Bankers advise that stability and predictability of the regulatory environment should be achieved in order to be able to support actively the economies of the CEE countries;

Analysts advise to outline steps for resolution of the geopolitical issues in Eastern Europe.

Experts at the Annual Conference of Euromoney for Central and Eastern Europe, which took place in Vienna last week, largely shared the view that uniform standards for banks in Europe need to be implemented as well as the requirements in the various countries to be converged.

Representatives of several international banking groups operating in CEE, among whom was Francesco Giordano, Chief Financial Officer of UniCredit Bank Austria, pointed out that stability and predictability of the regulatory environment is required.

“Times are changing, but one thing remains the same. Central and Eastern Europe maintains its strategic importance to UniCredit. If regulations in the European countries are constructed everywhere according to objective criteria, systematically and predictably, this will help us to be more useful to our local and international clients”, said Francesco Giordano. He reminded that the successful completion of ECB stress tests was highly important for the Group. The results were announced at the end of October 2014 and indicated that UniCredit is one of the most rock-solid banks in Europe. All indicators of the Group greatly surpassed the minimum requirements set by the regulators, even in conservative assessment approaches.

“We support the implementation of Single Banking Supervision. UniCredit observe the regulations of many regulators and now we will have one more. The direction is clear and in our opinion it is a positive one”, said Francesco Giordano.

According to Piroska Nagy, Director of Country Strategy and Policy at the European Bank for Reconstruction and Development (EBRD), with regard to the single banking supervision there is yet to consider the countries outside the eurozone and how they will apply the EU regulations in the sector. She also confirmed that convergence of the standards for banks in the CEE countries will be useful for the region. “Local regulations are affected by the different tax, legal and judicial environment and in some cases there are differences that can be improved”, thinks Nagy.

During his visit to Bulgaria at the end of last year Gianni Papa, Head of CEE Division, recommended that the country should strive to join the European Banking Union, with the first step being the Single Supervisory Mechanism.

“This is extremely important because people will have more confidence knowing that one more authority is supervising banks”, said Gianni Papa.

At the conference, experts expressed hope that a maximum possible number of countries will adopt the supervisory frameworks of the European Central Bank. Analysts pointed out that prior to the change in the regulations the banking sector should have the possibility to operate in a more predictable economic and political environment. Therefore, it is recommended to outline steps towards solving the geopolitical issues in Eastern Europe.

According to a representative of a banking group with active involvement in the CEE, due to the underdeveloped capital markets banks are a main source of funding for the companies in the region. He believes that it is important banks to be sensible and cautious when taking risks in lending and recommended that the countries should set up additional guarantee mechanisms, if they want lending to grow.

This information is from the panel “CEE Bank Strategy” of the Euromoney Conference for CEE. The agenda and the list of speakers at the conference are available at: http://www.euromoneyconferences.com/Assets/8/7105/elements/Euromoney%20CEE%20Forum%202015%20working%20agenda6.pdf.

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