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Consolidation of Serbia's banking market – Glass Podrinja


BELGRADE, November 11, 2018 (Beta) – The takeover wave that played Serbia's banking market on the one hand is quite expected and, on the other hand, quite unexpected.

It is expected that experts claim that 29 banks are too much for a country whose gross domestic product last year was less than 37 billion euros. But it is unexpected because former foreign banks have already been bought by existing domestic banks, and in recent times foreign-owned banks buy domestic businessmen.

Miodrag Kostic, who became 100-year-old owner of AIK Bank, took the first time to take over Alpha Bank.

Last year, AIK Bank was the first in Serbia for a net profit of 118 million euros, the fourth for the capital of half a billion euros and the sixth for total loans totaling almost 1.8 billion euros.

New players in this market are Andrej Jovanovic and Bojan Milovanovic, who first bought the Serbian branch of Nova Credit Bank Maribor, renamed Direct Bank and then "bought up" Piraeus and Findomestik Bank.

Prior to joining Piraeus at the end of 2017, the bank was the tenth with a profit of 16 million euros and in the 19th place after taking part in the total assets of 0.8 percent (the share of Piraeus Bank was 1.5 percent ) and in terms of the capital amount of EUR 33 million, while the capital of Piraeus Bank is three times higher, 108 million euros.

Many may not even remember that more than 80 banks worked in Serbia two decades ago, almost all with domestic capital. Already in 2004, the number dropped to 47, and this trend continued, although new players, such as Bank of China or Mira Bank from the United Arab Emirates, arrived in the meantime.

In professional circles, there is almost agreement that there is still a tightening in Serbia's banking market, as banks with a market share of less than one and two percent can barely survive in the increasingly difficult game.

Currently, there are as many as 14 banks with a market share of less than 1.5 percent. All approved only 7.5% of the total loans, while the shares in the six largest banks, Intesa, Komercijalna banka, Unnikredit, Societe Generale, Raiffeisen and AIK banka were eight times higher – 62.2%.

Almost everyone in the big six has a larger share of 14 small banks together. That is why the economic journalist Miško Brkić reminds of the forces in the Serbian banking market, reminiscent of six "Guliver" and "Liliputans".

He is convinced that some of the existing banks will eventually be the target of taking over. After all, Finance Minister Sinisa Mali has already announced that the state plans to sell its share in Jubmes Bank next year and Komercijalna at the end of this year and the strategy for the Serbian bank is being prepared. In addition, the public has guessed for several months for who could buy Societe Generale Bank, as the French group has already withdrawn from the Croatian market.

"I'm not sure it will survive for ten long-term banks with a market share of less than 0.4 percent, of which even six last year ended with net losses, as long as their shareholders still have the patience to cover these minuses. Because of all this, I would not be surprised if the relationship between the forces in the banking sector has changed dramatically in the foreseeable future, but before anything happens in other countries, Brkic says.

For this thesis there is also a low degree of concentration on the Serbian market. In Croatia, the four largest banks account for nearly 70% of the total assets, and in Serbia the four largest banks accounted for approximately 47% of all loans. Therefore, Ivan Nikolic, a member of the board of Serbia's central bank, considers that the consolidation is not only expected but also desirable.

"This is a positive process, as it will increase performance and strengthen competition between banks, and this will bring benefits to customers, because they will get cheaper loans," said Nikolic, who recently told the BETA agency to He does not see the problem that banks buy domestic investors. Earlier, NBS Council Member said, "Experience has shown that foreign owners are not always successful."

In the group of six of the largest, there are currently only two banks with capital capital, Komercijalna and AIK bank, with the earlier "book" could only save a letter, as the state is already looking for a buyer for Komercijalna Banka.

If you look at the results of the business in 2017, the highest amount for the purchase of new banks AIK Bank, which reported a net profit of 118 million euros last year. In addition, Miodrag Kostic has already demonstrated clear intentions for further expansion in both Serbia and the region.

He is virtually the only businessman from Serbia who in a way already entered the EU as co-owner of Gorenjska banka. Therefore, it is now possible for AIK Bank customers to offer additional benefits and facilitate their business with EU partners and through a bank in Slovenia.

The approval of the European and Slovenian central banks for the purchase of the majority stake in Gorenjska Bank for Kostic is a confirmation from the highest point that its AIK bank is strong, stable and liquid, and it is the functions that savings banks take on more and more accounts in especially as interest rates are at the historical lowest level.

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