Romaniaaa‚¬a„¢s loan market will expand by 10 percent yearly through to 2015, says Raiffeisen report

Newsroom 09/11/2011 | 12:54

The banking sector in Romania will register growth on the medium and long term, according to the latest edition of The CEE Banking Sector Report issued by Raiffeisen. The report reveals that the Top 5 banks in Romania accounted for 50 percent of total assets in 2010.

The loan growth in Romania was 3.4 percent in 2010, while Bulgaria reported 2.7 percent and Bosnia and Herzegovina was 3.4 percent, in EUR terms. Raiffeisen specialists stated that the average annualized growth of 2010 and the first half of 2011 reached 5 percent. The corporate loan growth was up 7 percent last year. The mortgage lending reported a 17.8 percent increase due to Prima Casa government support scheme in the same time period.

The Romanian banking market set to growth mode

The report acknowledges that Bulgaria’s and Romania’s loan-to-deposit ratio increased from around 89-90 percent in 2005 to more that 120 percent in 2008. However, the ratio dropped to around 110-115 percent in 2010. The report states that the Romanian banking sector enjoys a “benign growth outlook”. Romania still has the potential to increase it loan-to-GDP ratio on the long term, which stood at 113 percent on H1 2011.

Raiffesien projects that the loan market will expand in Romania by 10 percent year-on year in the 2011-2015 period and that the loans volume will add EUR 23 billion in the next four years.

The Romanian banking market is set to be the most attractive SEE market, and has registered a decent expansion and sustainable further development, with nominal loan and asset growth rates on the range of 8-11 percent year-on-year in EUR terms, over the 2011-2015 period.

Banking sector market shares in Romania

At end-2010, BCR held a market share of 20.7 percent, followed by BRD Societe General with 14.1 percent and Banca Transilvania with 6.7 percent. Raiffeisen Bank ranks 4th with a market share of 6.5 percent and UniCredit with 5.8 percent. Volksbank and CEC Bank each have a 5.6 percent share, while Alpha Bank had 5.3 percent, before the merger with EFG, represented by Bancpost in Romania. The aggregated market share of other banking institutions totaled 29.7 percent.

M&A Perspectives in the Romanian banking sector

Raiffesien mentions Banca Transilvania as a candidate for a long-term takeover. Currently, 10 percent of the lender  is owned by Bank of Cyprus and another 18 percent stake belongs to EBRD and IFC.
CEC bank has been a takeover candidate for years, and rumors have appeared about a possible floating of the bank.
Volksbank Romania has an uncertain future at present, with a high portion of FX (foreign exchange) mortgages.

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