Emerging Europe
LATEST ARTICLES
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In an interview with Euromoney, European Banking Authority chair José Manuel Campa joins the European Central Bank and others in pressuring banks to do more to prepare for geopolitical risks spreading from Russia to China, the US and Middle East.
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Although the relative health of some nationalized banks may facilitate their privatization, major obstacles to any sales remain.
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Rumours that FAB is in exploratory talks with a Turkish lender, together with hopes for a big-ticket IPO, point to optimism despite the dire outlook on inflation.
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Isbank’s chief executive Hakan Aran sees embedded finance and an innovative approach to bank branches as the future as the Turkish bank looks to rebuild on a better market environment for its 100-year anniversary.
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Extracting value from Russia via a stake in Strabag previously owned by Oleg Deripaska shouldn’t be confused with a proper disentanglement from Russia by Raiffeisen. The main impetus for the transaction may, in fact, lie with Deripaska and Strabag’s other shareholders.
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Record regional bank profits, plus strong capital ratios in Western Europe, have fuelled hope for more bank acquisitions in Central and Eastern Europe. The uncertain effect of recent court rulings on Swiss franc mortgages, however, is a big obstacle to deals in Poland.
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Recently, investors have welcomed Turkish USD debt with open arms. As 2024 approaches, prospective borrowers will be hoping that the renewed interest can last.
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National Bank of Ukraine governor Andriy Pyshnyy talks to Euromoney about stabilizing the country’s financial system after the invasion, how rapid shifts to cloud-based banking can work and why cyber risks mean other countries are now seeking Ukraine’s advice about keeping banks running when national electricity infrastructure is down.
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The war in Ukraine has suddenly ramped up demands on the European Bank for Reconstruction and Development after the institution spent years searching for a new role. President Odile Renaud-Basso talks to Euromoney about the bank’s strategy and plans to boost its capacity through a €4 billion capital increase.
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Turkey’s central bank took another step on the path to normalization when penalties for exceeding interest-rate caps on lending were scrapped last week. It is good news for banks, but will it last?
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Despite the cross-border growth of Hungary’s OTP Bank and the regional potential of Romania’s Banca Transilvania, banking in central and eastern Europe is increasingly a national game.
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BlackRock, JPMorgan and McKinsey are working on plans for a new development finance institution focused on Ukraine’s reconstruction. The project has already had to temper some ambitions, but its advisers still hope it can propel flows of private-sector money to Ukraine in years to come.
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At €1.9 billion, international investors would happily have bought all of Europe’s biggest IPO since Porsche – even on the illiquid Bucharest stock exchange.
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VÚB banka spreads its love for the environment typographically.
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Turkish airline Pegasus hopes an innovative funding solution tied to sustainability targets will help it increase capacity despite challenging market conditions.
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Both Egypt and Turkey have recently been able to tap dollars more cheaply through sukuk.
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Macroeconomic disruptions and regulatory scrutiny will drive market participants to adopt a practical environmental, social and governance strategy in the year ahead – one that is less about narrative and more about materiality.
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The country has one of the world’s best-performing economies with one of the few emerging market currencies to be appreciating against the dollar. It also has large numbers of highly skilled Russians fleeing across the border to avoid conscription. National Bank of Georgia governor Koba Gvenetadze speaks to Euromoney.
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NatWest digital SME bank Mettle has broken new ground in its partnership with Polish fintech firm Vodeno.
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Societe Generale has exited, and Citi is winding down in retail, but the two biggest remaining Western European players in Russia are also spending a lot of time working out their exposures and operations in the country.
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Societe Generale’s choice of Slawomir Krupa to succeed Frédéric Oudéa suggests an approach of riding out the storm and continuing elements of Oudéa’s recent strategy, rather than any radical change.
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A new job running Bayern Munich's finances could be more rewarding for HVB CEO Michael Diederich, especially after UniCredit CEO Andrea Orcel’s push for more cuts in Germany.
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Fossil fuel assets were set to become obsolete in the transition to net zero. But the war in Ukraine is forcing European governments to secure alternative energy sources and driving demand for coal, oil and gas back in the wrong direction. With the global energy transition seemingly pitched against national energy security agendas, banks are trying to navigate a difficult path through the turmoil.
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When Margeir Pétursson bought Bank Lviv in 2006, he had much to learn about operating a bank in a country permanently in Russia’s crosshairs. Talking to Euromoney six months after the invasion, he says there is opportunity among the chaos in this key Ukrainian city.
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PrivatBank chief executive Gerhard Boesch looks to the future and the bank’s war-delayed privatization.
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Oleksandr Pysaruk, chief executive of Raiffeisen Bank Ukraine, describes how contingency planning for war rapidly morphed into the real thing.
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Despite the Russian bombs pounding Ukraine, there have been no wartime bank runs, no bank collapses or even the suggestion of a systemic wobble. That is largely thanks to the work of former National Bank of Ukraine governor Valeria Gontareva. She tells Euromoney that the time for further reform to the stricken country’s banking sector is now.
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China has in the past felt compelled to accept the terms of IMF programmes in struggling nations without due consideration of its own views.
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The pandemic and the war in Ukraine have brutally exposed the fragility of global supply chains.
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India’s refusal to take a side over Russia’s invasion of Ukraine is typical of a geopolitical approach that aims to keep everyone onside – to India’s advantage. Doing so helps the country to keep inflation in check, the one threat to an exceptionally powerful domestic story that is enticing the banking sector.
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Ukraine’s recent debt restructuring agreements with international bondholders give it a better prospect of returning to market once its war with Russia ends. But the IMF – more used to pulling countries out of purely economic crises – faces a policy challenge in assisting a country at war.
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In what was supposed to be a banner year for Poland’s banks, free universal mortgage holidays are set to halve profits in the sector in 2022. Many fear the government will extend the policy as elections approach in 2023. Are Poland’s attacks on mortgage interest margins in the name of fighting Russia-fuelled inflation a sign of things to come elsewhere?
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With Turkey maintaining its ties with Russia, the risk of secondary sanctions against Turkish banks rises. But even if such sanctions are targeted, the central bank’s policies are already risking a deeper crisis.
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If Russia stops the gas this winter, the damage to European banks will be worse than Covid, and Germany will be at the centre of the storm.
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China’s support for Russia is part of its strategy to reduce the world’s dependence on the greenback – might it work?
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The idea of capping the price of Russian oil and gas exports sounds good in theory, but it might be better to test methods for energy rationing.
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The currency’s fairly benign passage through the early months of 2022 is now under threat from a variety of factors, including spiralling inflation, the cost of supporting the currency and even a growing interest in cryptocurrency.
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Kyrylo Shevchenko, governor of the National Bank of Ukraine, has been corresponding with Euromoney as war rages in his country. Here he tells us how the central bank has kept the banking system operational and protected the currency in extraordinary circumstances.
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SocGen’s deal to sell Russian lender Rosbank back to Vladimir Potanin’s Interros Capital is painful, but could help it to move on from the war in Ukraine.
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Without Russia, Raiffeisen will be a different entity – one focused on safer countries in the former Habsburg heartlands. The low home-market profitability that Russia once served to mitigate, however, will be more evident than ever.
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A number of commodity currencies have received an unexpected boost from the conflict in Ukraine as Western economies look to reduce their dependence on fossil fuels from Russia more rapidly than previously planned.
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A combination of geographical position and commodity strength is working in the country’s favour.
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The financial frontline of Russia’s war in Ukraine runs through the offices of overworked sanctions officers at banks everywhere. It is their job to freeze the accounts and assets of sanctioned oligarchs. The pressure is colossal: get it wrong or act too slow, and the impact on a bank’s brand and bottom line will be felt for years to come.
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The war in Ukraine has further highlighted the benefits of Banco Santander’s diversification across Europe and the Americas, according to executive chairman Ana Botín. However, its European home market may be a big disadvantage in Citi’s looming auction of Mexican lender Banamex.
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ESG has been an intense focus for banks in recent years – not least for their communications teams. But with war in Ukraine, ESG has hit its first real test – and the talking has stopped.
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Margin hikes are raising the table stakes in markets from commodities to stock loans. Margins may be a better risk signal than curiously subdued measures like the ViX index of equity volatility.
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The Russia-Ukraine war is a sobering reminder for all treasurers that geopolitical risk can escalate rapidly. The importance of forward planning cannot be overstated.
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The provider of embedded banking to UK fintechs heads to Europe after its technology achieves speedy implementation of Russian sanctions screening.
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When a group of leading banks were unable to source the roubles needed to deliver in settlement of FX swaps, compression trades saved the day. The episode serves to highlight how fragile very large, complex and interconnected financial markets have become.
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What practical steps do banks have to take when a client falls foul of a sanction list?
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Western governments need to wise up to how smart Putin and his people are at hiding and moving their money.
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Despite the current financial turmoil, proponents of de-dollarization still have a mountain to climb. But blockchain and digital currencies could put their goal within eventual reach.
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Where do the borders of ESG lie – now and in the future? Investors from the US to China are revisiting these questions and finding thorny and often unpalatable answers, even as they dump Russian assets for ethical reasons. The results are set to shape the financial world’s relationship with sustainability for years to come.
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The early days of war in Ukraine saw the price of bitcoin rise. New technology now improves the prospect that wealth stored in crypto may be spent.
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As the US takes action to tighten sanctions on Russia by banning energy imports, Europe is trying to pull together a plan to wean itself off Russian gas through greater use of LNG and renewables.
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It has been a tough few years for Europe’s banks, but they finally seemed to be firmly on the road to recovery in early 2022. Then Russia invaded Ukraine. Will the financial turmoil that follows derail the sector’s hard-fought-for revival?
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The prospect of China’s Cross-Border Interbank Payment System vying with or supplanting Swift grabbed attention in the wake of Russia’s invasion of Ukraine. But CIPS isn’t ready for the big time. It is too small and underdeveloped, and is a policy vehicle dominated by Beijing for the purpose of globalizing the yuan.
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Western governments hope Russian citizens will blame the regime of president Vladimir Putin and seek change. That is a gamble.
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In just a few years, the New Eurasian Land Bridge, which conveys rail freight between China and Europe, became a key part of Beijing’s fading Belt and Road Initiative. Thanks to sanctions levied against state operator Russian Railways, that vital trade link threatens to be disrupted – and possibly severed.
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With little chance of a swift resolution to the conflict in Ukraine, the effect on FX markets is being felt well beyond the bounds of the former Soviet Union. But not all reactions have been typical for a crisis.
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Oligarchs that use shell companies and fake identities may dodge the pain of Russian banks being shut out from Swift, heaping it on innocent people instead.
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Several sovereign funds have either pledged to leave Russia or are considering doing so. But how will they get out? Could their exit enrich those that sanctions are intended to penalize?
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ING and Intesa Sanpaolo could take bigger hits than Societe Generale in a ‘walk-away’ scenario, according to Autonomous Research.
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Jane Fraser can front Citi’s investor day with good news about consumer divestments in Asia. It is hard to see a Russia sale now, though.
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Exclusive: The head of Ukraine’s largest bank tells Euromoney that it is refilling ATMs and keeping branches open even as Russian attacks intensify.
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The US has named Russia’s sovereign wealth fund and its chief executive in strikingly harsh language as part of its sanctions package. Is RDIF ‘a slush fund for president Vladimir Putin’ or a legitimate vehicle ‘building international relations and supporting constructive ties’?
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Decades of work have been put into building Russia’s financial system. Putin’s war is destroying it overnight.
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Russians could try to use cryptocurrencies to dodge sanctions following the invasion of Ukraine, but a move into the mainstream by crypto exchange heads hungry for fiat currency wealth will complicate evasion tactics.
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In the raging crisis between Russia and Ukraine, fixed income bankers picking over a disrupted new issuance market are finding echoes of the start of the coronavirus pandemic. But they warn that the conflict is only worsening inflation concerns – and that central banks are in a bigger bind than ever.
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For Putin, the threat of expulsion from Swift carries far less weight than it did in 2014. Russia’s own system for transfer of financial messages can now settle domestic transactions, but the move would still trigger a deep recession in the country.
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Russia’s incursion dispels vain hopes of manageable tail risk and heralds a bear market correction.
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Energy price volatility driven by war in Ukraine could deliver a windfall to banks such as Goldman Sachs that retain scale in commodity trading. Profits from dealing can also be made without triggering ESG or sanctions-related pain.
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A year ago, Sber’s stellar profitability looked to be under threat. This year, it has defied the doubters and has just unveiled record net profit for the first nine months of the year.
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At the end of each year, Euromoney takes a close look at the performance of 25 key institutions that we cover. Speaking to senior executives at these firms, we assess what went right and what didn’t, together with what might lie ahead. This year, we have also examined the views of those at the top on two important factors for 2022: their own and others’ asset quality, and the disruptive threat of China. Their observations are discussed in the two features below, followed by our reports for 2021 on the Euromoney 25.
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Turkey’s currency continues to flounder, with hardline president Erdoğan apparently determined to prove that the best way to curb inflation is to reduce – rather than increase – interest rates.
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Emerging Europe has been slow to join the fight against climate change. Now the region’s biggest banking group is making its voice heard.
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Perhaps it is not such a strange time to bet billions on Turkey’s economy.
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Policymakers in Moscow are finally promising to tackle climate change. Will the Russian private sector follow suit?
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Can multilateral development banks fight climate change while still promoting economic development in emerging markets? The European Bank for Reconstruction and Development is the first to set out concrete plans on how to do this.
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After reaching 10 million users this month, the firm is raising funds and seeking licences in Turkey and the EU.
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A new anti-money laundering centre housed in the Baltic state’s central bank is growing and hiring fast. It aims to turn Lithuania into an AML hub – and to address and reverse the region’s questionable reputation.
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ESG issues are part of the package with emerging market sovereign bonds.
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Naysayers were swift to condemn Lithuanian involvement in the German scandal.
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Low interest rates, lockdown boredom and super-sophisticated trading apps have lured millions of Russian retail investors into the capital markets over the past year. But will they stay for the long term?
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If the current geopolitical tensions escalate into military action, even the most hardened foreign investors might start looking for an exit from Russia.
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The country’s banks have successfully weathered a series of crises during the past six years. Will this time be different?
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After a lifetime in Vienna, Peter Bosek has moved 1,600 kilometres north to head up Blackstone’s banking operation in the Baltics. He talks to Euromoney about life in Tallinn, how to take advantage of millennials’ new-found enthusiasm for investment and what banks can learn from Netflix.
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Zafer Sönmez was well underway with a long-term plan to model Turkey’s sovereign wealth fund on Singapore’s Temasek and Malaysia’s Khazanah – his former employer – when he was unexpectedly removed from his role in March. Before going, he gave Euromoney a detailed interview on the challenges involved in building a wealth fund in a country that is not blessed with oil wealth, plentiful foreign exchange reserves or even budget surpluses. Those challenges will remain after his departure.
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Polish companies have been behind the curve when it comes to sustainability. A reinvigorated Warsaw Stock Exchange plans to bring them up to speed.
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Strong fundamentals, generous Covid support and timely digital banking regulation mean that Hungary’s banks are in good shape for 2021.
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Emerging markets have regained some of the buoyancy lost during the early months of the coronavirus crisis, but analyst opinions hint at the difficulty of identifying which EM currencies investors should favour.
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Critics question whether the bloc’s taxonomy will work for emerging Europe.
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The saga of Poland’s Idea Bank has finally been resolved with a forced takeover by number two player Pekao. But questions remain over the role of the state.
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Russia’s big state bank wants to be the leading player in the country’s fast-growing e-commerce sector. It could succeed.
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The battle for control of Petropavlovsk has been raging since the board and management were unexpectedly voted out at the AGM in June. But only now has it become clear the role a conversion of bonds may have played. At issue are allegations of unequal bondholder treatment.
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Every bank wants to rebrand as a tech player, but few are aiming as high as Sberbank.
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Turkey has been the outlier in CEE this year for many reasons.
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Emerging Europe’s dormant primary equity market springs back to life. Can the revival continue into 2021?
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Turkey’s FX strategy might look odd but, despite the damage it is wreaking on the lira, analysts doubt that the country’s economic policies will change.
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The BRICS economies, which between them represent 40% of the world population and 32% of its GDP, are a powerful force for the private banking industry as their economic engines drive wealth creation. But they are all distinct markets with their own unique opportunities and challenges.
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A bank with a profitable core business is a better bet than one designed to lose money.
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While banks have made progress on integrating environmental considerations into areas such as project finance and corporate lending, investment bankers have so far faced few – if any – sustainability-related restrictions on their activities.
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A backdrop of buoyant economic growth, falling unemployment and rising consumer confidence gave Serbia’s banks a welcome boost last year.
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Investors should stop pretending to care about ESG risks.
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A new law prohibiting the return of banks to their former owners will unlock international funding for Ukraine. But is it really the game changer some are claiming?
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Tinkoff Bank’s virtual assistant is good for eating out, but not food for thought.
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Leading firms in emerging Europe welcome a surge in interest in digital payments products and online lending.
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Co-founder Sergey Khotimskiy says the coronavirus crisis could help Russia’s private-sector banks fight back against state dominance.
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It’s hard to blame anyone for looking for bright spots in these difficult times.
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Economies and banking sectors in emerging Europe have gone into the coronavirus crisis in good shape. But will they be able to navigate the political fallout from the expected downturn?
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Fast-track financing, infrastructure support and equity investment opportunities: first vice-president Jürgen Rigterink details the development bank’s Covid-19 crisis response – and delivers a warning to banks in its region.
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Bernhard Spalt talks to Euromoney about banks’ responsibility to lend, the risk of a ‘blame game’ and the prospects for a return to business as usual in emerging Europe.
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With consumers and businesses demanding instant access to Covid-19 support financing, the RBI chief executive warns of a backlash against banks.
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Central banks in emerging Europe have started buying local government bonds in response to the Covid-19 crisis. Has quantitative easing arrived in the region? And, if so, will it work?
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Loan growth can return to double digits in second half of 2020, says deputy chief executive.
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Recruited to set up a national payments system, the central bank’s Olga Skorobogatova has overseen initiatives to protect consumers and promote competition in Russia’s banking sector. In her first interview with international media, she talks sandboxes, blockchain and the challenges of regulating bank ecosystems.
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Vladimir Verkhoshinskiy says Covid-19 crisis offers opportunities for leading Russian private-sector banks.
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Dealing room challenges, loan forbearance and short board meetings: CEO John Hollows describes the impact of Covid-19 on the Czech Republic’s largest bank.
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Coronavirus Covid-19 knows no borders, but the economic support packages being put in place sadly do.
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‘Inadequate’ stimulus package could leave banks on the hook as Covid-19 pushes Poland towards recession.
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Amid the coronavirus crisis, can emerging Europe's lenders persuade policymakers to call a truce?
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Slovenian market leader eyes further regional expansion after the purchase of Serbia’s Komercijalna Banka.
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Emerging Europe’s economies are vulnerable to trade disruption from Covid-19, but strong macro fundamentals and robust banks will limit the impact.
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Political instability could delay the long-awaited revival of Romania’s stalled privatization programme, as hopes for early elections fade.
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Turkey’s strong private-sector banks are its biggest asset – undermining their profitability for short-term political gain will prove counterproductive.
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Stand-off in Slovenia highlights politicians’ failure to tackle retail lending boom.
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Banks in emerging Europe are touting their fintech programmes and credentials, but is the enthusiasm reciprocated by the startup community?
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In 2014, a $1 billion bank fraud nearly bankrupted the tiny state. It came through in better shape thanks to reformist policymakers, an IMF bailout and the sale of big banks. But a Russia-leaning administration now threatens to undo those reforms.
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The need to raise funding in international markets comes at a bad time for a sector facing uncertainty over Swiss franc mortgage litigation and rising levies.
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Sustainable financing is gaining ground in corporate Russia as firms look to improve their environmental, social and governance policies ‒ but can the country’s notorious polluters really go green?
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Reformers in Kyiv and Dnipro come under fire as the battle for PrivatBank heats up.
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A deluge of negative transatlantic headlines overshadows the achievements of Ukraine’s reformers.
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The former consumer finance specialist focuses on collateralized lending and sustainable finance ahead of its planned IPO.
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Russia’s leading private sector lender looks to mortgages to maintain pace of loan growth.
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New plans to clean up Soviet-style banking sector will see underperforming legacy loans transferred to state fund.
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VTB has long lagged state-owned rival Sberbank in terms of profitability, but with sanctions limiting access to capital the pressure is on to close the gap – chairman Andrey Kostin explains why digital transformation and aggressive retail growth hold the key to success for Russia’s second-largest lender.
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The country’s risk scores have lagged its central European neighbours since the financial crisis. Is overspending in the mid 2000s entirely to blame, or should the Fidesz government take some responsibility?
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Zagreb Stock Exchange pilots multi-level market structure with Estonia’s Funderbeam.
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It is 11 years since Kosovo declared independence from Serbia, and even now, only about half of the UN recognizes it as a free-standing sovereign state. That lack of international validation – not least the absence of a credit rating – is holding back a strong economy.
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Clubby governance structures in the EU are obstructing the fight against money laundering.
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Danske Bank’s compliance head Philippe Vollot is on a hiring spree, but parts of its international network might still be too risky.
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The gradual erosion of institutional credibility could prove more damaging to Turkey than economic and political shocks.
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For 22 years, he has led banking in Austria and across CEE at the helm of Erste Bank. Even as he nears retirement, he is pushing to transform Erste into a ‘financial health company’. Euromoney’s Banker of the Year for 2019 talks about this vision and how digital transformation is at its heart.
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A higher score, and tier, in the Euromoney Belt and Road Index shines the spotlight on Russia’s participation this quarter.
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Banking and capital markets in Asia, central and eastern Europe and Africa have been transformed over the last 50 years, but the change in Asia is particularly breath-taking.
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Ilhami Koç started his career at Isbank in 1986. He was chief executive of Iş Private Equity between 2001 and 2002, before returning to Is Investment as chief executive in 2002. Since November 2016, he has been chief executive of Turkish insurer Anadolu Sigorta.
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As part of Euromoney's 50th anniversary coverage, we profile some of the biggest names that we interviewed for our May CEE focus.