Page 13 - bne magazine February 2022_20220208

bne February 2022 Companies & Markets I 13
More and more ‘local’ champions
Apart from the overall market trends, it is also always good
to know how market share trends that reflect the individual positioning of major banking groups on a country level
are shaping CEE banking markets. Here we observe the following three interesting trends. First, more and more
‘local’ champions are emerging in individual banking markets in Central and Southeastern Europe. A good example is
Banca Transilvania in Romania. The planned merger of PPF and Moneta Money Bank would also create a sizeable local champion that can compete with the three largest foreign- owned banks in Czechia. Sometimes politics also plays a role here. The Hungarian Bank Holding (a merger of MKB, Takarek and Budapest Bank) is set to become a large Central European bank in terms of total assets (with a 4% market share in the CE-3 asset base and 15% on the Hungarian market).
Secondly, more and more cross-border regional champions are emerging out of CEE. Hungarian OTP is THE winner in terms of upscaling in recent years. Based on solid M&A activity, the CEE asset base of OTP has passed the €60bn threshold and
is now larger than the one of Intesa and ING, and is chasing the fourth-largest CEE bank (SocGen). The second regional champion NLB now has a regional asset base above €20bn. But so far there have been no cannibalisation of the Western European players in the region.
And this brings us to another important trend. All Western European banking or banking groups active in the region are strategically more inclined towards the region. The aggregate market shares of the leading banks have remained more or less constant in recent years. The three large pan-European CEE banks (Erste, RBI, UniCredit) continue to have market shares of close to 20% in Central Europe and 30% in SEE, while the leading 5-6 foreign banks continue to hold market shares of 30%+ in Central Europe and 45% in SEE. Recent balance sheet data also show that the two largest lenders in CEE are (once again) two Austrian pan-European lenders – Erste
and RBI, the latter once again slightly ahead of the friendly competitor UniCredit. RBI and Erste are the only lenders with an asset base above €100bn in CEE.
M&A activity in CE/SEE vs divestment and/or organic market trends in Eastern Europe & Russia
The leading Western CEE banks are currently participating very actively in the consolidation process, which is regaining full momentum. Since the last edition of our CEE Banking Sector Report, we have witnessed remarkably stronger M&A activity and the return of the former main players to the scene, with more than €34bn of assets subject of either concluded
or signed agreements in the region. The chief motive is operational upscaling as the best medicine against unabated competitive pressure.
On this front the recent headlines were made by RBI (acquisitions in Serbia and Czechia, divestment in Bulgaria), Erste (upscaling in Hungary), KBC (acquisitions in Slovakia and Bulgaria), Sberbank (divestment in Bosnia, Croatia,
Hungary and Serbia) and OTP (divestment in Slovakia, acquisitions in Slovenia, Uzbekistan and Albania).
Interestingly, a certain stability of market shares – albeit
at very different levels – also applies to the Eastern Europe region. Here the market share of the three banks operating
in Russia (and also in the region) has remained constant at 3.8% since 2013/2014. This constant figure conceals slight shifts. Currently, RBI is the leading Western CEE bank with the most prominent presence in the region. It has a market share of 1.6% compared with 1.3% in 2013/2014. UniCredit's regional market share has decreased from 1.4% to 1.0% in the same period, while Societe Generale's market share has risen slightly from 1.1% to 1.2%.
These key figures naturally reflect above all the dynamics
in the Russian market. Here, Raiffeisenbank is now slightly ahead of Societe Generale and UniCredit (1.2% and 1.0% respectively) with a market share of 1.3%. In 2013/2014,
the competitors from France and Italy were larger than RBI's Russian subsidiary (market shares were then 1.6% UniCredit, 1.5% SocGen vs. 1.2% Raiffeisen).
Overall, the largest universal foreign lenders (RBI, UniCredit, SocGen) stay well entrenched in their niche on the Russian market, though somewhat behind the market average in retail loan growth and profitability (except for RBI) in 2021. With the departure of Citi from the Russian retail lending market (its local retail business represented <10% of total assets) the market share of the remaining entity will fall below 1%.
(Geo-)politics matter in EE but no deleveraging Shares in CEE exposures (% of total)
Source: BIS, RBI/Raiffeisen Research
We have already emphasised the positive business and volume development in the CE/SEE banking sectors. Consolidated cross-border claims of Western banks towards the CE/SEE region increased in double-digit territory over the last 12-24 months. (+12 % December 2019 to June 2021, +14% June 2020 until June 2021). In contrast, cross-border positions (on a consolidated basis, i.e. including local claims in LCY and FCY plus cross-border businesses) remained more or less flattish in the EE region over the last 12-24 months.
www.bne.eu