The market share of international banks in Central and Eastern Europe (CEE) continues to grow. Over the past ten years, their combined share in the group of countries without Russia and Ukraine has more than tripled, to a current level of 69 per cent (based on ownership interests). Austrian banks account for one-third of the share of international banks in the whole CEE region. This is the result of a recent study published by Bank Austria Creditanstalt (BA-CA). „If the total assets of those CEE banks in which foreign owners have a majority interest are added together, international banks handle three-quarters of banking business in the region,“ says Marianne Kager, Chief Economist of Bank Austria Creditanstalt.
The market share of international banks is highest in Estonia (98 per cent) and in Slovakia (97 per cent) and exceeds 90 per cent also in Lithuania, Albania and Croatia. In Slovenia, Serbia and Latvia, the market share of international banks is below 50 per cent. Significant catching-up potential is seen especially in Russia and Ukraine, where foreign banks control only 8 per cent of the banking sector.
Strong growth continues
International banks continue to show strong interest in the CEE region. „After fifteen years of transformation, the banking market in Central and Eastern Europe is still characterised by dynamic growth, which will continue in the coming years,” says Marianne Kager. Some 400 banks with total assets of 440 billion euros are active in the CEE region (without Russia and Ukraine) today; including Russia and Ukraine, the total number of banks is over 2,000 with total assets exceeding 650 billion euros.
The degree of intermediation (total assets as a percentage of GDP) is still well below the euro area average of 206 per cent. In the CEE region without Russia and Ukraine, the figure is 74 per cent, just over one-third of the level in the euro area; in the entire group of countries, the degree of intermediation is 59 per cent.
Catching-up potential in the area of loans
The volume of loans as a percentage of GDP differs widely from country to country. Lending volume is highest in Croatia, with 62 per cent of GDP, compared with the CEE average of only 31 per cent. In Romania, however, the comparative figure is as low as 18 per cent. Credit growth in the entire CEE region averages 24 per cent per annum, well above the annual growth rate of 4 per cent recorded for the euro area.
BA-CA’s economists expect this strong momentum to continue in the coming years, although growth will slow down somewhat. According to their calculations, lending volume will grow by about 17 per cent annually from 2006 to 2008. „Although credit growth in CEE will slow down somewhat in the coming years, the volume of new loans in the next four years will be about EUR 370 billion, significantly exceeding the figure of EUR 150 billion recorded in the past four years,” says BA-CA’s Chief Economist Marianne Kager.
Personal loans are driving growth
Economists at BA-CA think that particularly strong growth will continue to be seen in personal loans, a sector which in the past four years expanded by 100 per cent and more in some CEE countries. Annual growth averaged 40 per cent, driven by enormous pent-up demand, the stabilisation of the economic environment, and an improvement in the quality of banking services. In the current year, personal loans in CEE will increase by more than 30 per cent, according to the BA-CA study. Per-capita growth in this sector will amount to EUR 700 in the group of countries without Russia and Ukraine; it is expected that this figure will almost double to reach about EUR 1,200 by 2008.
BA-CA holds a leading position in Central and Eastern Europe
Among the international banking groups operating in CEE, Bank Austria Creditanstalt together with other HVB Group companies is among the leading financial services providers in the region. „In the past year, we significantly strengthened our position by gaining market share in almost all countries and through acquisitions. This means we are well placed for future growth,” says Regina Prehofer, BA-CA Managing Board member responsible for operations in Central and Eastern Europe.
Within HVB Group, Bank Austria Creditanstalt is responsible for business in the markets of Central and Eastern Europe (CEE). Based in Vienna, BA-CA has a presence in 11 CEE countries; through HVB Group, BA-CA is also present in Russia, Ukraine and in the Baltic states. The entire CEE network of the BA-CA / HVB Group comprises more than 1,000 offices, with some 18,000 employees serving more than 4.6 million customers. In the past year, BA-CA expanded its CEE network by adding new branches and acquiring banks in Bulgaria (Hebros Bank) and in Serbia (Eksimbanka). In May 2005, Bank Austria Creditanstalt signed an agreement with Banca Tiriac in Romania to merge Banca Tiriac and BA-CA’s subsidiary HVB Bank Romania.
