Raiffeisen Bank strengthens client base, maintains branch network well dimensioned despite slowdown

Raiffeisen Bank has seen an increase of 10 percent in its active client base who use two or more banking products, despite the difficult economic environment, according to the vice-president for the lender’s retail division, Vladimir Kalinov. Kalinov said the bank’s volume of loans had remained stable, with a significant portion of customers looking for refinancing schemes in order to consolidate their debt. However, Raiffeisen’s portion of debtors is 8 percent versus the total customer base. This involves the level of due payments that customers have to make.

Romania’s economic growth will pass the 1 percent threshold next year, according to Kalinov. This represents a downgrade in the economic forecast for 2012, as a report issued by Raiffeisen this August predicted that the economy would grow by 2.7 percent. Last week, President Traian Basescu said that GDP should increase by 2-2.5 percent on a strong investment base, while the IMF has forecasted 3.5 percent growth. This year, the Romanian government is expecting GDP to hike 1.5 percent.

In a research paper on the economic outlook in Europe, Valentin Hofstätter of Raiffeisen stated that the extreme unrest in the banking sector, the falls on financial markets and the escalation of the debt issue are awakening associations with autumn 2008 and the fall of Lehman brothers. Greece will remain a driving element in the coming months and the euro zone should expect temporary falls in GDP. This will also impact Romania’s export-based economy, which depends on the financial wellbeing of Western economies.

Last week, the National Bank of Romania decided to maintain the monetary policy rate at 6.25 percent, although it should go down on the medium and long term according to the Raiffeisen representative.

A new regulation package for retail lending will come into effect on October 1, seriously denting lending in foreign currency. However, Kalinov said this step was inevitable and that Raiffeisen would not post a decrease in its lending business, as 99 percent of its loans were taken out in the local currency (RON).

Raiffeisen Bank is constantly trying to reposition its branch network and is currently pursuing a policy of relocations for its units in large cities. The bank has already relocated branches in Constanta, Iasi, and Timisoara. The latest investment involved the relocation of a new office in Bucharest, at Unirii Square, totaling EUR 400,000.

Kalinov said that on the short term, the bank was considering further relocations in Iasi, Arad and Constanta, as rents have decreased by an average of 20 to 30 percent in recent years, from the 2008 peak. In one particular case, the bank was able to negotiate a 50 percent rent reduction.

The lender will continue to establish its physical network of branches as Romanians are not mainstream users of internet banking. In fact, according to Kalinov, customers still prefer to meet bank staff face-to-face, meaning that branches will have to be located in areas with high pedestrian traffic.

Ovidiu Posirca