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Small banks might choose to merge with each other

Small and medium banks (segment 2 and 3) which appear to suffer because of the more expensive financing on the foreign markets, might be subject to certain takeovers, market exits or to such niche strategies, according to certain scenarios confirmed by the bankers.

'The banks need to hold a reasonable market share to be able to cover their costs on the Romanian market and to be successful too. Certain banks on the segment 2 and 3 already began to have difficulties, with the market only starting to get consolidated, and with the large banks proving better competencies and growing in a more faster pace than the other banks,' Andrei Caramitru, managing partner with McKinsey Romania, which is the branch of the largest strategy consultancy company worldwide said.Caramitru believes no such large banks will enter the Romanian market in the next years to start from zero anyway, with such entering being more and more difficult and with increasing investments being needed, also with significant risks.'We need to see a consolidation of the market at least on the segment 3. Nevertheless, many of the small banks are owned by such very ambitious foreign banks,' McKinsey explained. According to him, it will be quite interesting to see if there are such mergers among the small banks with and also if there are such foreign banks choosing to exit the market or to specialize more on a segment instead.

Matei Paun, managing partner with BAC Investment Bank, says that the banks on the market, segment 2 and 3, begin to have difficulties and that is most probable local banks to have bigger difficulties than the foreign banks, due to the lack of expertise and capital. Some of the top bankers take into account also a drop in the profitability of such banks on the segment 2 and 3 of the market, on the background of the growth in the costs and of a less favourable macroeconomic climate.

Banca Carpatica, an institution controlled by businessman Ilie Carabulea, reports 3.39 million lei (some 923,160 euros) in the first half of the year, that is a drop by 48.4 percent compared with the similar interval last year, in the context of an accelerated increase in such costs to attract financing.

Moreover, OTP Bank Romania, the branch of the largest Hungarian bank in terms of assets, reports losses worth 1,20 billion forints in the first half in 2008, a drop by 38.3 percent compared with the same interval last year, with the negative results on the second quarter, standing at 4.6 million euros, having been caused by the significant increase in the expenditures and commissions paid to the agents, Business standard daily reads.

Radu Gratian Ghetea, Chairman with the Romanian Banks Association says that the results presented by the commercial banks after the first half of the year are not necessarily relevant in terms of a conclusion saying certain banks start to have difficulties. He also said that the Romanian banking market is still insufficiently developed, with the new units or new working points in Romania being necessary, either through the expansion of the already existing credit institutions or through the entering of new players. According to him, this is not the best moment anyway for the international banks to enter the market.

Sursa: http://www.actmedia.ro

Tags: banks market segment small otp

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