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Consolidation of the Serbian banking market – Glas Podrinja



BELGRADE, November 11, 2018 (Beta) – The takeover wave, which on the one hand was poured into the banking market in Serbia, is quite expected, on the other completely unexpected.

It is expected because experts say that 29 banks are too much for a country whose gross domestic product last year was less than EUR 37 billion. However, this is unexpected, because previously foreign banks were already bought by existing domestic banks, and recently banks with foreign capital are buying domestic entrepreneurs.

Miodrag Kostic, who in the meantime became the 100-year-old owner of AIK Bank, withdrew for the first time to take over Alpha Bank.

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

The new players in this market are Andrej Jovanovic and Bojan Milovanovic, who for the first time bought a Serbian branch Nova Kreditna Bank Maribor, changed its name to Direct Bank, and then "bought" Piraeus and Findomestik Bank.

Prior to joining Piraeus, at the end of 2017, Direct Bank was the tenth with a profit of 16 million euros, and in 19th place after a share of total assets of 0.8 percent (Piraeus Bank's share was 1.5 percent) and in terms of capital from EUR 33 million, while the capital of Piraeus Bank is three times higher, EUR 108 million.

Many probably do not even remember that over two hundred banks operated in Serbia two decades ago, almost all with domestic capital. Already in 2004, their number dropped to 47, and this trend was maintained, although in the meantime new "players" such as the Bank of China or Mira Bank from the United Arab Emirates came.

There is almost a consensus in the professional circles that the banking market in Serbia is still tightening, because banks with a market share of less than 1-2 percent can survive in all the more difficult games.

There are currently 14 banks with a market share of less than 1.5 percent. All of them approved only 7.5% of all loans, and the share of the six largest banks: Intesa, Komercijalna banka, Unnikredit, Societe Generale, Raiffeisen and AIK banka was eight times higher – 62.2%.

Almost everyone in the big six have a larger share in 14 small banks. That is why economic journalist Miško Brkić recalls forces on the Serbian banking market resembling six "Guliver" and "Liliputans".

He is convinced that at the right time some of the existing banks will be the target of the takeover. In the end, finance minister Sinisa Mali has already announced that by the end of this year he plans to sell his share in Jubmes Bank next year and Komercijalnie, and a strategy is being prepared for the Serbian Bank. In addition, for months people have guessed who could buy Societe Generale Bank, because the French group has already withdrawn from the Croatian market.

"I am not sure if he will survive in ten long-term banks, whose market share is less than 0.4 percent, of which even six last year ended with net losses, if their shareholders still have the patience to cover these shortcomings For this reason, I would not be surprised if the power relations in the banking sector dramatically changed in the foreseeable future, but before something similar happens in other countries, "said Brkic.

In favor of this thesis, there is also a small degree of concentration on the Serbian market. In Croatia, the four largest banks account for almost 70% of total assets, while in Serbia the four largest banks approved about 47% of all loans. That is why Ivan Nikolic, a member of the Board of Governors of the National Bank of Serbia, believes that consolidation is not only expected but also desirable.

"This is a positive process because it will increase efficiency and strengthen competition between banks, and it will benefit customers because they will be cheaper loans," – said Nikolic, who recently told Beta agency that he sees no problem in that banks are buying domestic investors. Earlier, as a member of the NBS Council says, "experience has shown that foreign owners are not always successful."

In the group of the six largest, there are currently only two banks with majority domestic capital, Komercijalna and AIK banka, whereas the earlier "book" can save only one letter, because the state is already looking for a buyer Komercijalna Banki.

If you look at the company's results for 2017, the highest amount of money for the purchase of new banks is from AIK Bank, which last year recorded a net profit of EUR 118 million. In addition, Miodrag Kostic has already shown clear intentions for further expansion both in Serbia and in the region.

He is practically the only entrepreneur from Serbia, who in a sense has already entered the EU as a co-owner of Gorenjska banka. That is why now clients of AIK Bank can offer additional benefits and facilitate conducting business with partners from the EU and through a bank in Slovenia.

The approval of the central banks of Europe and Slovenia regarding the purchase of a majority stake of Gorenjska banka for Kostic is a confirmation from the highest place that its AIK bank is a strong, stable and liquid capital, and these are features that savings accounts are increasingly adopting, in particular as interest rates, the rates are historically the lowest.


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