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Regional banks are emerging as the big winners in the battle for private banking clients in central and eastern Europe. While Swiss banks continue to be the first choice of Russia’s ultra-wealthy, in the rest of the region it is lenders with a strong local presence – led by UniCredit, Raiffeisen and Erste – that increasingly dominate the market. Bankers say this is mainly due to the squeeze on margins caused by historically low interest rates across central and southeastern Europe in particular that has made it uneconomical for less committed players to cover the region.
“The big international banks who had a small rep office in certain countries and were trying to attract clients with their global brand are finding it harder to compete today in an environment of reduced margins,” says Fabian Stenzel, head of private banking at Raiffeisen Bank International. As a result, he adds, many have cut back their activities in the region.
Andras Kallay, private banking director at Erste Bank Hungary, agrees.
“In the past few years, the smaller players have lost market share and some have disappeared,” he says.
