Consolidation of the banking market of Serbia – Glas Podrinje



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BELGRADE, November 11, 2018 (Beta) – The takeover wave, which on one hand has crossed into the Serbian banking market, is expected to be completely unexpected, on the other hand.

It is expected that experts say that 29 banks are too much for a country whose gross domestic product last year amounted to less than EUR 37 billion. However, it is unexpected that already existing domestic banks have already been bought by foreign banks, but recently they are buying foreign businessmen from foreign banks.

Miodrag Kostić, who at that time became the 100-year-old owner of AIK Bank, withdrew for the first move to take over Alpha Bank.

Last year AIK Bank was the first in Serbia for a net profit of 118 million euros, a fourth for a half billion euro capital, the sixth for total loans approved in the amount of almost 1.8 billion euros.

The new players on this market are Andrej Jovanović and Bojan Milovanović, who first bought Serbian branch Nova kreditna banka Maribor, changed its name to a direct bank and then bought Pireus and Findomestik Bank.

Prior to joining Piraeus, at the end of 2017, a direct bank accounted for ten titles with a profit of 16 million euros, in the ninth place after participating in the balance sheet total of 0.8 percent (Pireus Bank's share was 1.5 percent) and the capital of 33 million euros , while the capital of Pireus Bank is three times higher, 108 million euros.

Many probably do not even remember that more than 80 banks operated in Serbia two decades ago, almost all with domestic capital. Already in 2004, their numbers fell to 47, and this trend continued, while new players, such as Bank of China or Mira Bank from the United Arab Emirates, arrived in the meantime.

In professional circles, there is almost a consensus that the banking market in Serbia is still tightening, since banks with a market share of less than two percent find it difficult to spend in an increasingly tough game.

Currently, there are as many as 14 banks with a market share of less than 1.5%. They all approved only 7.5% of all loans, while the share of the six largest banks Intesa, Komercijalna banka, Unnikredit, Societe Generale, Raiffeisen and AIK Bank was eight times higher – 62.2%.

Almost everyone in large six has a larger share of 14 small banks. Therefore, economic journalist Miško Brkić recalls the forces in the banking market in Serbia, reminiscent of six "Guliver" and "Liliputans".

He is convinced that in the future some of the existing banks will be the target of acquisitions. After all, Finance Minister Siniša Mali has already announced that the state will sell its stake in Jubmes Bank next year and Komercijalna, and will prepare a strategy for the Serbian bank by the end of this year. In addition, the public for several months guessed who could buy Societe Generale Bank, since this French group has already withdrawn from the Croatian market.

"I am not sure that he will survive ten long-standing banks with a market share of less than 0.4%, of which even six last year ended with a net loss as long as their shareholders are still patient in order to cover these minuses. I would not be surprised if the ratio of forces in the banking sector will change dramatically in the near future, before similar happens in other countries, "Brkic said.

There is also a low concentration for this problem in the Serbian market. In Croatia, the four largest banks account for almost 70% of total assets, while in Serbia, four largest banks approved approximately 47% of all loans. Therefore, Ivan Nikolic, a member of the Board of Governors of the National Bank of Serbia, believes that consolidation is not only anticipated but also desirable.

"This is a positive process, as it will increase efficiency and strengthen competition between banks, which will benefit customers, as they will be cheaper loans," said Nikolic, who recently told BETA that he does not see the problem in the fact that banks are buying domestic investors. Prior to this, a member of the NBS board said, "Experience has shown that foreign owners are not always successful".

In the group of six largest banks, currently only two banks with majority domestic capital, Komercijalna and AIK banka, as soon as possible, the "book" can save only one letter, as the state is already looking for a buyer for the Commercial Bank.

If you look at the business results for 2017, AIK Bank has the highest amount of money to buy new banks, which reported a net profit of 118 million euros over the past year. In addition, Miodrag Kostić has already shown clear intentions for further expansion in Serbia and the region.

He is practically the only businessman from Serbia, who in some way entered the EU as a co-owner of Gorenjska banka. Therefore, users of AIK Bank can now offer additional benefits and facilitate their business with EU partners and through a bank in Slovenia.

The approval of European and Slovenian central banks for the acquisition of a majority stake in the Gorenjska Bank for Kostić is a confirmation from the highest city that its AIK Bank is strong, stable and liquid, and these are the characteristics saved by savings in accounts, especially as interest rates on the historically lowest level.

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