New Europe’ (excluding Turkey) produced GDP growth of 3.8% in 2003, compared with 0.4% for the EU’s 15 member states, and in 2004-06 the growth advantage will continue at an estimated 4.4% versus 1.9%. ‘New Europe’ still has an underdeveloped retail banking market, he says: loans and deposits represented only 70% of GDP in 2003, compared with 193% in the EU’s 15 states, leaving huge potential for expansion.
