Hungarian and Austrian banks seen widening footpring in the Balkans

Bank sales in the former Yugoslav republics have started to pick up. Austrian and Hungarian lenders may be among bidders for stakes, Bloomberg reported.
Hungarian and Austrian banks seen widening footpring in the Balkans
The news agency’s article had the following key points:
  • It is not just France’s Societe Generale that is selling its stake, the state’s share in one of Europe’s fastest growing segment has also been decreasing. The last banks that went on sale were located in Serbia and Slovenia.
  • The increasing supply may be exploited by banks seeking to widen their footprint in the region, such as OTP Bank of Hungary, Vienna-based Raiffeisen Bank International AG and Erste Group Bank AG and financial investors.
  • Across former communist eastern Europe, expanding loan books from higher consumer spending are making banks more attractive as takeover targets amid a reshuffling of the industry.
  • In the Balkans, a decades-long wariness is easing about doing business in a region with a reputation of corruption, ethnic strife and economic instability.
  • Partly as a result of pressure from the European Union and the International Monetary Fund (IMF), euro-area Slovenia is offering two banks that together account for almost a third of the market and Serbia is selling a lender that controls about 11% of the banking industry.
  • Slovenia this month sold 59.1% of Nova Ljubljanska Banka dd for 608.6 million euros. The bank was the chief recipient of a EUR 3.2 billion state bailout in 2013 and the EU and European Central Bank have since urged the government to sell its holding.
  • The other Slovenian bank up for sale is the country’s third largest bank by assets, in which at least five suitors may be interested, according to the Finance newspaper in Ljubljana. Potential bidders include OTP, U.S.-based Apollo Global Management and Blackstone Group LP. The sale agreement must also be completed by the end of next June.
  • As regards Serbia, the government wants to pick a winner by the end of the year for Komercijalna Banka AD Beograd with assets of EUR 3.1 billion. The bank, which is 42.6% owned by the state and 25% by the EBRD, is still loaded with debt and lacks the efficiency to compete with larger foreign rivals. Although the bank will most probably find its buyer, it would be “highly surprising" to see the valuation exceeding 70% to 75% of its book value, according to a broker at Momentum Securities in Belgrade.
  • The sale of Serbia’s third-largest bank - behind the local units of Intesa and UniCredit SpA- is a condition for Serbia to fulfill its new 30-month IMF programme.
  • It is no wonder that regional banks are among the key potential bidders in the Balkans. In a sign of the strength of the industry, banks beating profit estimates for last quarter included local giants Bank Pekao SA, Komercni banka AS and OTP. Of the western European lenders with large operations in the region, KBC Group NV, Raiffeisen, Societe Generale, Intesa Sanpaolo SpA and Erste all performed above analysts’ expectations as well.

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