Page 9 - bne_Magazine_September_2017

bne September 2017 The Month That Was I 9
Finance
Central Europe
2017 has been the best year for Central European equities since 2012 so far. The CECE Composite, an index provided by Vienna Stock Exchange that reflects the performance of the 28 larg- est stocks listed in Warsaw, Prague and Budapest (CEE3 thereafter) gained 22% from the start of the year to August 15.
Czech utility CEZ, which owns a regional electricity distribution company in Bulgaria, received several binding offers for its business. CEZ CEO Daniel Benes has said that the company would decide by September whether to stay in Bulgaria or sell the business.
Private investment group R2G Rohan Czech announced the start of a volun- tary takeover bid for shares of Czech textile company Pegas Nonwovens at CZK 1,010/share. The offer has won the support of Pegas’ board of directors. R2G Rohan Czech owns 10.83% of shares
of Pegas. The stock closed at CZK1,019 shortly after, indicating shareholders expect the bid price to rise.
Southeast Europe
Bucharest bourse head Ludwik Sobo- lewski announced that he would no longer act as CEO, in order to avoid legal complications. The managing board of Bucharest Stock Exchange failed to extend, in its latest August
18 meeting, the term of office of CEO Sobolewski and this created “an unusual legal situation”.
Assets of commercial banks in Bosnia & Herzegovina increased by 8.3%
y/y to BAM26.87bn (€13.74bn) in June, after rising 8.2% y/y the previ- ous month. The assets in June equalled 84.3% of Bosnia’s projected GDP.
The Slovak banking sector posted a €76mn drop in profit to €350mn in the first half of 2017, data released by the
National Bank of Slovakia revealed. The poor result has been blamed on the low interest rate environment that is pres- suring lenders. Low interest rates have spurred competition amongst banks, leading to a sharp rise in lending, which has the NBS hugely concerned for sector stability in the medium term.
Eastern Europe
In July 2017 Russian banks posted pre-tax profit of RUB157bn ($2.7bn), the second-highest profit during the year after RUB 215bn posted in April 2017. For 7mo17, pre-tax profit reached RUB 927bn, which is almost in line with the result for all of 2016 of RUB 930bn. Conversely the Ukrainian banking system saw UAH1.85bn (€390mn) of net losses in January-June, the National Bank of Ukraine (NBU) reported on August 11. The result was due to banks setting aside funds for reserves and prob- lems at nationalised lender PrivatBank.
The Russian government approved
a new $700mn loan to Belarus, which will be denominated in Russian rubles. The loan will be used to refinance Belarus’ debts on previous Russian gov- ernment loans and contributes to debt funding through to 2018.
Russia's largest lender, the state- controlled Sberbank, revised a number of target indicators for 2017 upwards after turning in above- expectations second quarter results. The bank expects return on capital at about 20% this year (up from 16-19% previously) and capital adequacy ratio of at least 10.5% (up from 10%).
Sberbank is seeking an out of court settlement with Transneft, following a court decision to award the state- owned Russian monopoly pipeline operator a $1bn award on a derivative contract. Alarmed at the news, Russia’s central bank has reportedly requested the systemically important banks to provide information on risk hedging for largest clients at short notice.
Eurasia
An investment fund set up by wealthy Armenians from the diaspora announced its first project – a $150mn and 76 MW hydropower plant for Lori province. The Investors’ Club of Armenia said the facility will generate 5% of the country’s power production.
Uzbekistan no longer requires export- ers to convert 25% of their foreign currency revenues from overseas sales into the national currency. The move is a step towards liberalising the currency market, and will serve to stimu- late exports. The black market rate for the Uzbek som immediately appreciated on the news.
Moody’s downgraded Azerbaijan’s debt ratings from ‘Ba1’ to ‘Ba2’ with a stable outlook, citing the weaken-
ing of Azerbaijan’s fiscal and economic strength as a result of low oil prices, declining production potential and very weak banking system.
Government support for troubled International Bank of Azerbaijan (IBA) has amounted to 27% of Azerbaijan’s 2016 GDP. But Fitch Ratings analysts are “uncertain whether the current restructuring will be sufficient” because of the overall depressed operating environment in the banking sector.
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