Page 27 - bne_newspaper_December_14_2018

Opinion
December 14, 2018 www.intellinews.com I Page 27
to just under 80% in Southeastern Europe and from almost 20% in Eastern European markets (dominated by Russia) to a single-digits.
Interestingly, the increase in local ownership
in Central and Eastern Europe was also accompanied by an increase in the market shares of state-owned banks. This is less the case in Southeastern Europe. In Southeastern Europe, the share of state-owned banks, with the exception of Serbia, is well below 10% and has hardly changed in recent years. In Central Europe the share of state-owned banks has risen from just under 10% to almost 20%, but in Eastern Europe the share has soared from 35% to 65%.
In addition to the regional trend, a certain polarisation is also discernible. There are countries where ownership has not shifted significantly from Western banks to local and/or state-owned banks (Czech Republic, Slovakia), in other countries there are significant shifts (e.g. Poland, Hungary but also Russia).
All in all, it is clear that not all CEE countries are now focusing on similar development strategies. In some individual countries privatisation efforts are even still visible (Serbia, Slovenia), in others there is still no strong state-owned banking sector (Romania, Bulgaria, Czech Republic, Slovakia) ... in others one speaks almost proudly of the increased state influence.
These developments could favour the fact that the state share in Belarus will soon be lower than in Russia - who would have thought this possible five years ago? If the recent speculations about the sales of leading Russian commercial bank Alfa Bank are confirmed, then the share of state-owned banks in Russia could soon reach
70 %, and in Belarus successful privatizations could reduce the share of state-owned banks
to just under 60 % in the coming 12-18 months. This would make Russia a more state-controlled economy than Belarus in the banking sector.
The trends outlined above clearly show that a more differentiated view of the local banking sectors in Eastern Europe is necessary. Very divergent market share trends are discernible. And do the foreign banks really have to fear local competition or are the market trends outlined negative for them? The answer is probably rather no. All long-term studies on the effectiveness of banking systems show that a too high proportion of state-controlled banks and especially those with an unclear mandate are unlikely to increase efficiency. In addition, this again creates a clearer differentiating feature, as certain customer groups may still prefer to work with a non-local bank. And the experience of recent years has shown that foreign banks with niche exchange strategies can earn good money again, even in sometimes more difficult banking markets such as Russia, Ukraine, Belarus or partially Hungary.