The expected growth in the region will be at a slower pace but more stable;

The trend of strengthening the focus on domestic funding resources is also facilitating the sustainable development of the countries in Central and Eastern Europe.

The investments of companies and the activation of business will be the factors to bring the expected economic growth in the countries in Central and Eastern Europe. With the forecast 2.6% average annual GDP growth in the countries in Central and Eastern Europe and 2.9% for South-eastern Europe in the next five years (2013-2017), the region remains highly attractive for international companies and bank groups. This economic growth, however, will not ensue from an increase in household consumption but from investments in the region.

This opinion was shared by participants in one of the working panels of the Annual Conference of Euromoney, hosted by UniCredit. The panel on the topic: “The Role of International Banks in CEE” was led by the Head of CEE Corporate and Investment Banking at UniCredit, Gianfranco Bisagni, with participation also of representatives of the Austrian Central Bank, the Head of Group Strategic Planning at UniCredit, Aurelio Maccario, and others.

Characteristic of the development of the CEE region in mid-term aspect is that the forecast GDP growth in the countries will be slower and in a still more competitive environment but at the same time it will be more sustainable.

The trend of gradual rebalancing of the business model for funding will also facilitate the sustainable development of CEE, while there will be more and more reliance on domestic savings as a source of funding instead of foreign capital inflows.

“We see that the insecure situation is lowering the appetite of households for consumer and mortgage loans. In many CEE countries corporate loans already represent 30% from the banks’ balance and the trend will continue”, noted Gianfranco Bisagni, Head of CEE Corporate and Investment Banking at UniCredit.

He pointed out that he considers the region attractive for investments at the moment, particularly because of the low property prices. “The advice we usually give our clients looking for expansion in CEE is to turn to a rating agency in order to be able with this rating to get the best funding prices. At the same time, I would like to point out that our relations with the clients are not so much “bank-client”, but rather a partnership. This is necessary in the difficult and insecure setting in which we all work.

There is a change in the paradigm of the relations with clients. Before the crisis clients could go to the banks, get financing and only choose the lowest interest rate. Now for both parties what is important are the long-term partnership relations, and price does not have a leading role. Yet more significant will be whether the bank is able to provide complex servicing and whether it is broadly represented in the region”, thinks Bisagni. He expects a stable growth, especially in the project finance sector.

The participants in the panel were unanimous that the main challenge towards achieving the desired economic growth in the region in the coming years will be tackling non-performing loans and working out a clear regulatory framework.

Some of the proposals were for using all possibilities for restructuring bad loans so that the business could be supported as much as possible. With regard to the regulators, the expectations of the participants in the discussion were for greater clarity on the requirements of the various regulators in the countries from the region.

UniCredit

UniCredit is a leading European commercial bank with strong roots in 22 countries. Our overall global network embraces approximately 50 markets, with over 9,400 branches and more than 158,000 employees (as of 30 June 2012). In the CEE region, UniCredit runs the largest international banking network with more than 3,700 branches. The Group operates in Austria, Azerbaijan, Bosnia and Herzegovina, Bulgaria, Croatia, the Czech Republic, Estonia, Germany, Hungary, Italy, Latvia, Lithuania, Kazakhstan, Kyrgyzstan, Poland, Romania, Russia, Serbia, Slovakia, Slovenia, Turkey and Ukraine.

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