Austria's Raiffeisenbank Vows No Quitting Bulgarian Market

Finance | November 24, 2011, Thursday // 20:27|  views

CEO of Raiffeisenbank Bulgaria Momchil Andreev has stated that Bulgaria is a priority market for the top Austrian banking group. Photo by BGNES

The Bulgarian market is a priority for Raiffeisenbank, according to CEO of Raiffeisenbank Bulgaria Momchil Andreev, after earlier on Thursday the Austrian banking group CEO Herbert Stepic suggested it might be quitting some Eastern European markets.

"Raiffeisenbank Bulgaria is the first fully foreign-owned investment in the Bulgarian banking sector and is one of the most profitable banks on the Bulgarian market. We are working actively to keep expanding our customer base," Andreev declared Thursday night, as cited by BGNES, refuting doubts about the Bulgarian subsidiary of Austria's top bank.

"The business model of the bank is successful as only in the past 2.5 years our clients increased by over 100 000, and as of September 30, 2011, our profit for the first nine months amounted to BGN 58.4 M. Raiffeisenbank Bulgaria is very well balanced, and its credit portfolio has been funded with local deposits and long term credit lines from international financial institutions," Andreev explained further.

Earlier on Thursday, Chief Executive Herbert Stepic said that while Austrian bank Raiffeisen Bank International AG (RBI.VI) could withdraw from one or more of its markets, it will maintain its presence in Hungary.

"We will remain in Hungary for the time being," said Stepic, despite recent measures taken by the Hungarian government that are hurting banks' profitability, Dow Jones and The Wall Street Journal reported.

The WSJ reminds that earlier this year, Hungary allowed some borrowers of foreign-currency mortgages to repay those loans at a discounted foreign-exchange rate, with the banks bearing the shortfall.

As of November, Stepic said that 8.2% of applicable mortgage borrowers had applied to settle the loans under the new rules and that 6.3% of the loans had actually been settled.

On Wednesday, Hungarian regulators said they were investigating seven banks, including Raiffeisen Bank International, on suspicion of anticompetitive practices.

Stepic said Thursday that the bank hasn't been involved in such practices. He added that the measures taken by the Hungarian government are a means to plug a budget deficit by taking money from institutions.

Overall, Stepic said he sees Central and Eastern Europe as Europe's "growth engine," with continuing convergence potential and--Hungary being the notable exception--with lower levels of public debt than in the rest of Europe.

Whereas Raiffeisen expects the euro zone economy to shrink by 1% in 2012, growth in Central and Eastern Europe will slow but remain positive at 2%.

Hungary, however, remains a problem, Stepic said, with a challenging macro-political situation.

The bank's third-quarter earnings had been negatively affected by the business in Hungary. Losses as of the end of September were EUR 286 M in Hungary, said Stepic.

Stepic did not specify what particular CEE markets the bank might eventually pull out of.

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Tags: CEE, Hungary, Central and Eastern Europe, Eastern Europe, Momchil Andreev, Raiffeisen Bank International AG, Raiffeisen Bank Bulgaria, Raiffeisen Bank, Raiffeisen, Herbert Stepic


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