Eurasian Bank Survey 2012 - Banking in the time of cholera

By bne IntelliNews November 7, 2012

bne -

It's a bad time to be a banker. The green shoots of recovery in 2011 didn't just wither, they were stomped on by the resurgence in the European debt crisis. Governments around the world began to panic as another financial meltdown looked increasingly likely, although the worst appears to have been averted for now. The "bne Eurasian Bank Survey 2012" shows banking asset growth in Eurasia has been lacklustre compared to the boom years. In some countries the whole sector has simply stood still, while several of the stars of the boom years have seen their assets shrink mildly.

Still, despite the obvious drag on growth from the ongoing uncertainty, the economies of the Eurasian region are all still growing, which has benefited the market leaders in most of the region.

The names at the top of the list of bne's annual survey remain little changed from last year (to see table of bank, click here for pdf). The Russian banks still dominate, taking nine out of 10 of the top slots, and the first eight banks remained the same as last year. Collectively, these eight banks saw their assets increase by $186.5bn from $635.8bn in 2011 to $822.3bn, or a 29.3% increase - higher than the Russian sector's average growth of about 20%.

Steady as she goes

Our survey also shows that the rise in asset growth of the top 100 banks in the region has been fairly uniform if you count Sberbank out. The assets of the top 99 banks (excluding Sberbank) increased by $140.2bn, compared with Sberbank's increase of $115.1bn alone. This means that the increase in assets for banks all through the top 99 have on average been growing at 16-17%, which is a lackluster performance when measured against Sberbank's 39.6% increase.

Much of Sberbank's growth is down to the merger with leading investment bank Troika Dialog at the start of this year. But at the same time, it is also starting to grow again relative to the rest of the Russian banking sector and saw its share in retail deposits climb back above 50% for the first time since losing market share steadily to the leading commercial banks during the boom years. In general since German Gref took over as CEO, Sberbank is emerging as not only the leading bank in all of the former Soviet Union, but is fast becoming a leading European bank that will challenge the more established names in Western Europe soon.

The importance of government ownership in Russia's banking sector is highlighted, as all the top six banks in the list - Sberbank, VTB, Gazprombank, Russian Agricultural Bank, Bank of Moscow and VTB 24 - are at least partly state owned.

The highest ranked private bank is Alfa Bank, owned by oligarch Mikhail Fridman, who is also one of the partners in the Russian consortium that just cashed out of oil company TNK-BP in a deal with Rosneft. Alfa Bank is at the core of the diverse holdings controlled by his Alfa Group and saw its assets increase by over a quarter from $27.2bn as of September 2011 to $34.2bn a year later, which was enough to move it up one place from eighth to seventh place on the list. Alfa Bank's increase in assets was enough to swap places with UniCredit Group, the leading foreign-owned bank in the region, which fell from seventh to eight place as its assets contracted mildly by $535m to a total of $27.1bn as of September.

Ukraine's Privatbank overtook Belarusbank to become the largest non-Russian bank in the region, rising to 10th place with a impressive increase in assets from $17.6bn to $20.6bn, especially given that the entire Ukrainian banking sector has been moribund and yet to recover from the blow it took in 2008. Belarusbank's fall in assets from $14.1bn in 2011 to $13.7bn this year is more understandable, as the country has been through two devaluations in a year and the economy remains in intensive care.

Kazakh banks have also been experiencing a hard time recovering from one of the worst banking crises in the former Soviet region, despite the economy making something of a comeback. The former leader, Kazkommertsbank, fell from ninth place in the table last year to 14th place this year as its assets fell from $17.5bn to $16.1bn from a year ago. It has now been overtaken by the ultra-conservative Halyk Bank as Kazakhstan's top bank by assets, despite the fact the latter's assets have barely grown from the $14.8bn it had last year.

Between them, Russia, Ukraine Belarus and Kazakhstan account for the lion's share of assets in the Eurasian region, but there are a few outstanding banks from the other countries of the region.

Only 11 banks outside the dominant quartet make it into the list of the top-200 Eurasian banks. The largest is Azerbaijan's state-owned International Bank of Azerbaijan (IBAR) in 38th spot with assets of $6.5bn. IBAR is followed by the state-owned National Bank of Uzbekistan with assets of $4.5bn in 53rd place. The celebrity bank of the Caucasus, Bank of Georgia, is in 82rd place with assets of $3.0bn and dominates that country's sector. And Moldova makes its debut into the list of top-200 banks in the region: Moldova-Agroindbank is ranked 194th in the list with assets of $835m.

Finally, there are several banks that lie outside the top 200, but are turning up the heat on their bigger competitors. TBC Bank in Georgia has been running an aggressive expansion plan and hopes to give Bank of Georgia a run for its money. In Tajikistan, the banks Agroinvestbank, Tadjiksodirotbank and OrienBank are all pioneering the country's creation of a modern banking sector and growing fast. Moldova has made a lot of progress as its economy stabilizes, and Victoriabank and Moldinconbank are coming up fast behind Moldova-Agroindbank. Despite its autocratic regime, money is flowing into the Uzbek economy and Uzpromstroybank and Asaka bank are benefiting. And in Armenia, ACBA-Credit Agricole Bank and Ameriabank are amongst the ones to watch.

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