Emerging Europe

Euromoney’s recent coverage of trends in the region, including the shifting sands in the Russian banking system, CEE banks’ fight with incompetent policymakers, Turkish banks braving the market storm, and an interview with the Czech central bank chief on FX intervention. We also have an exclusive interview with the lawyer of the former BTA chairman Mukhtar Ablyazov and the Hungarian government’s fight with the banking sector.

The Czech crown weakened this week after Miroslav Singer, the head of the country’s central bank (CNB), revealed in an interview with Euromoney his controversial support for intervention in the FX market to avoid Japanese-style deflation, in the teeth of resistance from some CNB board members.

The emerging market sell-off since May is just the start of a painful multi-year adjustment process – and China has blazed a trail for the next downturn. Capital abundance, deflationary pressures and imbalanced global demand continue to drive the 15-year cycle of credit booms and busts.

In mid-2013, Rusal had its lowest net debt level since 2008: less than $10 billion, Oleg Mukhamedshin, deputy CEO, tells Euromoney. He says the firm hopes to reduce debt further – from six times ebitda – via internal cashflow, dividends from Norilsk Nickel, assets disposals and new equity issuance.

Famed for his tough approach to regulation, Czech central bank head Miroslav Singer now has his sights set on currency market intervention to reflate the country’s flagging economy. He talks to Euromoney about the limitations of fiscal policy, the prospects for Czech adoption of the euro, and the dangers of regulatory integration.

Despite its recent travails, the Turkish banking sector has been a hive of activity in the past year among foreign banks vying for a foothold in the market.

For all their strengths, the ferocity of this summer’s market sell-off has amplified some vulnerabilities that could be the first true test in a decade of the resilience of banks and the economy as a whole.

During the past three years, Russian banks have plastered over holes in the corporate sector with record profits from retail. The choice now might be between fuelling a bubble or stagnation.

With growth finally returning to the region, emerging Europe’s big banking players are focusing on the most profitable markets and punishing hostile or incompetent policymakers.

Threat of military action adds uncertainty; central bank inactivity supporting volatility.

New FX mortgage scheme; Government plans state bank

Former chairman arrested in France; $112 million net profit in first half.

Changes to the regulation of non-bank providers of payables and receivables services could spice up competition with bank providers, but for now the relationship is more complementary than competitive.

Hopes are growing that concerted Brics policy action – with the creation of a $100 billion swap fund – and bargain-hunting will help engineer a rebound in sentiment towards EM currencies.

It has been a horrible few months for emerging market (EM) currencies, with foreign exchange investors looking to exit a broad range of exposures from Brazil to Indonesia. However, a closer examination of the EM landscape reveals that among the detritus are currencies that look set to outperform.

ECR experts, led by Irish and Portuguese restructuring, have begun to upgrade bank stability assessments after sharp falls in the indicator scores since the credit crunch five to six years ago. However, the picture is blurred by scores still falling for many at-risk countries amid deep concerns about Cyprus, Malta and Slovenia.

EM FX reserves have grown to record levels in recent years, but a reversal of the accumulation trend threatens to further exacerbate weakness in local currencies that has been seen during the past few months.

While the contentious proposed EU cap on banks’ card fees has drawn much attention, the Payment Services Directive is also courting controversy, with respect to the ability of third-party providers to offer payment initiation services and refund obligations for Sepa direct debits.

US bank is showing signs of real momentum; Astute hires and capital strength key to growth

Incoming governor holds bank’s first press conference; launches new refinancing facility.

The Hungarian forint is set to come under pressure as the country’s government prepares to mitigate the effect of FX loans taken on ahead of the financial crisis in a bid to garner popularity before next year’s elections.

A weakening currency, strong credit growth and inflationary pressure will force the central bank to raise interest rates in the teeth of political pressure, imperiling the government’s growth target, analysts say.

EM FX is less undervalued than it has been for a decade despite the sharp falls in high-yielding currencies, such as the Turkish lira, Indian rupee and South African rand, in recent months.

PKO BP buys Nordea Poland; Regulatory flux means pension business excluded

Protest clampdown amid emerging market sell-off; central bank seen delaying rate increases.

Eurozone slide is maintained with the region’s average score hitting a new low in June, as 10 of the 17 participating member states succumb to further score declines during H1 2013.

Two-thirds of the region’s 18 countries have seen increased risk since December, not least because of the failure of Cyprus to recover its score decline following the banking crisis.

June was the worst month for emerging markets since at least 2008. What about the next five years?

Most corporates are still wholly unprepared for mandatory compliance with the Single Euro Payments Area, the EU’s flagship cross-border payments system, with a lack of understanding of its scope and impact.

Portugal is a ‘red herring’ to assess whether the eurozone crisis is about to blow-up again. Its economic and political landscape provides plenty of reasons for cheer, rather than fear.