Emerging Europe

If some recent press coverage of central and eastern Europe is to believed, operating in the consumer finance market in the region is the equivalent of pouring money down the drain. But Czech Republic headquartered PPF Group, which manages more than €10.8 billion-worth of assets across central and eastern Europe, ranging from the Czech Republic to Kazakhstan, demonstrates that the region can still provide rewards as well as risk. The core parts of the group, which was established in 1991, include retail banking through its Home Credit subsidiary, which serves more than 15 million customers, and insurance and asset management through Generali PPF Holding, a joint venture with Italian insurance group Assicurazioni Generali, which boasts more than 10 million customers. In 2008, despite a challenging environment, PPF boosted its profits to €2.8 billion, up sharply from €245 million in 2007. Jiri Smejc, PPF’s chief executive, says that the figures clearly demonstrate the successful execution of his company’s strategy to develop long-term, profitable businesses across the region. "PPF has proven its management experience in acquiring and setting up companies, and developing their value," he says. "This is the very core of our business developer’s concept."

Although it was founded only last year, Erste Asset Management has established itself as the number one player in its field in central and eastern Europe. Leveraging off the experience and distribution capabilities of the Erste Group, which outside its home market of Austria also operates in the Czech Republic, Slovakia, Hungary, Croatia, Serbia, Slovenia, Romania and Ukraine, EAM has access to Erste Group’s 16 million-strong customer base in the region and consequently boasts €32 billion of assets under management. Günther Mandl, executive vice-president, says that Erste Group’s 3,000 branches in the region give EAM a strong competitive advantage. "Our local presence and knowledge is a key strength – there are lots of cross-selling opportunities and our business model is geared towards keeping our number one position in a high-growth region." He adds that in addition to its retail distribution channels, EAM is well placed to exploit the development of the institutional investor market in the region, servicing the growing needs of pension funds, insurance companies and corporate treasury teams. "We are well prepared for the future, strong across all the markets where we operate, and are improving our services and products all the time through our client-driven approach," he says.

When it comes to listing the leading international banking groups that operate in central and eastern Europe, the names that immediately spring to mind are such banks as RZB and Erste Bank from Austria or Italy’s UniCredit or Intesa SanPaolo. But France’s Société Générale can also justifiably lay claim to being one of the leaders of the emerging European banking pack through its ownership of household names throughout the region – including Splitska Banka in Croatia, Komercni Banka in the Czech Republic, BRD in Romania, Rosbank in Russia and SKB Banka in Slovenia. In addition to these big players, it owns banks in Albania, Bulgaria, Georgia, Macedonia and Moldova. Altogether the bank has 17 subsidiaries with more than 2,800 branches in the region, which serve more than 10 million customers. Central and eastern Europe accounts for 75% of Société Générale’s net business income from its international retail banking operations. Concerns about the short-term economic health of the region notwithstanding, Jean-Louis Mattei, head of international retail banking, says: "We are focusing on managing our overheads but are also preparing for any rebound – there’s still a lot of room for development in the region."

The Commonwealth of Independent States is hardly renowned as a hotbed of investment banking talent but Tbilisi-headquartered Galt & Taggart Securities is helping to change that perception. Since 2000, GTS has expanded beyond its home market in Georgia to encompass offices in Azerbaijan, Belarus, Moldova and Ukraine as well. GTS chief executive Nick Piazza says that the firm’s key strength is the fact that it is owned by London Stock Exchange-listed Bank of Georgia, which numbers emerging market funds such as East Capital and Firebird Asset Management among its shareholders. "We pride ourselves on servicing Bank of Georgia shareholders’ needs in the region. Their faith in our reliability and market knowledge has helped us to weather this year’s tougher market conditions," Piazza says. He adds that as one of the few full-service investment banks in the CIS, GTS can offer international investors access to frontier markets that until recently had been bereft of world-class research and trading capabilities. At the same time it offers local investors access to more than 180 stock exchanges. Alongside equity and fixed-income brokerage and asset management services, GTS has executed more than 50 investment banking transactions worth more than $1 billion.

Proprietorial approach yieldsimpressive returns.

Turkey’s banks in equity market rally

Turkey’s banks in equity market rally

The country’s banks are proving among the most resilient in emerging Europe and have helped to boost sentiment towards the country and its stock market. But are there still dangers ahead? Guy Norton reports.

Banks begin great financial retrenchment

CB governor defends one-off devaluation; Hails fight against inflation

The authorities have run out of ways to deal with the debt overhang and to create new credit. The only palatable way out looks to be a period of generalized inflation

Investor demand for central and eastern European sovereign risk is strengthening, allowing governments across the region to access the international bond markets again. The Slovak Republic continued a positive trend in May when it attracted €2.8 billion-worth of orders for a €2 billion six-year deal.

Banks begin great financial retrenchment

Over the next few years the financial landscape could see a dramatic shift as market forces, politicians and tighter regulations make banks scale back their foreign businesses and focus more at home. Is the era of global banking over? Sudip Roy reports.

In early May, Icap hosted the fifth International Rouble Settlement Forum at its London headquarters. The meeting was chaired once again by Darryl Hooker, global emerging market manager at Icap Electronic Broking. Hooker has played a key role in bringing together a diverse range of market participants to try to drag the rouble market into the 21st century and no doubt he will have been pleased to see the forum so well attended; for the first time, representatives from CLS, Swift and the Russian central bank were all brought together in one room.

The emerging market equity boom might turn out to be leverage-fuelled.

Emerging markets specialist announces raft of hires; Opportunities in equities and commodities

This is a new category/methodology for 2009.