CEE banking market will continue to grow substantially
BA-CA comparison of banks in Central and Eastern Europe for 2002:
- International banks have a high market share in CEE.
- Consolidation in Central and Eastern Europe, growth in South-East Europe.
- Austrian banks hold the leading position in the region.
The forthcoming EU enlargement will give a further boost to the banking market in Central and Eastern Europe (CEE). EU accession will enhance the stability of the banking system. CEE markets will become even more attractive to international investors. The banking market in CEE continues to be characterised by the major features of a banking system that is catching up: personal incomes grow at above-average rates while the level of product usage is still below average. These two factors, combined with further declining interest rates and expectations of relatively stable inflation, indicate large growth potential for banks in the region. This is one of the conclusions drawn by Bank Austria Creditanstalt's experts in their latest comparison of banks in CEE. Within HVB Group, Bank Austria Creditanstalt is responsible for the markets in Central and Eastern Europe.
International banks operating in this market have become well established. Over the past ten years, the banking systems in the region have been privatised to a large extent. At the same time international bank have steadily expanded their market share. In 2002, their market share rose further, to 62 per cent, an increase of 3 percentage points over the previous year. Combined total assets of international banks rose by 2 per cent to EUR 211 billion (2001: EUR 207 billion). This means that international banks continue to grow, though at a slower pace than in previous years. In 2001, the share of foreign banks had increased by as much as 34 per cent. "Nevertheless, the banking market in Central and Eastern Europe has defied the international economic slowdown and has achieved growth, in contrast to other markets. Growth will continue in the coming years,“, says Martin Grüll, Head of the CEE Division at Bank Austria Creditanstalt (BA-CA). BA-CA's experts forecast growth of the CEE banking market to reach an annual average rate of 9 per cent until 2006.
Combined total assets of banks in local currency rose by 5 per cent. In euro terms, after exchange differences, combined total assets declined by 3.1 per cent, from EUR 352 billion to EUR 341 billion. The main factors explaining this decline were the depreciation of the Polish zloty and the consolidation process in the Czech banking market.
Consolidation in Central Europe, growth in South-East Europe
A second phase of consolidation has already started: in the past year, several international banks withdrew from the region. For example, in 2002, Bayerische Landesbank sold Rijecka Banka, its Croatian banking subsidiary. Bankgesellschaft Berlin withdrew from the Czech Republic and sold its equity interest in Zivnostenska Banka to UniCredito. "Further players will leave the market in the next few years, continuing the second wave of consolidation,“ says Marianne Kager, Chief Economist of Bank Austria Creditanstalt.
South-East Europe is currently experiencing the strongest growth momentum in the region. The market share of international banks in South-East Europe rose at an above-average rate in 2002: for example, in Bosnia and Herzegovina from 31 per cent to 56 per cent, in Bulgaria from 70 per cent to 81 per cent, and in Romania from 38 per cent to 44 per cent. Bank Austria Creditanstalt has a very strong presence in South-East Europe: in 2002, it acquired Splitska Banka in Croatia and Biochim in Bulgaria, as well as opening a banking subsidiary in Bosnia and Herzegovina. The bank opened a representative office in Macedonia in the first half of 2003, and in July it signed the agreement to purchase Central Profit Banka, a Bosnian bank. "South-East Europe is still the growth market in a growth market. Like various other international banks, we will therefore consistently continue our expansion in these countries,“ says CEE Division Head Martin Grüll.
Austrian banks hold the leading position
In the CEE region, Austrian banks are leading by a wide margin. With a market share of 27.6 per cent (including BA-CA), they are far ahead of Italian banks (14.6 per cent) and Belgian banks (11.9 per cent). These three countries are followed by Germany (8.9 per cent), the USA (8.3 per cent), France (7.5 per cent) and the Netherlands (7.4 per cent).
The ranking of the top 10 banks in Central and Eastern Europe includes three Austrian banks: Erste Bank, Bank Austria Creditanstalt and RZB.
A ranking by total assets shows the following picture: the leading position is held by KBC of Belgium, with EUR 24.2 billion (total assets on a pro-rata basis reflecting ownership interests), followed by Erste Bank (EUR 21 billion) and Bank Austria Creditanstalt (EUR 19.7 billion). UniCredito (EUR 17.3 billion) is in fourth place, followed by Citigroup (EUR 12.7 billion).
Bank Austria Creditanstalt has the most extensive presence in the CEE region (excluding CIS and Baltic states), the bank's network covers 11 countries. RZB maintains a presence in 10 countries, UniCredito is active in 9 countries, and Volksbank units operate in 8 countries. KBC and Societe Generale are both represented in 7 countries.
The largest deals until June 2003
The largest single transactions took place in Bulgaria (BA-CA / acquisition of Biochim, OTP / acquisition of DSK), Poland (Nordea / acquisition of Petro Bank), Bosnia and Herzegovina (BA-CA / acquisition of Central Profit Banka) and in the Czech Republic (UniCredito / acquisition of Zivnostenska Banka). The purchase of DSK by OTP indicates a new development: this transaction was the first acquisition of this size in CEE that was made by a bank from the region itself.
Strong growth potential in Central and Eastern Europe
Bank Austria Creditanstalt's Chief Economist Marianne Kager continues to see strong potential for growth in the region: until 2006, the banking market in Central and Eastern Europe will grow by 42 per cent, from EUR 351 billion to EUR 499 billion. Particularly strong growth will be achieved in loans, from EUR 150 billion to EUR 226 billion, an increase of 51 per cent. "To be able to use this potential, an international bank must have a well-established local presence. A bank that intends to enter the CEE banking market now would be very late," says Marianne Kager.
Bank Austria Creditanstalt will continue to pursue its expansion in the region. In July it rented 32 branches from FINA, the Croatian Finance Agency, thereby enlarging the network of Splitska Banka, its subsidiary in Croatia, by 40 per cent. The closing of the purchase of the Bosnian bank Central Profit Banka is planned for autumn this year.
Enquiries: Bank Austria Creditanstalt Group Public Relations
Ildiko Füredi, tel. +43 (0)5 05 05 56102;