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Consolidation of the banking market of Serbia – Glas Podrinja


BELGRADE, November 11, 2018 (Beta) – The takeover wave that spilled the banking market of Serbia on the one hand is quite expected, and on the other, completely unexpected.

It is expected because experts claim that 29 banks are too much for a country whose gross domestic product last year was less than 37 billion euros. But it is unexpected because previously foreign banks have already been bought by the existing domestic banks, and lately foreign-owned banks are buying domestic businessmen.

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

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

New players in this market are Andrej Jovanovic and Bojan Milovanovic, who first bought the Serbian branch of Nova kreditna banka Maribor, changed her name to the Direct Bank, and then "bought up" Pireus and Findomestik Bank.

Before joining Piraeus, at the end of 2017, the Direct Bank was the tenth by a profit of 16 million euros, and on the 19th place after participating in the total assets of 0.8 percent (the share of Pireus Bank was 1.5 percent) and in terms of the amount of capital from 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 of them with domestic capital. Already in 2004 their number dropped to 47, and this trend continued, although 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 there is still a tightening in the banking market of Serbia, because banks with a market share of less than one-two percent can hardly survive in all the tougher game.

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

Almost everyone in the big six has a larger share of 14 small banks together. That is why economic journalist Miško Brkić reminiscent of the forces in the Serbian banking market reminiscent of six "Guliver" and "Liliputans".

He is confident that in due course, some of the existing banks will be the target of the takeover. After all, Finance Minister Sinisa Mali has already announced that the state plans to sell its share in Jubmes Bank, next year and Komercijalna, by the end of this year, and the strategy for the Serbian Bank is being prepared. In addition, for months, the public has been guessing who could buy the Societe Generale Bank, as this French group has already withdrawn from the Croatian market.

"I am not sure that it will be able to survive for ten long-time banks with a market share of less than 0.4 percent, of which even six last year ended with net losses, as long as their stockholders still have the patience to cover those minuses. Because of all this, I would not be surprised if the relationship of forces in the banking sector dramatically changed in the foreseeable future, but before something similar happens in other countries, "Brkic said.

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

"This is a positive process, as it will increase performance and strengthen competition between banks, and this will bring benefits to customers, because they will cheaper loans," Nikolic said, who recently told the Beta agency that he does not see the problem in the fact that banks buy domestic investors. Previously, says NBS Council member, "experience has shown that foreign owners are not always successful".

In the group of six of the largest, there are currently only two banks with majority domestic capital, Komercijalna and AIK banka, with the sooner the "book" could save only one letter, as the state is already looking for a buyer for Komercijalna Banka.

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

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

The approval of the European and Slovenian central banks for the purchase of the majority stake in Gorenjska banka for Kostic is a confirmation from the highest place that its AIK bank is capital strong, stable and liquid, and these are features that the savings accounts are taking on more and more accounts, especially as interest rates rates at the historically lowest level.

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