Risk-taking smaller banks buck the consolidation trend

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Risk-taking smaller banks buck the consolidation trend

Talk in the media and analysts’ reports about banking in central and eastern Europe tends to revolve around consolidation – the inevitable acquisition of the region’s most promising targets by foreign firms eager to increase their investment in rapidly growing economies. Smaller firms, the logic goes, will have to sell up or face becoming dwarfed. The results of this year’s poll, however, provide an intriguing counterpoint.

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Risk-taking smaller banks buck the consolidation trend

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Several smaller banks with high-risk strategies have impressed the respondents to Euromoney’s poll, suggesting that at least some markets in the region are not yet so consolidated that newcomers cannot make a splash.

Take Russian Standard Bank, a fast-growing consumer credit provider that placed sixth equal in the most convincing and coherent business strategy category. "They have a high-risk business model," says Chris Birney, a banking analyst at Fitch Ratings, "but it’s amazing now to see how they’re doing. They’ve seized an opportunity in the Russian market, and have a head start on the competition. Without going through a full credit cycle it’s impossible to say if their business is sustainable, but they’ve certainly made an impressive start."

Birney cites Poland as a market that is particularly sympathetic to dynamic new banking.

"Getin is another example of a bank with a high-risk operation that has been very successful commercially. They started from nothing, but by keeping things simple, working well with intermediaries and knowing what sectors to be in they have demonstrated that the market is not as much of an oligopoly as some might have thought."

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