South east Europe is growing fast and the major banks in the region, particularly the Greek banks, are rapidly expanding their capital base as they expand their networks into neighbouring countries. This year’s Top 50 South East European banks listing shows that aggregate Tier 1 capital has risen by 33.6% to $32bn from $24bn in last year’s listing. Some of the major Greek banks significantly increased their capital to support future expansion. National Bank of Greece (NBG), the largest bank in the region, increased its Tier 1 capital by 58.8% to $3.71bn at the end of 2003 thereby markedly raising its Tier 1 capital adequacy ratio from 7.4% to 10.3%. Alpha Bank also saw Tier 1 capital rise by a significant 48.9% to $2.64bn. Panayotis Thomopoulos, deputy governor of the Bank of Greece, believes Greek banks have the highest levels of Tier 1 capital in the EU at 10%.
Despite the kickstart to merger and acquisition (M&A) given by two high-profile US deals, a report from Fitch Ratings last month stated that a growth in cross-border consolidation among financial institutions in Europe is unlikely. The report said that Europe was still fraught with regulatory, fiscal and cultural barriers, “not to mention a lack of any realistically achievable synergies”.
Spanish banks have had an uphill struggle in Latin America but now the continent is delivering returns at the same time as the domestic market remains buoyant. Jules Stewart reports.Last month’s terrorist attacks in Madrid may have raised a question mark over Spain’s political agenda, but for the banks it is business as usual, only more so. The outlook for 2004 is for continued growth inoperating profits.
Greece’s newly elected conservative government has pledged to boost growth and reduce unemployment. However, Prime Minister Costas Karamanlis has more pressing issues to contend with first – namely, to ensure the success of this year’s Olympic games. Kerin Hope reports from Athens.
Investment bankers in Spain are looking forward to an active 2004 as Spanish companies lift their heads above the parapet with repaired balance sheets and more positive stockmarket sentiment. This follows two years, 2001 and 2002, which Antonio Rodriguez-Pina, president of Credit Suisse First Boston (Espana) calls “the worst and most difficult of the last 20 years”.
A boom in Spanish covered bond issuance has been good news for the savings banks. Head of capital markets at Caja Madrid Carlos Stilianopoulos tells The Banker about dealing with commercial banks, cooperation with smaller cajas and plans to extend the market abroad.“By definition, a triple-A market is relatively boring,” according to Carlos Stilianopoulos, head of capital markets at Spain’s Caja Madrid. But if he is right that Spanish covered bond issuance has grown by 90% in the past year, then a little excitement is surely justified – especially for Caja Madrid, which is at the heart of it.
Anthony O’Connor reports on why covered bonds are becoming a favourite funding tool for banks.Although the legislation has been in place for Spanish banks and financial institutions to issue cedulas or covered bonds since the early 1980s, it is really only in the past couple of years that issuance has boomed. According to market data compiled by savings bank La Caixa, at mid-December 2003, nearly -60bn of cedulas hipotecarias – covered bonds backed by residential mortgages – are outstanding from nine issuers, with 32 transactions to date. Equally striking are figures for the end of 2003, which show that cedulas hipotecarias will account for about 13% of all mortgage funding, almost double that of 18 months ago. But opinion is split about why cedulas are becoming a favourite funding tool.