Raiffeisen open to buying banks in CEE

Raiffeisen Bank International plans to grow its business in Central, Eastern and South-Eastern Europe organically but is keeping an open mind about acquisition opportunities, Herbert Stepic, CEO of the Austrian bank, told Emerging Markets.

After a period of intense expansion in the region during the boom years, many Western banks have retreated to their core markets, either forced by the need to deleverage or due to new strategies at group level.

“We are very actively being offered opportunities to take over banks, which we deny, but also to take over assets and liabilities and customers. On that front, of course, we are looking into in each and every case,” Stepic said in an interview before the EBRD annual meeting.

In March, the bank bought the retail operation of Citibank Romania and last month it expressed interest in buying the assets of Bank of Cyprus in Romania after the Cypriot bailout, but its offer was rejected.

Stepic said Raiffeisen was not necessarily interested in acquisitions, as it is one of the banks with the widest network in Central, Eastern and South-Eastern Europe (CEE). “Having said that, the present deleveraging that is happening, with banks easing out [of the region] of their own decision ... is creating chances for Raiffeisen and others whom I would call strategic investors in CEE,” he said. His bank is vying with co-national Erste Bank for second place in the region, which is dominated by Italian UniCredit.

He slammed the initial Cypriot bailout plans, which had included a haircut on depositors with less than 100,000 euros, as “a detrimental mistake” and said the bailout had sparked a “flight to quality” by customers, from which his bank has benefited.

“Immediately after Cyprus happened, Raiffeisen banks in the various surrounding countries, specifically in South-Eastern Europe, have experienced an additional influx of deposits coming from other banks,” Stepic said.

But he is confident that the Cypriot crisis will not be repeated. “There is hardly anyone that is comparable to Cyprus. This is a really specific case and we don’t expect any other country around the peripherals that we all know coming somewhat close to the circumstances prevailing in Cyprus.”

Stepic sees growth in the region improving in the second part of this year, and stressed there was a “positive growth differential” between the EU average and Central and Eastern Europe of 2%, saying this was “a huge advantage for the companies and also the banks that operate there”.

He said figures for non-performing loans would improve “when the economy is really showing signs of improvement.” Stepic believes Germany will be the driver of growth for the eurozone again and this would be a “positive development” for the single currency area and CEE, but admitted that the upswing will be “really slow.”

He reaffirmed his bank’s commitment for the region: “we have been earning, in a very difficult phase of the economy, in the five years of the crisis, on average E800 million per annum; this at a time when other banks made huge losses and have decreased their earnings considerably.”

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