Its geographic and product diversification has allowed Credit Europe Bank to effectively spread its risk, a strategy that has served it well during a particularly tumultuous economic period in Europe.

It is such a simple strategy it is a wonder more banks have not tried it. But, while many of Europe’s financial institutions are still trying to overcome the effects of the successive waves of crisis, it is perhaps understandable that few have had the chance to consider how to avoid future upheaval. Yet Netherlands-based Credit Europe Bank (CEB) has managed just that, despite boasting growing operations in some of Europe’s most difficult markets including Russia, Romania and Turkey

According to the bank's CEO, Murat Basbay, the upheavals in the European banking sector have had little effect on his bank. “We had to tighten our credit policies and to drop some of our growth targets, but we did not see any material effect on our financial standing,” he says. Mr Basbay believes that this is a direct result of the bank’s strategy of spreading risk.

“Geographical diversification is one of the main pillars of our risk management,” he says, adding that the bank balances its group-wide risk management standards by adjusting to local market conditions in each country it operates.

Tailored approach

The bank’s core Netherlands operation may only have been established in 1994, but the fact that such a recent entrant has expanded across Europe should come as no surprise. The bank was established by Turkey’s Fiba group, itself founded as recently as 1987 by Husnu Ozyegin, a graduate of Harvard Business School and outgoing CEO of one of the country’s largest banks, Yapi Kredi.

Mr Ozyegin’s first foray into bank ownership came with Fiba’s Finansbank, which he established in 1987 and sold in 2006 to National Bank of Greece for a healthy €5.5bn. Eschewing possible early retirement, Mr Ozyegin instead forged Finansbank’s overseas subsidiaries into CEB and started over, building banking subsidiaries in eight European countries, together with offices in Shanghai and Dubai.

Geographical diversification is one of the main pillars of our risk management

Murat Basbay

Its strategy of spreading risk and adjusting to local markets has seen CEB focus on different banking services in different markets. In western Europe, where CEB has been able to build on its lengthy experience of online banking services, the focus has been on corporate trade and retail banking in Netherlands, Malta and Switzerland, with the understandable addition of private banking in Switzerland, while in Germany the focus has been on retail banking building a client base of 400,000 customers.

In eastern Europe, CEB has grown to become the 10th biggest retail bank in Russia with about 2 million customers, served through its 99 branches; in Romania it has become the market leader in bank cards with 300,000 credit cards in use; while in Turkey the group’s subsidiary Fibabanka, established in 2010, has so far focused on collecting deposits.

Growth engines

The bank might avoided many of the problems facing much of the European banking sector, but Mr Basbay concedes that CEB’s rapid expansion across the continent is currently on hold pending better trading conditions.

“Currently, we are focusing on countries where we already have subsidiaries – and we expect Russia and Turkey to be our growth engines in the coming years,” he says.

In line with its strategy, the bank has very different plans for each market. In Russia, this sees CEB entering into a tie-up with Ikano Bank, a banking group owned by the Kamprad family, better known as the Swedish founders of global furniture giant IKEA. 

“Initially we will focus on commercial banking and then expand into retail banking, focusing on IKEA Group companies and their customers,” says Mr Basbay. He adds that CEB already provides retail banking in IKEA stores and IKEA Group malls – only one of many long-term partnerships CEB has forged with local retailers in Russia. “This new partnership will further extend those services,” he says.

In Turkey, where CEB’s subsidiary Fibabanka currently operates 21 branches focusing on commercial banking, CEB plans a focused expansion into retail banking. “We don’t aim to compete in every retail banking sector immediately, rather we plan to start with the fast-growing cash loan and car loan segments,” says Mr Basbay.

Listening works

The bank plans to make good use of internet, SMS and social media campaigns to help market its new products. “Currently we are running test campaigns for retail loans and we plan to accelerate these over the coming months,” says Mr Basbay, explaining that it is still too early to say how many new branches it plans to open or name potential retail partners.

The return of Fiba and CEB to the Turkish banking sector is interesting, confirming the long-held observation that Turkish multinationals and Turkish businesses in general tend to display more national loyalty than their western European counterparts, with Turkish firms operating outside Turkey often choosing to work with Turkish partners.

Mr Basbay concedes that CEB has been able to make good business with Turkish companies across the continent. “We are very well positioned to serve their financial needs, so most of the Turkish companies based outside of Turkey are choosing CEB as their main bank,” he says, adding that CEB’s presence in diverse European markets gives it valuable local knowledge.

These companies only constitute a small percentage of CEB’s customer base outside Turkey, however. “Our main strategy remains to work with local customers in each market and to listen to them and be responsive to their needs,” he says.


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