Minggu, 29 Mei 2011

Banks in Central Europe


Herbert Stepic could qualify as the grand old man of central European banking, and not just because of his avuncular beard: at Austria’s Raiffeisen Bank (now RBI) he has been the face of its foreign business since the 1970s. RBI’s subsidiaries now range over 16 former communist countries including Russia and last year yielded around €930m ($1.3 billion) in pre-tax profits. He is bullish about the potential for banking in the region, having just bought Polbank, a Polish retail bank, which he says fills “the last gap” in his diversified portfolio.

Only UniCredit of Italy has a comparable spread, if its banks in the Baltic states and Turkey are included. UniCredit calculates that, by assets, it is the biggest regional player. Erste Bank, which is Austrian like RBI, has more concentrated market power. Through its subsidiaries it has around a quarter of the retail markets in the Czech Republic, Slovakia and Romania.

The region is undoubtedly promising. For 2011, RBI predicts GDP growth of 3.9%, more than double the euro area’s 1.8%. Each group insists it is well placed to profit from the upswing. UniCredit points to its exposure to Russia, Turkey and Poland, which it says combine size with low banking-sector volatility. The trio accounts for 57% of the Italian bank’s regional revenues.

A handful of other foreign banks have a presence in one or two central European countries, but they lack a grand regional strategy. Intesa San Paolo of Italy, for example, owns the biggest bank in Serbia and the second-biggest in Croatia and Slovakia. KBC, a Belgian banking and insurance group, owns the biggest bank in the Czech Republic and the second-biggest in Hungary. It is expected to hang on to those but is planning to sell its banking interests in Russia, Serbia and Slovenia.

Two decades after the fall of the Berlin Wall, Erste, RBI and UniCredit are benefiting from their early commitment. Each has been led by a man with a zest for the place. In Austria, Andreas Treichl, still head of Erste, and Mr Stepic at RBI acquired banks early on in neighbouring countries and never looked back. Alessandro Profumo, then head of UniCredit, was early into Poland and later bought Germany’s HypoVereinsbank, which owned Bank Austria Creditanstalt, the market leader.

These men had the foresight, during the global banking crisis, to keep their banks engaged in the region, with a little help from their home governments, the European Commission and the European Bank for Reconstruction and Development. Together they developed a voluntary pact known as the Vienna Initiative, to keep money flowing in the European Union’s eastern states. It is paying dividends today.

There are some clouds. The recoveries in Hungary and Romania may falter and the Polish economy could overheat. Mr Stepic reckons the biggest irritant is bank windfall taxes imposed by Austria and Hungary, based on balance-sheet size. Other countries will follow, perhaps with performance-based levies. But old hands like Mr Stepic seem to relish an obstacle race.

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