This September, the year over year growth rate stopped at 18 percent, bringing the total bank branches to 5,175 from 4,401 last year, according to central bank (BNR) statistics. Next year, the expansion race will see more of this slowdown, predict analysts, although some of the big names in local banking have announced plans to conquer what is left of Romania's cities and increase their market shares on the way. “Banks' plans to grow organically are understandable given that there are extremely few take-over targets out there. There are currently just two or three banks that are not part of international groups and have a market share that would make them interesting,” said Bancpost's chairman of the board of directors Mihai Bogza. Lenders prefer to put most of their money into brick-and-mortar units, rather than develop alternative sales channels, based on their clients' preference for traditional branches, he added. “Of course, in time this behavior might alter and banks are already diversifying the means of distribution for their products in order to not be caught ill-equipped. Still, until then banks try to meet the demand as it presents itself at this moment,” said Bogza. Banca Comerciala Romana has announced it will have upped its unit network from 532 at present to 700 by the end of 2008, which means that a new BCR branch will spring up at a street corner once almost every two days.
The second runner in the rankings by assets, BRD-SocGen said it would reduce the speed of its growth after finishing off the year with 700 units. Next year, the bank will set up more than 50 BRD Express branches and consider the expansion more or less a done deal. Meanwhile, Raiffeisen Bank said it would open one new bank branch every working day, and push for a total of 220 new branches next year. This stretching-out effort will bring the bank's growth costs up to approximately EUR 22 million, given that it costs roughly EUR 100,000 to set up one branch, according to bank president Steven van Groningen's own estimates. UniCredit Tiriac has announced a slight shift in the market strategy it had employed until this summer and currently focuses more on the money-making retail business. “On August 1, we introduced a new organizational model which involves having dedicated units for retail customers and corporate clients respectively. By the end of 2007, we will have 20 branches dedicated to companies, six of them located in the capital city. The bank wants to expand rapidly in cities where it is not yet present and in big cities also, to ensure that all areas with high retail potential are covered,” said UniCredit Tiriac reps. Consequently, UniCredit Tiriac said it will open 70 new branches in 2008, from the 141 it will have by year-end. Bancpost wants to up the number of its branches by roughly the same amount, by opening 74 next year and taking the total of branches to 310, said Bogza. Like UniCredit Tiriac, ING Bank is going through rebranding struggles, which entail the inflation of its branch network by multiple means: traditional branches, franchised units and, if circumstances call for it, even an acquisition. ING Bank currently has 141 SelfBank units and 26 wholesale banking branches. “This year alone, at ING Wholesale Banking, seven new corporate/wholesale branches became operational. Also, ING Retail Banking opened 47 new ING Offices, and the total number of ING franchised units is 141,” said the bank's representatives.“ING Bank Romania aims to be a top five bank on the Romanian market and to reach one million clients by the end of 2008. In order to achieve this objective, we will continue the network development (for both wholesale branches and retail offices), launch new products and focus on new market segments,” said ING Bank officials. Alpha Bank has this year taken its former 100-branch network over the 125 milestone and plans to open 75 more next year, including Alpha Point units located in commercial centers and targeted mainly at hurried shoppers searching for a quick loan.
Domestic-owned banks are also putting big sums into multiplying their units throughout the country. Banca Transilvania wants to go from about 430 branches at the moment to some 500 in 2008, depending on shareholders' say on the matter in March next year. BT's main goal is to up its market share to 5.2 percent of total assets, which is not an easy task given the high competitiveness on the local banking market, especially at the top. The bank has also decided to take a different approach to growth this year and was the first to open a branch in Cyprus at the beginning of October.Lower down the charts, Volksbank opened 53 branches this year, thus reaching a total of 123. Aside from them, there are 75 Volksbank franchises throughout Romania, specializing in granting retail loans. Latest statements say the lender will open 12 more units by year-end and even more franchises, 15, which would bring their number up to 90, and their weight to up to 40 percent of the bank's entire branch network. Volksbank's strategy is to reach a 4.5 percent market share next year and achieve a top five position by the end of 2011 said the bank, which is why it will push the pedal on growing in 2008 and the years to come. “We expect in 2008 a profit growth of 50 percent to a total of EUR 36 million, which will of course still be influenced by opening 65 new branches,” said general manager Gerald Schreiner.The sole exception from the sizzling growth among the top ten banks is state-owned CEC, undisputed leader in the number of branches on the local market. CEC is the oldest lender in Romania and has thus had plenty of time to build up a 1,400-branch network that extends to some of the remotest villages in the country where no other bank has ever set foot or is planning to in the foreseeable future. CEC's network has remained mostly unchanged in 2007 and is expected to remain so in 2008 as well, with the exception of four or five branches that might be relocated to more prosperous surroundings, said CEC reps.
All things considered, banks will set up fewer branches in 2008 than this year, approximately 800 compared to 1,100 in 2006. Seven of the banks in the top ten by assets are staying under the 80-branch limit the year to come: Alpha Bank, Banca Transilvania, UniCredit Tiriac, Bancpost, Volksbank, CEC and ING Bank. Still, their hopes for upping market shares remained unchanged. “Banks' announcements regarding their plans to up their market shares in the future are very aggressive – if we add them all up, the total would be significantly beyond 100 percent – and a sign of the huge increase of the competition in the sector,” said Bogza. “In reality, in 2007 many banks will probably reach the objectives they have set out for themselves in terms of volumes, but their market shares will not grow as much as they expected or might even decrease on the backdrop of a more rapid market growth than initially estimated at the beginning of the year,” added Bogza. He said the same scenario goes for next year as well. Generally, it is normal for banks to have plans of market shares to dream for since non-governmental loans have gone up 50 percent annually, said central bank governor Mugur Isarescu. He added that similar growths will be “virtually impossible” to attain in the future, but “the battle for market share will be even fiercer than before, which will benefit clients and give bankers headaches.”