Austria’s Raiffeisen
International, the third-largest bank by assets in Central and
Eastern Europe (CEE), has announced ambitious plans to launch a
direct banking subsidiary in selected countries in the region from
as early as the first quarter of 2010.
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The new online bank, to be headquartered in
Austria, “will address the unique needs and interests of
internet-focused customers, who represent a fast-growing group in
CEE”, said chief executive Herbert Stepic in a statement.
“By investing in a new direct bank, we are
also underlining our commitment to CEE and our conviction that the
region’s convergence process will continue,” Stepic added.
Raiffeisen’s head of communications, Michael
Palzer, told RBI: “We are now in a deep evaluation phase,
both from a business and a legal point of view. We will set the
expected rollout schedule based on the outcomes of our analysis and
the speed of implementation process.
“We have already started preparations for the
notification process under the ‘EU passport principle’ that will
allow us to enter the respective countries afterwards. It is very
likely that the first launch in some of the CEE countries will take
place during 2010.”
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By GlobalDataThe bank is likely to kick off the online
subsidiary in one of seven core international markets: Bulgaria,
Czech Republic, Hungary, Poland, Romania, Slovakia and Slovenia
but, explained Palzer, “it is more likely that we will take our
first steps in a country neighbouring Austria”.
The reasons and timing of the launch are not
so hard to discern. The bank argues that the future lending
capabilities of banks in CEE will be defined by the strength of
their retail deposits. While total deposits at Raiffeisen fell by
3.8 percent year-on-year to €42.6 billion ($62.4 billion) at the
end of the third quarter, the drive to attract retail deposits
resulted in a 2.8 percent increase compared to the year-ago-period
to €20.9 billion.
“By strengthening our retail deposit
collection capabilities, we will be able to enhance the long-term
liquidity position of the whole banking group,” added Palzer.
“Therefore the new direct bank will initially focus on attracting
new clients through a competitive offering of deposit
products.”
When it launches, the direct banking unit’s
product range will include a current account, savings accounts and
term deposits with the bank stressing that products would be “lean
and easy to use”.
While product planning is at an advanced
stage, branding and marketing decisions remain to be resolved.
“We are evaluating several options that would
reflect the desired positioning of the new brand. The official name
of the entity under which the banking licence has been registered
will be changed,” added Palzer.
Palzer acknowledged that markets within CEE
vary enormously in terms of internet banking maturity; of the
bank’s seven core markets only Slovakia at 24 percent and Slovenia
at 21 percent come close to the European Union average of 29
percent of individuals aged 16 to 74 banking online. But he argues
there is a growing number of potential direct banking customers in
the region to target.
Palzer revealed that research indicated 28
percent of the population in four key markets were willing to buy
and use financial services online, adding, “we see a big
opportunity for the new direct bank throughout CEE”.
“Yes, we are aware of the competition and
understand the online banking model has similar features” he added.
“But there are areas in which the new direct bank can significantly
differentiate and we are convinced that the bank’s offer will bring
a new added value to its customers.”
Douglas Blakey
Although Central and Eastern Europe was among
the worst-hit regions during the economic crisis, Raiffeisen
maintains that growth in the region will still be higher than in
other developed Western European markets.
It continues to target a full-year profit for
fiscal 2009 despite a 78 percent fall in consolidated net profit
for the first three quarters of the year to €216 million (compared
to €965 million in the corresponding period last year).
While the bank has suffered from a sharp rise
in non-performing retail loans, chief executive Herbert Stepic told
analysts “this has calmed down over the past couple of months”.
The group’s interests in Russia and the CIS
Other region (principally Ukraine) were particularly hard hit with
the balance sheet shrinking by 20 percent and 31 percent
respectively compared to the end of the third quarter last
year.
The bank continued to invest in its branch
network: total outlets in the Southeastern Europe business unit
rose by 72 to 1,204 with branch numbers up by 32 to 583 in Central
Europe since the start of 2009.
Other positive indicators included a cut in
the bank’s cost-income ratio by 350 basis points to 51.1 percent
compared to the end of the third quarter last year while its Tier 1
capital ratio improved by 2.4 percentage points from the end of
fiscal 2008 to 10.5 percent.
Stepic concluded: “I am of the opinion that we
will see a rather slow upturn in the next couple of months and in
2010.”
