BA-CA analysis: One in five banking transactions in Central and Eastern Europe is handled by an Austrian bank
- Foreign banks hold majority interests in 73 per cent of banks in the "New Europe".
- Volume of new loans in the next ten years will exceed EUR 450 billion.
International banks continue to account for a growing proportion of total assets of the banking sector in the "New Europe"1. The current figure is 66 per cent (based on pro-rata ownership interests), with more than a quarter accounted for by Austrian banks. This is the result of a recent study by Bank Austria Creditanstalt (BA-CA). "If the combined total assets of banks in CEE in which foreign banks hold a majority interest are taken as a basis, one can see that more than three-quarters of banking business in Central and Eastern Europe is handled by foreign banks," says Marianne Kager, Chief Economist of BA-CA.
With the exception of Slovenia and Latvia, the banking sector in the new EU countries and the candidate countries (Croatia, Bulgaria, Romania) is dominated by foreign banks. In the Czech Republic, Slovakia, Estonia, Lithuania, Croatia and Bulgaria, foreign banks own more than 80 per cent of the banking industry.
Continued dynamic growth in Central and Eastern Europe
For 2004 as a whole, economists at Bank Austria Creditanstalt expect the combined total assets2 of all foreign banks in CEE to increase by 12 per cent. "Banks in Central and Eastern Europe are growing at significantly higher rates than in the euro area, where we anticipate growth of only 5 per cent for 2004," says Marianne Kager.
Lending business in Central and Eastern Europe is growing by 15 per cent, a substantially higher rate than in the euro area (about 5 per cent). The banking sector in Central and Eastern Europe thus maintains the strong growth momentum experienced in the past three years. During that period, credit volume rose by an annual average of 13 per cent, compared with just under 4 per cent per year in the euro area. Bulgaria and Romania saw the strongest growth of loans, followed by the Baltic states, Croatia and Hungary.
According to BA-CA's economists, this positive development may be explained by the CEE region's strong economic performance, the stabilisation of the banking market and the enormous backlog demand for financial services. "In the next ten years we expect loans to grow by over 250 per cent and deposits by some 170 per cent," says BA-CA's Chief Economist. In absolute terms, this translates into an additional lending volume of over EUR 450 billion. Poland, the largest CEE market, will account for EUR 170 billion in new business, followed by the Czech Republic (EUR 69 billion) and Hungary (EUR 63 billion).
Those countries which currently show the lowest level of market penetration will experience the strongest growth of loans. Economists at BA-CA think that these countries will be Romania, with expected growth of more than 470 per cent, and Bulgaria, with growth of about 360 per cent.
Austrian banks have the largest slice of the cake
Austrian banks hold the leading position among foreign banks in Central and Eastern Europe, accounting for 28 per cent of the combined total assets of foreign banks. Austrian banking groups' share of the total banking market is 20 per cent. "This means that one in five banking transactions in Central and Eastern Europe is handled by an Austrian bank,", says Marianne Kager. Italian banks account for almost 12 per cent, followed by Belgium with some 9 per cent. Among those banks with direct majority holdings in local banks in at least five of the new EU countries, Bank Austria Creditanstalt is ahead of Italy's Unicredit and Austria's RZB.
Outlook: long-term growth
The long-term outlook for markets in Central and Eastern Europe continues to be favourable, according to BA-CA's economists. At present, credit volume per inhabitant is EUR 1,600, about 7 per cent of the figure for the euro area. On the assumption of more than 250 per cent growth in the lending market in the next ten years, credit volume per inhabitant will rise to some EUR 6,000. This figure will then correspond to about 24 per cent of the current level in the euro area, or 17 per cent of the estimated future figure for the euro area. "This indicates considerable potential for growth in the region of Central and Eastern Europe," says Marianne Kager.
Bank Austria Creditanstalt is Austria's largest bank. Within HVB Group, it is responsible for the markets in Central and Eastern Europe. The bank recognised the strong potential of countries in Central and Eastern Europe at an early stage and has steadily expanded its network since the early 1990s. Today the bank's operations in 11 CEE countries have combined total assets of EUR 27 billion (as at 30 September 2004). 16,500 employees serve 4.2 million customers in the region. Most recently, "The Banker" has named Bank Austria Creditanstalt "Bank of the Year in Austria and CEE", and "Euromoney" has again rated
BA-CA "Best Bank in Austria and CEE".
1 EU member states and candidate countries from Central and Eastern Europe, together referred to as "CEE" in this text
2 in local currency
Enquiries: Ildiko Füredi-Kolarik
Bank Austria Creditanstalt, International Press Relations
Tel: +43-50505-56102, e-mail: email@example.com