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Opinion
December 14, 2018 www.intellinews.com I Page 26
COMMENT: The state is back in the banking business in Central and Eastern Europe
Gunter Deuber of Raiffeisen Research in Vienna
For a few years now, foreign banks have been constantly losing market share in many of the larger Central-, Southeastern and Eastern European markets.
On the one hand, this development naturally calls into question the long-term strategic plans of the Western banks operating there. After all, Western banks have come to Eastern Europe as "market share conquerors". On the other hand, this trend can also support the foreign banks that continue to operate in the region.
But let's start all over again. At the beginning of the 2000s, many Western banks wanted to conquer the new mass market in Central and Eastern Europe (CEE). Being big everywhere was the ambition: Western foreign banks conquered substantial market shares through a combination of bold acquisitions and aggressive organic growth. At that time, all relevant market players (local subsidiary banks of foreign groups, local regulators, local politicians on the ground and also the home country regulators) were satisfied with the overall situation. The banks earned good money and local lending was certainly not too scarce.
In the aftermath of the global financial crisis, the game has changed. Western banks no longer want to be big everywhere in Central and Eastern Europe per se. Especially in volatile markets and/ or markets with a business environment that
is not always easy for all customer groups, it is
The state is getting back into the banking sector in CEE as foreign owned banks retreat to niches
possible to earn good money with small market shares and so-called "niche player business models".
Risks have gone up. Home country regulators
in Western Europe (including the ECB) are also carefully watching the operations of leading European CEE banks in more volatile regional markets. In addition, Western banks have become a lot more cautious when making loans in CEE.
It was no coincidence that the call for a greater role for local commercial banks and/or local development banks became louder. It seems that politicians that profited from the previous “market share buying” by Western banks are now looking at other options.
Calls for more national ownership in local banking sectors have been bolstered by the increasing anti-capitalist and anti-globalist mood worldwide. Hence it's no coincidence that representatives of national and local development banks, as well as state banks from Central and Eastern Europe, are currently also happy to make a public statement at relevant forums like "... the state is back".
Since the global financial crisis, much has happened in terms of market shares in the CEE banking sectors. The market share of Western foreign banks has therefore fallen significantly in all sub-regions, from almost 80% to just under 60% in Central Europe, from almost 90%