Friday , March 5 2021

Consolidation of the Serbian Banking Market – Glas Podrinja



BELGRADE, November 11, 2018 (Beta) – On the other hand, the wave of takeover that has spilled off the Serbian banking market is expected and, on the other hand, totally unexpected.

Experts say that 29 banks are far too much for a country whose gross domestic product last year was less than € 37 billion. But this is unexpected, as previously foreign banks have already bought existing local banks, and recently foreign banks have been buying local businesses.

Miodrag Kostic, who at the same time became the owner of the 100-year-old AIK bank, abandoned the first takeover of Alpha Bank.

Last year, AIK Bank was the first in Serbia net profit of 118 million euros, a quarter of half a billion euros, and a sixth tranche totaling almost EUR 1.8 billion.

The new players on this market are Andrey Yovanovich and Boyan Milovnovics who first bought the Nova Credit Bank Maribor Serbian branch, changed their name to Direct Bank, then bought Pireus and Findomestik Bank.

Before joining Piraeus, at the end of 2017, the Direct Bank was tenth with a profit of 16 million euro, while in the 19th place after participation in total assets – 0.8% (Pireus Bank's share was 1.5%) and capital value of 33 million euros, while Pireus Bank's capital is three times higher – EUR 108 million.

Many have probably not even remembered that over 80 banks operated in Serbia twenty years ago, almost all with domestic capital. Already in 2004, the number dropped to 47, and this trend continued, although new players like the Chinese Bank or Mira Bank from the United Arab Emirates arrived at the same time.

In the professional circles, there is almost a consensus that the Serbian banking market is still tightening, as banks with a market share of less than 1-2 percent can hardly survive in all of the hardest games.

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

Almost everyone in the big six has 14 small banks together. Therefore, the economist journalist Miško Brkić is reminiscent of the Serbian banking market, reminiscent of the six "Guliverus" and "Liliputanas".

He is convinced that in the short term, some of the existing banks will have a takeover objective. In the end, Finance Minister Sinisa Mali has already announced that at the end of this year, the state plans to sell its share to Jubmes Bank, next year and Commercials, and the strategy of the Bank of Serbia is being prepared. In addition, for months, the company has guessed what could be bought by Societe Generale Bank, because this French group has already left the Croatian market.

"I'm not convinced that it will survive in ten long-standing banks with a market share of less than 0.4 percent, of which even six years ended in net loss, while their shareholders still have the patience to cover those losses. Thanks to I would not be surprised if the power relations in the banking sector would change significantly in the near future, but before something is going on in other countries, "said Brkic.

In favor of this work, there is also a low concentration on the Serbian market. In Croatia, the four largest banks account for almost 70% of total assets, while in Serbia, the four largest banks approved about 47% of all loans. Therefore, Ivan Nikolic, Member of the Board of the Serbian National Bank, believes that consolidation is not only expected but also desirable.

"This is a positive process as it will increase the performance and strengthen competition between banks and it will benefit customers as they will be cheaper loans," said Nikolic, who recently told the Beta agency that he does not see the problem as banks buy local investors . Previously, according to a member of the NAF Council, "experience has shown that foreign owners are not always successful".

Currently, there are only two banks with the largest domestic capital, the Commercial and AIK banks, in the six largest groups, as earlier the "book" could save only one letter, as the state is already looking for a buyer for the Commercial Bank.

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

He is practically the only Serbian businessman who has already joined the EU as a co-owner of Gorenjska Bank in some way. It is now possible for AIK Bank customers to offer additional benefits and facilitate business with EU partners and through a bank in Slovenia.

The approval of the European and the Slovenian central banks for most of Gorenjska banka's purchase of Kosta has been confirmed by the highest ranking of its strong, stable and liquid bank, and these are the features by which stock accounts are taking up more and more accounts, in particular because interest rates rates at the historically lowest level.


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