Banking merger and acquisition (M&A) activity in Central Europe is likely to be further limited by the upturn in the region’s economies, industry sources said in comments published on May 29.
Speculation of further consolidation has been doing the rounds for some time, on the back of suggestions that more Eurozone groups could seek to exit the region. The recent sale of Pekao, Poland’s second largest lender, by UniCredit - part of a drive by the Italian giant to stabilise its balance sheet - was notable for its size.
However, especially in Hungary and Poland, deals are still held back by the politicised nature of the market, with erratic policy and state interest in acquisitions overwhelming interest from the private sector. Meanwhile, with economies across Visegrad posting strong first quarter growth, there is less motivation to leave the region, according to bankers quoted by Reuters.
"Banks are now getting richer and chances of consolidation will be much smaller in these favorable economic conditions," Hungarian central bank Deputy Governor Marton Nagy told the newswire.
Several smaller cross-border banking mergers remain in the pipeline as western European lenders retreat. However, few targets within Visegrad are noted. Rather, the region’s locally- and foreign-owned lenders are looking across their borders, especially to the south and east.
KBC, which owns units in the Czech Republic and Hungary, signed a €610mn deal last year to acquire United Bulgarian Bank from the National Bank of Greece. The Belgian lender, which was heavily hit by the recent crisis, now says it is looking at expansion opportunities in Slovakia. UniCredit has been speculated to be seeking to exit both Slovakia and the Czech Repuublic, but little has been heard since early spring.
Hungary’s biggest bank, OTP, expects to find out by early July if its bid for Romania’s Banca Romaneasca has been accepted by the National Bank of Greece. OTP officials claim that three major Romanian lenders are up for sale currently.
The Hungarian group quit efforts to expand at home when the Fidesz government began in 2011 to press hard on the sector, and turned its eye abroad. It has been actively searching for acquisition targets in Central & Eastern European countries in which it already operates.
Deputy CEO Laszlo Wolf says the ongoing shake-out amongst banking groups from the likes of Greece and Italy has created opportunities for the bank to expand its southern footprint. "We will obviously look at good quality Greek banks," he said. "The low interest rate environment has raised the issue of efficiency of scale. It is not just Greek banks selling units in the region, but also owners who have realised that they cannot operate efficiently enough as a small bank. We will obviously look at those too."
In Poland, the Pekao deal may be the last for some time, although the PiS government has made clear it hopes to see more of the sector in state hands. The head of state fund PFR, which took 12.8% of Pekao in the deal, with state-controlled insurer PZU taking 20%, says he does not expect any further acquisitions.
However, PZU officials have said there could be more buys by Alior - the bank in which the insurer took control last year.
Still, at the same time as the Pekao deal, PZU missed out on buying Raiffeisen Polbank. Sources at Austrian lender Raiffeisen Bank International told bne IntelliNews at the time that the single bidder had played too hardball for its tastes. RBI will now revert to an agreement with Polish regulators to list a stake in Warsaw instead.
ING Bank Slaski Chief Executive Brunon Bartkiewicz said Poland's fifth-largest bank would be growing organically, but does not rule out buying another bank if it were to create an opportunity for "improving (Slaski's) general ratios".
The biggest sale of a lender within Visegrad in the coming years looks likely to be that of Budapest Bank. Nationalised alongside MKB in 2015, an agreement with the EBRD now commits Hungary to privatising all its banking assets by 2018.
However, progress has been slow. The pair of banks were initially viewed as central planks in a plan to revitalise the Budapest Stock Exchange, which the central bank took control of in late 2015. However, MKB has since been sold to a consortium of mysterious funds - with suspicion focused on government-friendly oligarchs and the MNB itself - while a new strategy to sell Budapest Bank is still awaited.
Austria's Raiffeisen Bank is preparing to file a complaint at the Croatian constitutional court later in July against a recent law that aims to declare thousands of its loans to Croatians void, ... more
An overwhelming majority of creditors (93.9%) to the International Bank of Azerbaijan (IBA) approved the bank's ... more
Lebanon has become the fifth member country from the Southern and Eastern Mediterranean (SEMED) region to join the European Bank for Reconstruction and Development (EBRD), becoming a shareholder with ... more