EURASIAN BANK SURVEY 2010: Russia remains on top

By bne IntelliNews December 2, 2010

bne -

There were a lot of changes in bne's annual bank ranking for Eurasia this year, as you might expect, but perhaps it is easier to start with what didn't change.

The Russian banks continue to dominate, with Sberbank still by far the biggest bank in the Eurasian region. However, what should surprise is that despite the crisis and the collapse of Russian industry in 2009, the bank has still managed to increase its assets from $223bn as of September 2009 to $283bn as of September 2010.

The increase in assets is thanks to the speedy action of the Russian central bank to help the sector during the darkest days of the global economic crisis; Prime Minister Vladimir Putin said earlier this year that the government dropped some RUB2 trillion ($66bn) of cash into the sector. And the rescue worked, as there have been no major bankruptcies in the sector, compared with the last big crisis in 1998 where the entire top tier of Russia's banking sector was wiped out.

Russia's big banks all got a bit bigger over the last year, but not by the 40-50% they were growing at in the glory years of 2005-2008, while the total number of banks in Russia fell below the 1,000 mark for the first time ever to 967, as of the start of November.

Russia's state banks still dominate and Alfa Bank consolidated its place as top dog amongst Russia's commercial banks, a testament to CEO Ed Kaufman's skill. Alfa didn't make any friends in the last year. While most banks adopted a "refinance and delay" strategy for debtors, simply kicking the repayment of credits down the road, Alfa aggressively called in loans when they were due and took over collateral if the customer was unable to pay. The bank now has one of the best non-performing loan (NPL) ratios amongst the leading banks and has already moved some of its bad loan provisions over to capital, which the rest of the sector is expected to start doing next year.

And now the changes...

Among Russian banks, the two dramatic changes were seen in VTB-24 - winner of the "bne 2010 Best Bank in Russia" award this year - which rose from 10th to 6th place over the last year, almost doubling its assets in the process, and MDM Bank, which dropped like a stone from 7th to 14th place, losing a third of its assets over the same period.

MDM had been on course to become Russia's biggest commercial bank after it merged with regional specialist Ursa Bank, which belongs to Russian banking wunderkind Igor Kim. However, after Kim left the bank in the middle of this year, MDM seems to have lost its way.

Another big change is Kazakhstan's Kazkommertsbank becoming the largest non-Russian bank in the region at 9th place with assets of about $17bn, about a fifth of Russia's second-biggest bank VTB.

Kazkommertsbank is closely followed by fellow countryman Halyk Bank in 13th place and even AMT Bank, which is what's left of BTA Bank after it imploded during the crisis, is still ranked 18th in the list of biggest banks in the region. Like Russia, the Kazakh government poured in money to prop up the country's banks - who had a much harder time of it than their cousins to the north - spending over $4bn to keep the sector afloat, much of this going to BTA. The fact that Kazakh banks still rank so high in the list is a testament to the strength of the banking sector prior to the crisis - if only they hadn't borrow so much abroad, eh?

Russians abroad

Belarusbank, the biggest bank in Belarus, also improved its position (and was another winner in the "bne 2010 Best Banks" survey this year), rising from 14th to 12th place over the last year and increasing its assets by about a third to $15bn. One of the Belarusian banks to watch for next year will be Belagroprombank, which has been taken over by Sberbank and added $2bn to its assets in the last year.

Among the Ukrainian banks, Privatbank is still the biggest at number 16 in the list with assets of $13bn, followed by the stateowned trade bank Ukreximbank at 24th. Raiffeisen Bank Aval, the leading foreign bank in the country, fell down the list from 18th place to 31st, but its assets total remains more-or-less the same at $7bn from a year earlier. However, the Russian-owned banks in Ukraine are all climbing up into the lower rungs of the rankings this year and should continue to rise next year.

International Bank of Azerbaijan and Bank of Georgia continue to battle it out for the title of most powerful bank in the Caucasus. However, IBA maintains an easy lead over its more celebrated rival at place 33 and assets of $6.3bn against BoG's ranking of 87 and assets of $2bn.

[[DOC:BNE_SPR_12_10,Eurasian Bank Report]]

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