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Consolidation in CESEE Banking Industry Ahead

Published: July 13, 2012; 19:36 · (Vindobona)

The Austrian Central Bank (OeNB) expects a wave of takeovers in the banking industry in Central, Eastern and Southeastern Europe. Many banking groups will withdraw from there, OeNB says.

Consolidation in CESEE Banking Industry Ahead / Picture: © Vindobona.org

In the next years, a strong consolidation wave in the CESEE region is expected. Many banks from Western Europe are expected to withdraw from this region, OeNB says. In order to receive bank aids, the banks must downsize their operations. These are requirements by the EU, OeNB explains. Ewald Nowotny, governor of OeNB: „We will have a concentration process in CESEE.“

Nowotny argues that many activities in Eastern Europe would be too small to achieve profits in the long run. „There is a thumb rule: It does not make sense to have a bank in a country with less than 5%.“ In the end, many banks from Western Europe will have to examine their activities in the region. „Now it is the right time. It is reasonable to have really strong banks there.“ Nowotny adds.

Nowotny argues that the three big Austrian banks Erste Group, Raiffeisen Bank International and Bank Austria were the pioneers in the CESEE region. „Thus, they have achieved a competitive position there.“ A withdrawal of Austrian banks is not realistic, the governor says. Nowotny refers to Hypo Group and VBAG, which had to sell their businesses in the CESEE region.

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