BANKING
HEALTH CRISIS TO ACCELERATE CEE BANKING SECTOR CONSOLIDATION
http://www.business-arena.ro
The COVID-19 crisis is expected to accelerate the consolidation of the banking sector in the Central and Eastern Europe (CEE) in the following years, as smaller players might not be able to weather the profitability and capital challenges, according to the latest edition of, conducted in 16 countries, including Romania.
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Robustness is paramount amid economic shocks and the CEE banking sector is still very fragmented, with a number of players with marginal market share, the study explains. Romania was one of the busiest markets in the CEE region in terms of banking mergers and acquisitions (M&A), with three transactions between 2019 and September 2020: Olimpiu Balas acquired 63% of Banca Comerciala Feroviara, EximBank Romania took over 99% of Banca Romaneasca and J.C. Flowers bought 100% of Bank Leumi Romania. , the financial sector was among the most active ones last year considering the number of transactions. “The onset of the COVID-19 crisis found the Romanian banking sector in a strong position compared to the EU average in terms of capital adequacy, liquidity and coverage of non-performing exposures by provisions. The crisis will show its real effects starting from the 2020 financial figures and it will surely impact the banking performance and the default rates. The consolidation wave in Romania is expected to increase, driven by the current pandemic context and by the fact that over 70% of Romanian banking assets are owned by foreign banking groups, so they are highly connected to the European trends,” said Radu Dumitrescu, Financial Advisory Partner-incharge, Deloitte Romania. The largest number of deals in the CEE region was reported in the Baltics (six transactions), Serbia (four transactions) and the Czech Republic (three transactions, the same as in Romania) between 2019 and September 2020.
The most active buyers in the region were the Hungarian OTP Bank (three transactions) and the KBC Group (two acquisitions) in the period analysed by the study. On the opposite end, the most active sellers were Société Générale (four transactions), Danske Bank (three transactions) and Piraeus Bank (two transactions)
