Tag Archives: banks

NYTimes realizes the Czech never bounced

The New York Times has picked up on a story that’s been doing the rounds in Prague for some time now: the Czech banks are doing just fine. As in, they’re profitable – earning dividends for their western owners – and their level of non-performing loans has dropped from 6.4% to less than 6%. It attributes their stability to their having stuck to the rather more boringly traditional activities of banks, like lending money to people and companies, rather than seeking super-profits in the sexier areas of investment banking.

“The industry is in good shape; the sector is stable and has not needed any assistance in the recent crisis,” said Jiri Busek, an analyst with the Czech Banking Association. “It’s quite a unique position in Europe, and we are grateful for it. We are stable, healthy and profitable.”

Now, anyone who knows anything about the way things went down here knows that Czech banks have their share of issues in the property sector. Nobody came out of the boom smelling like roses. The Czech economy is currently in its longest recession and isn’t exactly galloping back to growth.

Does the name Ambrose Evans-Pritchard ring any bells? He’s the (self-acclaimed) prophet at the Daily Telegraph who back in 2009 tried to wreck all faith in this region’s banking sector by warning that western banks had billions of euro of exposure in the sewer of CEE. “Failure to save East Europe will lead to worldwide meltdown” (that’s the actual headline) made for thrilling, shiver-inspiring reading at the time. Reading the it today makes clear the dangers of quoting adrenalin-induced predictions of economists and doomsday headlines. Remember, this is 2009:

“A failure rate of 10pc would lead to the collapse of the Austrian financial sector,” reported Der Standard in Vienna. Unfortunately, that is about to happen.
The European Bank for Reconstruction and Development (EBRD) says bad debts will top 10pc and may reach 20pc. The Vienna press said Bank Austria and its Italian owner Unicredit face a “monetary Stalingrad” in the East.
The implications are obvious. Berlin is not going to rescue Ireland, Spain, Greece and Portugal as the collapse of their credit bubbles leads to rising defaults, or rescue Italy by accepting plans for EU “union bonds” should the debt markets take fright at the rocketing trajectory of Italy’s public debt (hitting 112pc of GDP next year, just revised up from 101pc – big change), or rescue Austria from its Habsburg adventurism.
So we watch and wait as the lethal brush fires move closer.
If one spark jumps across the eurozone line, we will have global systemic crisis within days. Are the firemen ready?


UniCredit to expand in Warsaw

Not bad news at all for Warsaw. Confirming an ongoing trend in which the Polish capital is becoming the financial center of CEE, UniCredit has just announced it will be making the city its regional hub. Office developers will be rubbing their hands in anticipation at the news, because the company will be hiring lots of people to make this happen. Fox has the full story:

Unicredit CAIB Poland will handle all central European business with the exception of Turkey and Russia, Jacek Radziwilski said, adding that the Warsaw office will address more local client needs. The Unicredit subsidiary includes a brokerage, corporate finance arm and capital markets unit.

“The situation on global capital markets means many people are moving,” Radziwilski said, when asked whether it would be hard to convince potential employees to move to Warsaw. “Lots of people in the City [of London] are looking for work right now.”

MIPIM topics

Interested to hear what people expect the topics of MIPIM to be. (hint, send emails) We suspect it’ll be mostly the same: where’s the money? One worrying comment we picked up recently was one banker saying most of his meetings down in Cannes would be in with other bankers. Seems like everyone’s looking for money.

CEE banks worry about their W.E. owners

If you haven’t seen the recent Fitch report, or FT reporting around it, it’s probably a good one NOT to miss. To be honest, it sort of sums up the mood at MAPIC this year, was that the banks have suddenly seemed to to have gone missing. Privately, investors and developers in CEE are complaining that banks are pulling out of deals at frustratingly late stages. Eurohypo, of course, announced it would end new lending except for Germany and Poland. It was tempting to hope that would be restricted to real estate mortgage banks, but you get the feeling this goes just a bit deeper.

Anyway, back to the post on the FT’s blog:

Once upon a time foreign ownership of domestic banking sectors was deemed a “rating strength” in central and eastern Europe.

Before the financial crisis, foreign banks had demonstrated their willingness and ability to support their subsidiaries, according to Fitch associate director Michele Napolitano. But those days are now long gone.

As FT Alphaville has already noted, foreign bank ownership, if the owners are from western Europe, usually only means one thing today: deleveraging. That’s bad news considering the scale of foreign participation in the CEE region

In fact, while the article does a good job of trying to scare you, it’s not as black as you’d expect if you read the whole thing. But the bit about the pressure on Austrian banks was unwelcome:

Austrian bank supervisors have instructed the country’s banks to limit future lending in their east European subsidiaries, a further sign of the potential knock-on effects of the eurozone crisis for economies around the world.

The restrictions come as Austrian officials seek to defend the country’s AAA credit rating, amid concerns that the government might have to bail out its banks because of losses in central and eastern Europe, where they are the biggest lenders, and their exposure to Italy.

The moves by Austria, which appear to be unilateral, show how even the eurozone’s strongest economies are feeling the pressure of the sovereign debt crisis.

More on this — obviously — to come.

CTP scores new development loans

CTP has continue to expand its financing base by agreeing loan terms with VUB/Intesa for a €20m facility for the development of its newest venture, CTPark Mlada Boleslav. The industrial investor is hoping to take advantage of the growing importance the city has on the European auto manufacturing scene. The developer also concluded new loan agreements with CSOB (€12m) and with Volksbank Real Estate (€8m) for the construction of new projects for clients like ViskoTeepak, ABB, Raben/Wincanton and Kühne & Nagel.CTP now has 225,000 sqm of construction underway and has €194m in new financing secured.

New C. Sporitelna RE chief named

Filip Hradec has taken over at the helm of Ceska Sporitelna’s Real Estate Transactions Division, after the departure of Kamil Kosman. The move took effect Sept. 15. The RE Transactions Division is part of the Erste Group Immorent Division. Prior to this assignment, Hradec specialized in financing for corporate customers for the bank.

“Personnel changes in the management of the Real Estate Transactions Division were connected with the establishment of a group-wide business model and should result in the completion of a comprehensive value chain in the real estate sector. As of 1 October 2011, the regional distribution developer centre network will be transferred to the newly created Regional Corporate Centres, under the Corporate Clientele Division, led by Petr Witowský,” says Daniel Heler, the Board Member responsible for corporate and investment banking and financial markets.

Worth noting…

A few things caught our eye recently:

Viktor Orban (you know, Hungarian PM) has been humming the anti-bank tune recently, saying he’ll put an end to the “era of bankers”. This apparently involves banning forced evictions, and forcing banks to accept discounted repayments of foreign denominated mortgage loans. Sounds like after-the-fact regulation….“He said that while the affected banks had initially condemned the government’s announcement, they were likely to reconsider their position. He added that similar measures were expected to be introduced in several European countries.”  Realdeal.hu   

Of course, just when you thought it was safe to do some Orban-ranting, the EU comes up with a new Bank Tax proposal. The banks say it will kill the recovery because they’ll have to pass those costs on to the consumer.

For the sake of argument, why do they have to? Shouldn’t the question be whether or not they should?  Continue reading