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May 14, 2015 South-eastern Europe Slovenia’s bank sector sees
bne IntelliNews Daily 15
Turkish firms sense opportunity as Iran emerges from isolation
Kivanc Dundar in Istanbul
Following the breakthrough in the interna- tional talks on Iran’s nuclear programme on April 2, Turkey is well placed to benefit from better relations through increased trade and investment. So it was fitting that Turkish President Recep Tayyip Erdo- gan paid an official visit to Iran just a few days later.
Erdogan, a pragmatic politician, sought to focus on economic issues, and avoided talk about regional politics during his trip to Tehran. Turkey’s main export market, Europe, has not fully recovered from its deep economic crisis and Turkey’s $800bn economy needs to maintain good relations with its oil-producing neighbour.
However, Erdogan has recently taken a swipe at Iran over Yemen and its rising regional ambitions. Iran, and the terrorist groups it supports, must withdraw from Yemen, Erdogan said on March 27, claiming that Tehran was trying to dominate the re- gion and antagonising Ankara, Saudi Arabia and the Gulf states in the process. Turkey’s disagreement with Iran is not limited to Yemen; Ankara actively supports the Syrian opposition, while Iran is Syrian President Bashar al-Assad’s closest ally in the region.
Following Erdogan’s comments, the Ira- nian foreign ministry summoned Turkey’s charge d'affaires in Tehran, asking for an explanation, while Iranian lawmaker Man- sour Haghighatpour said: “Anyone who speaks against Iran cannot be our guest.” There was calls to postpone the visit.
Erdogan went anyway, arriving in Tehran on April 7. He walked hand in hand with President Hassan Rouhani over the red carpet to enter the Saadabad Palace in Teh- ran, and during the joint press conference he addressed Rouhani as “my brother” and emphasized that Turkey and Iran should join their efforts to bring a peaceful out- come to the Yemeni crisis.
Maintaining dialogue with Iran has al- ways been important for Turkey, Hikmet Ce- tin, a former foreign minister, told Al Moni- tor. Trade between Turkey and Iran stood at $13.7bn in 2014, down from $14.6bn in the previous year. Turkey’s exports to Iran were at $3.9bn last year, or 2.5% of Turkey’s total exports, while imports from Iran (mostly energy) were $10.9bn, or 4% of Turkey’s total imports. With GDP of about $366bn, Iran's economy is about 20% smaller than it would have been without sanctions, ac- cording to a study by the US Congressional Research Service, but the end of sanctions will provoke a boom.
“If you put together the consumer po- tential of Turkey, the oil reserves of Saudi Arabia, the natural gas reserves of Russia, and the mineral reserves of Australia you have it all in one country," Ramin Rabii, CEO of Iranian investment firm Turquoise Partners, told CNN.
better times ahead Clare Nuttall in Bucharest
Two years ago Slovenia’s banking sec- tor was in crisis, and the country looked odds-on favourite to become the sixth Eu- rozone member to require an international bailout. It didn’t happen. A good 2014 has seen a turnaround and the state is gradu- ally pulling out of the banking sector, which should give a fillip to efficiency-improving competition.
Several of Slovenia’s largest banks posted good results for 2014. Among the state-owned banks, Nova Ljubljanska Bank (NLB) announced positive results for the first time since 2008, with net profit after tax hitting €62.3mn. The chairman of the bank’s supervisory board, Gorazd Podbev- sek, told journalists on February 27 that 2014 marked a “pivotal change in the op- erations of the NLB Group”. Nova Kreditna Banka Maribor (NKBM) also rebounded
in 2014 Ljubljana spent another €3.5bn to support the sector, as well as setting up a "bad bank" known as the Bad Assets Management Company (BAMC). Today, the government is looking to sell its holdings in the country’s three largest banks that were taken over during the bailout. The Bank of Slovenia also set up a special fund for bank resolution at the end of March.
As banks work through their legacies of bad loans and resolve capital adequacy is- sues, the better performance of the sector is expected to continue in 2015, although Fitch Ratings reported at the end of March that the sector "remains fragile".
“We have seen a lot of progress over the last 18 months, but there are still some challenges, such as privatising national- ised banks, improving corporate govern- ance and continuing with corporate re-
of the creation of the BAMC. “Non-per- forming loans are still high but are coming down. In terms of resolving NPLs, Slovenia is ahead of other countries in the region,” says Markovic.
Still, Slovenia is not out of the woods yet as its banking sector is being impacted by the regional slowdown affecting every- one. Lending in January-November 2014 falling 19.6%, partly due to the transfer of bad loans to the BAMC, according to the Institute of Macroeconomic Analysis and Development of the Republic of Slovenia.
However, UniCredit’s Friedl expects lending to revive in 2015, in line with the general strengthening of the economy. The EBRD forecasts GDP growth of 1.6% this year – up from an earlier forecast of 1.0%, though still below the 2.7% expansion in 2014. “Competition for good clients will prevail in 2015. A lot of banks are chasing them, but we want to have the right clients with the right ratings, and not to pursue growth at any price,” Friedl says.
The banking sector's health will be further improved if the state managed to sell off its main assets. NKBM is re- portedly in the final stages of talks with US investment fund Apollo, which is be- lieved to have topped an offer from Hun- gary's OTP. Slovenia Sovereign Ljubljana also plans to exit its 75% stake in NLB as well as finding a buyer for the country’s third largest bank, Abanka, following its planned merger with the smaller Banka Celje. All three banks are included in the list of 15 major companies earmarked for privatisation and are expected to be sold by the end of this year – a process that the OECD said on May 4 is essential together with pension reform to ensure long-term financial stability.
“Gallup's 2014 "Positive Experiences In- dex" revealed Latin America to be the world’s happiest region, while Southeast Europe, Eastern Europe and the Caucasus emerged as the unhappiest.
Uzbekistan was the highest-scoring Cen- tral and Eastern Europe and Commonwealth of Independent States (CEE/CIS) country for the second year running, with 2013 and 2014 scores of 76 and 78, respectively. Poland fol- lowed at 70. The rest of CEE/CIS was below Greece's score of 67.
The lowest scoring CEE/CIS countries were Serbia and Turkey, at 54, followed by Lithuania, Georgia and Bosnia-Herzego- vina on the same score as Afghanistan at 55. One spot above were Ukraine, Azerbai- jan and Moldova.
The biggest loser was Kosovo, whose score fell from 68 in 2013 to 58 in 2014. The most improved CEE/CIS nations were Kyr- gyzstan and Turkmenistan, whose scores both improved by 6 points to 67 and 65, respectively.”
“We have seen a lot of progress but there are still some challenges”
from a €648.4mn loss in 2013 to earn a €35.9mn profit in 2014.
In the private sector, the country’s larg- est foreign-owned bank, UniCredit Slove- nia, closed 2014 with a small profit, a result the bank’s chief financial officer Guenter Friedl says was, “clearly driven by our tight cost management.”
Both NLB and NKBM were recapitalised by the Slovenian government in 2013 and
structuring,” the European Bank for Re- construction and Development's (EBRD) Slovenia country economist, Bojan Mark- ovic, told bne IntelliNews.
Slovenia has also made progress in tack- ling the non-performing loans (NPL) that are the legacy of the narrowly missed fi- nancial crisis. The share of bad loans has dropped from 18.1% in November 2013 to 11.6% as of January 2015, partly as a result
Gallup World Poll: 2013 and 2014 Positive Experience Index