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Banks withdrawing from Eastern Europe

Regional info/economyPosted by Chambers of Commerce Sweden - Southeast Europe Wed, March 07, 2012 13:02:18

(For an update from the EBRD blog, click here)

“The demands on banks for larger capitalization together with the Eurocrisis can start a mass exodus of European banks from Eastern Europe”, says Mr Erik Berglöf, Chief Economist of the European Bank for Reconstruction and Development (EBRD) in an interview with Swedish newspaper Dagens Industri recently.
One example is the German Commerzbank who now choses to focus on Poland and Germany, whilst leaving Ukraine and cancelling its plans for an establishment in Belarus. Also the Italian bank Unicredit, who is under hard pressure these days, is expected to decrease its expansion plans according to Berglöf..
Another threat to the banking system is the crisis in Southern Europe. If Greece is falling the consequenses for particularly Bulgaria, Romania, Serbia, Macedonia and Albania, where Greek banks have a large market share, will be devastating.
“A deepend Euro crisis would directly hit the bank system and further worsen the situation in Eastern Europe”, says Berglöf”. “The banks have played a central role in Eastern Europe. If the banks are pulling out from the East, Central Europe will have to pay with lower growth. In the end that will hit also Western Europe. Eastern Europe is today the most important export market of the Eurozoon”, he says.
Read the full DI-article (in Swedish) here.

…but Raiffeisen stays
Raiffeisen Bank international (RBI) regards Central and Eastern Europe as its home market and has no plans to leave the region. This was the firm answer we received from the Austrian bank´s representative office in Stockholm as a comment to the article above, continuing:
"Raiffeisen Bank International has never, in any quarter or year, posted a loss on the group-level, pre-crises, in the crises or now. Profit before tax for the first three quarters of 2011 was in excess of EUR 1 bln. Even in the difficult year 2009, RBI (at that time Raiffeisen International) posted a profit before tax of nearly EUR 370 million. This is above all due to the bank´s diversified business model: diversification by markets, customer groups and products. Karl Sevelda, RBI's Deputy CEO responsible for the corporate business, also underlined this stance in a 30 December 2011 interview with the Viennese daily Die Presse: "Let me be very clear: we will not exit from any market in Central and Eastern Europe. But we will, of course, take into consideration the diverging risk developments [within the region] when making future investments. And naturally, it may well be that we reduce our assets here or there. But a market withdrawal? – No!."

Our members can download two very interesting and comprehensive reports made by Raiffeisen Research here:

The CEE Banking sector

CEE Q1/2012 stratey report

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