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2010 Central and Eastern Europe Awards for excellence: By country



Awards for Excellence 2010

Regional awards

Central and Eastern European winners by country

Albania
Armenia
Azerbaijan
Belarus
Bosnia & Herezegovina
Bulgaria
Croatia
Czech Republic
Estonia
Georgia
Hungary
Kazakhstan
Kosovo
Kyrgyzstan
Latvia
Lithuania
FYR Macedonia
Moldova
Poland
Russia
Serbia
Slovakia
Slovenia
Turkey
Ukraine
Uzbekistan

ALBANIA

BEST BANK
Raiffeisen Bank

In 2009, Raiffeisen Bank cemented its position as the clear market leader in Albania through a combination of organic growth and cost-cutting. Thanks to continuing expansion of its branch, ATM and point-of-sale networks, the bank’s customer base reached just under 575,000 by the year-end, up 8.1% on 2008, and take-up of debit cards rose 20.9% to 208,000. In addition, Raiffeisen became the country’s leading provider of private voluntary pensions, accounting for more than half the market, with its acquisition last summer of the American Institute of Supplementary Private Pensions.

Efficiency improvements including the centralization of regional back-office activities and extensive process automation resulted in a 10% reduction in operating costs and 70% reduction in processing time. As a result, the cost-income ratio fell from 39.8% to 32.6%. Both pre-tax profit and return on equity were slightly down on 2008 but remained at a healthy €39 million and 29.1% respectively, despite a 108.8% increase in provisioning for impairment losses to €29 million. A 7% decline in loans to retail customers was offset by a similar increase in loans to corporates, and net interest income held steady at €82 million.

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ARMENIA

BEST BANK
HSBC Bank Armenia

In a year when the Armenian economy struggled because of the downturn in its neighbours’ economic fortunes, which hit the export-dependent Caucasian republic, having the subsidiary of a big global bank to support further economic development was a clear boon for the country as a whole as well as for the standing of the still relatively undeveloped Armenian banking sector. For its part the bank benefited from the classic flight-to-quality syndrome, which has affected most countries in central and eastern Europe in the past 12 months. Despite a challenging operating environment the bank continued to expand its services, introducing telephone and internet banking, which helped to boost customer deposits. Given the pick-up in the economic fortunes of important trading partners for Armenia, such as Russia, where HSBC also has a growing presence, HSBC Bank Armenia looks well set to be a prime beneficiary of any recovery in trading activity. This is because it is a leading player in the foreign exchange and trade finance markets in Armenia and can offer a wide range of products and services to individual as well as corporate customers in Armenia and abroad.

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AZERBAIJAN  

BEST BANK
AccessBank

Although state-owned International Bank of Azerbaijan remains a potent force in the Azerbaijani banking sector, this year Euromoney recognizes the efforts of one of the country’s leading private-sector players, which is helping to fund all-important development at the small and micro-sized enterprise level. This will ultimately be a factor in reducing the country’s natural resource dependency. AccessBank boasts an impressive array of shareholders – including the European Bank for Reconstruction and Development, the International Finance Corporation, the Black Sea Trade and Development Bank, and KfW – which recently backed a $27 million capital increase at the bank. This will enable it to accelerate its mission of helping to diversify the economy, creating jobs and reducing poverty. Many banks in Azerbaijan cut back lending in 2009 but AccessBank bucked the trend, growing its loan portfolio by more than 40%. At the same time it maintained a high-quality portfolio and generated healthy returns, with profit after tax rising by 91%. The financial reliability of the bank is also reflected in AccessBank’s increasing deposit business, with the bank increasing the number of deposit accounts by more than 300% in 2009. It now serves more than 65,000 households and enterprises. The bank is also an acknowledged leader in terms of corporate governance and financial transparency.

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BELARUS

BEST BANK
Belarusbank

Belarusbank is not only the largest financial institution in its home market but is arguably also the most internationally minded of the Belarusian banks. As such it is at the forefront of efforts to help open up Belarus to increased foreign investment. For example, it is a partner of the Warsaw Stock Exchange as part of an initiative to promote capital markets development in Belarus and has extensive and long-established correspondent banking relationships with all the top international banking groups. At the start of the year Belarusbank was the first financial institution from the country to raise funds in the international markets. It signed a $60 million trade-finance facility via Intesa Sanpaolo and VTB Bank that was twice oversubscribed and provided an important marker for other Belarusian banks to follow. On the domestic front it is a key market player, accounting for 56% of all retail deposits, 43% of all lending and 29% of banking sector profits. In 2009 it more than doubled its return on equity to 16.1%, with net profit improving from $84 million in 2008 to more than $146 million.

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BOSNIA AND HEREZGOVINA 

BEST BANK
UniCredit Mostar

UniCredit is represented in Bosnia by two subsidiaries, based in Mostar and Banja Luka, which together form the largest branch network in the country, with 142 outlets. Created in 2008 by the merger of UniCredit Zagrebacka Banka with HVB Central Profit Banka, UniCredit Mostar is now second only to Raiffeisen Bank in terms of penetration and balance-sheet size, and last year continued to grow its asset base while that of its larger rival showed a slight contraction. Both market leaders posted after-tax profits in line with those of 2008 despite challenging market conditions – Bosnia was badly hit by the global recession and required a €1.2 billion IMF bailout loan in May last year – but UniCredit Mostar’s ROE of 8.3% was nearly a percentage point better than that of Raiffeisen. The bank’s tighter focus on cost-control also paid dividends in the first quarter of 2010, when gross operating profit grew 55% year on year.

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BULGARIA

BEST BANK
UniCredit Bulbank

In a difficult year for Bulgarian banking, UniCredit Bulbank maintained its position as the country’s leading universal bank. Already easily the largest bank by balance sheet size, it continued to expand in 2009, registering a rise of 4.6% in total assets to €5.89 billion and increasing its market share to 16.3%. Despite an inevitable decline in profitability from the previous year, it also posted the highest net income in the sector, with a full-year figure of €98.7 million. These results are particularly impressive given the bank’s dependence on a corporate client base that bore the brunt of a 5% fall in real GDP last year. In an environment of subdued demand and deteriorating credit quality, UniCredit Bulbank nonetheless expanded its corporate loan portfolio by 5.6% to €2.83 billion. It also attracted an additional 4.3% in corporate deposits, taking the total to €3.23 billion, while in the banking sector as a whole it fell by 5%. In addition, the bank demonstrated the breadth of its offering with an innovative Lev199 million ($125 million) convertible listing for local holding company Chimimport.

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CROATIA

BEST BANK
Erste Bank Croatia

BEST INVESTMENT BANK
Zagrebacka Banka

Croatia’s four biggest banks all performed well last year under testing conditions, but Erste Bank Croatia receives the best bank award in recognition of its steady expansion in recent years into a relatively mature market. The bank grew its balance sheet by 7.4% to €6.34 billion in 2009, increasing its market share to 13.2% from 12.4% at the end of 2008. Loans were crucial to this expansion. In both the housing and corporate loan markets, where overall growth was just 1.2% and 2.2% respectively, Erste Bank Croatia increased its portfolio by about 9% – and even in retail loans, where the sector as a whole contracted by 3%, the bank recorded growth of 2.9%. At €83.6 million, net profit was down 22.9% year on year in line with sector averages but the bank posted a healthy return on equity of 11.4% and its cost-income ratio of 41.5% was notably better than that of its nearest rivals.

UniCredit subsidiary Zagrebacka Banka once again demonstrated the breadth of its local expertise in investment banking across a range of markets. Highlights included the largest euro-denominated high-yield deal in the region last year, a €400 million issue from food-producing and retailing group Agrokor, as well as three M&A transactions and a pair of structured finance deals worth more than €760 million. In custody services the bank is the clear leader, with a 40% market share, and its retail brokerage arm accounted for 18% of the total market by the end of 2009.

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CZECH REPUBLIC

BEST BANK
Ceskoslovenska Obchodni Banka

Ceskoslovenska Obchodni Banka (CSOB) earns the title of best bank in the Czech Republic for its record of consistent and sustainable growth under testing market conditions. In 2009, the universal banking group grew its balance sheet by 4.2% to €33.3 billion while cutting its underlying cost-income ratio to 45.2%. Headline returns for the year were boosted by the sale of its Slovak subsidiary to its parent KBC and by a revaluation of its CDO portfolio. However, underlying net profit still came in at a respectable €406.7 million, down 17.5% on 2008 but well ahead of the sector average. The strongest growth came from CSOB’s traditional retail base, with double-digit increases in all areas of consumer lending, which helped to offset weaker results in the SME sector and at the group’s leasing arm. Nevertheless, there are questions about CSOB’s future. As a condition of KBC’s receiving state aid, the European Commission required the bank to divest part of its holding in the group and a minority listing was planned for the autumn. However, this is likely to be delayed because of a continuing arbitration dispute between KBC and the Czech government over the repayment of state funds. When it does come up for sale, however, CSOB’s combination of healthy profitability and product diversity – the group’s portfolio also includes insurance, pension fund, asset management and factoring subsidiaries – is likely to make it a sought-after asset, and several big European banking names are already rumoured to be interested in taking a stake.

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ESTONIA

BEST BANK
Swedbank

Swedbank wins the best bank title because of its undoubted commitment to its Estonian franchise and its role as the most important financial services player in the Baltic state. Although as the country’s biggest bank Swedbank suffered its fair share of pain from the 14% contraction in the economy in 2009, it still managed to outperform the underlying economy. Its assets fell less than 10% from $14.7 billion at year-end 2008 to $13.4 billion at year-end 2009.

Furthermore the bank’s Swedish parent clearly demonstrated its commitment to Estonia by granting the government a $74 million loan to help it cope with the effects of the sharp decline in growth. With Estonia poised to return to positive growth this year and perhaps become the latest member of the eurozone in 2011, Swedbank, with its combination of domestic and foreign clients, is well placed to benefit from the upturn in the Estonian economy. Swedbank’s Estonian operations remain at the core of Swedish-Estonian economic relations and the bank is key to facilitating business and trade relations between Scandinavia and the Baltic states. According to its latest results for the first quarter of 2010 there are tentative signs of recovery in the bank’s fortunes, with revenues up by 1% on the fourth quarter of 2009 and deposits increasing by 2% to give the bank a 47% market share. Although the loan portfolio decreased by 2%, mainly because of less new lending, Swedbank’s share of the lending market was still a market-leading 43%.

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GEORGIA

BEST BANK
Bank of Georgia

Difficult market conditions notwithstanding, Bank of Georgia continues to dominate the Georgian banking market thanks to maintaining the financial strength that enables it to operate in any environment by sustaining strong capital adequacy ratios. As of December 31 2009, the bank’s tier I capital adequacy ratio was 22.4% and its total capital adequacy ratio was an impressive 34.7%. Its tight liquidity management in the first half of the year resulted in high liquidity levels and it ended 2009 with a liquidity ratio of over 30%, well above the 20% minimum liquidity ratio required by the Georgian banking regulator.

Bank of Georgia is the largest bank by assets, loans, deposits and equity in Georgia, with 34.1% market share by assets as of March 31 2010. The bank offers a full range of retail banking and corporate banking services and is also the leading provider of insurance, wealth management, leasing, investment banking and card-processing services. It has more than 700,000 retail customers and more than 85,000 corporate clients, which it serves through the country’s leading distribution network: 141 branches, 382 ATMs, 1,958 point-of-sale terminals and a state-of-the-art call centre.

The bank continues to attract top talent, with Al Breach, former head of research for Russia for UBS, joining the supervisory board and giving the bank access to world-class macroeconomic insight.

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HUNGARY

BEST BANK
OTP Bank

OTP’s overall results suffered last year because of weak performance in its CEE subsidiaries but the core Hungarian banking operations proved remarkably resilient in the face of the regional downturn. OTP Bank’s position as leader in nearly every sector of its home market remains unchallenged. In 2009, the bank recorded growth in total assets of 17% to €21.5 billion, boosting its market share by 2.5 percentage points to 26.3%, and maintained its dominance of the retail sector, where it accounts for 29.2% of deposits and 26.7% of loans. It also gained ground in corporate banking, previously a weaker area, with loans to businesses up 4% year on year and corporate deposits up 8%.

The headline number for the year, though, was a 34% increase in net profit to €658.0 million. This was partly a result of one-off events including a bonus from the repurchase of upper tier 2 capital and tax relief for losses on loan guarantees in Ukraine. Nevertheless, it is an impressive achievement in a year when provisions for loan losses increased by 60%.

The bank was also successful in keeping operating costs under control, resulting in a year-on-year reduction in cost-income ratio from 48.5% to 40.3%.

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KAZAKHSTAN 

BEST BANK
Halyk Bank

BEST INVESTMENT BANK
UBS

Thanks to the prudent but progressive management style of its present and former leadership, Halyk Bank has proved to be a rock of stability amid the stormy conditions that have laid low many of its rivals in the wake of the global credit crunch and associated economic slowdown. Its figures for the first quarter of 2010 indicate that the bank is poised for further growth as the Kazakh economy emerges from recession and the banking sector recovers from soaring non-performing loans and an 18% currency devaluation in 2009.

Net income increased by 179.6% to KT11.4 billion ($77.5 million) from KT4.1 billion in the same period in 2009, while impairment charges fell by 52.8% to KT13.3 billion from KT28.3 billion. Overall the results illustrated that the bank has the safest business model in the Kazakh banking sector. With the largest network and deposit base in the country it looks well set to be a prime beneficiary of Kazakhstan’s return to growth.

Other positives include the fact that the bank repaid 12 to 18 months early a KT60 billion deposit to Samruk-Kazyna, which the sovereign wealth fund deposited with the bank as part of the state’s support to the banking sector in early 2009. Analysts greeted the move as a sure sign that the bank feels comfortable about starting to dispose of excess liquidity. Just as crucially, lightening up on expensive funding will support the bank’s net interest margin development in the rest of 2010.

UBS wins the best investment bank award for its skilful handling of the $10 billion-plus restructuring of BTA Bank’s debts. The complex workout involved dealing with a host of different currencies, issue structures and investor interests and is seen as laying the ground for a positive rerating of the Kazakh banking sector’s investment prospects.

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KOSOVO

BEST BANK
ProCredit Bank

ProCredit Bank (PCB) has been operating in Kosovo since 2000. As Micro Enterprise Bank, it was the first banking institution to set up in the breakaway state, and the first to offer newly independent Kosovars bank cards and ATMs. In 2003, it became part of ProCredit Group, a Frankfurt-based microfinance and SME lending specialist, yet despite a continuing focus on developing smaller businesses the bank has continued to expand its product range and offers a full complement of banking services. With more than 320,000 customers, PCB is the largest bank in Kosovo and last year grew its balance sheet by 14% to €732.5 million.

At the same time, the bank boosted its capital adequacy ratio by five percentage points to 18.5% and proved the strength of its ultra-conservative strategy by posting a net profit of €21.4 million. This was up 12.3% on 2008 and accounted for nearly 90% of all banking sector profits in the country last year.

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KYRGYZSTAN 

BEST BANK
Demir Kyrgyz International Bank

The recent political turmoil in Kyrgyzstan will clearly have repercussions for the country’s banking sector, with a number of financial institutions effectively nationalized by the interim government. As a bank that includes the European Bank for Reconstruction and Development and the International Finance Corp alongside its Turkish parent among its major shareholders, Demir Kyrgyz International Bank (DKIB) enjoys the political and financial clout to ride out the storm and is poised to become an important player in economic development. Before the recent troubles, DKIB could already point to impressive progress. In 2009 it posted net profits of $1.43 million on assets of $85.7 million, and its deposit base of $72.8 million is one of the largest in the country.

DKIB also plays a key role in private sector financing, attracting funds from such institutions as the Asian Development Bank, the EBRD and the IFC. These have enabled it to grant much-needed medium- and long-term loans to small and micro-sized enterprises that it is hoped will form the basis for economic recovery.

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LATVIA

BEST BANK
Rietumu banka

Small but perfectly formed would seem to be an appropriate description of Rietumu banka, which is one of a select number of Latvian banks that has remained profitable during the country’s sharp economic decline in recent years – GDP shrank by 18% in 2009 alone.

Despite this unpromising backdrop, Rietumu banka still managed to earn a profit of Lats8.3 million ($14.4 million), while the bank’s asset base remained relatively stable, slipping by just 12% to Lats1 billion in the course of 2009. The bank’s capital adequacy ratio of 17.5% substantially exceeds international and local regulatory standards. Having largely eschewed speculative real estate lending in favour of more stable corporate lending, Rietumu is one of Latvia’s few liquid banks, which gives it the ability to lend to high-quality clients at high interest margins.

To ensure that its clients feel well served by the bank Rietumu last year extended personal banker services to all its customers, so that each one has a dedicated manager at the bank. The bank also introduced new short-term financing products aimed at liquidity issues, as well as adding new types of term deposits and savings accounts to its product range. Having weathered the economic storm in Latvia, Rietumu has been quick to seize on signs of a pick-up in international trade and increased demand for export-import financing. It is expanding its range of trade finance services, in particular to help boost cargo transit through Latvian ports.

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LITHUANIA

BEST BANK
Swedbank

Economic conditions in Lithuania remain challenging after the country registered a 15% drop in economic activity in 2009. But recent bank results suggest that business prospects are now beginning to improve. Euromoney’s best bank in Lithuania, Swedbank, can certainly point to some positive features in its latest data. In the first quarter of 2010 it still registered a loss but lower credit impairments and expenses meant that its financial performance improved on the previous year and there were some bright spots thanks to deposits that rose 6% year on year, giving the bank an overall 29% market share. The bank’s bad loan ratio improved to 5.05% in the first quarter versus 16.85% in the fourth quarter of 2009, while the bank shaved 14% off its operating expenses.

Swedbank’s importance as a financial services player in Lithuania was further enhanced earlier this year when the European Investment Fund appointed Swedbank to manage a funded risk-sharing instrument under which Swedbank will provide loans worth €104 million to small and medium-sized enterprises in Lithuania over a two-year period. This transaction will enable Swedbank to accelerate lending to Lithuanian SMEs during the economic recession and should help to kickstart a recovery in the country’s fortunes.

Furthermore, the standing of Swedbank in Lithuania is set to be further strengthened with the proposed integration of the Lithuanian operations into the Swedish parent group structure under recently revealed plans that are designed to underline the continued strategic importance of the Baltic states.

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FYR MACEDONIA

BEST BANK
Ohridska Banka

Since its purchase by Société Générale in 2007, Ohridska Banka has expanded rapidly. Originally a local bank in the southwestern region of Ohrid, it has grown its branch network from 13 to 29 in two years and almost doubled its market share in the capital, Skopje. In the wake of the financial crisis, Ohridska Banka switched its focus from retail to corporate and SME customers. As a result, the bank raised its corporate credit portfolio by 25.5% from 2008 to 2009, driving a 34% rise in net interest income to €8.85 million and limiting the drop in profits to just 7.6%. It also expanded its balance sheet by 8.7% to €236.2 million, making it Macedonia’s fourth-largest bank. Following strong results in the first quarter of 2010, the bank has renewed its focus on retail expansion while maintaining an aggressive strategy on the corporate side.

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MOLDOVA

BEST BANK
Moldova Agroindbank

Despite a combination of the global economic slowdown and a domestic recession, Moldova Agroindbank put in a creditable performance in 2009/10 and fully justified its claim to be the leading bank in Moldova. By the end of 2009 it had maintained its market-leading position, with a 19.5% share of total assets, 19.3% of total loans and 20% of total deposits. In addition, the bank’s NPL ratios remain below the sector average. Thanks to a well-tuned management strategy the bank remained profitable in the face of challenging economic conditions, reporting a profit of MLei104.7 million ($8.2 million). In order to improve the speed, efficiency and quality of service for its clients Moldova Agroindbank continues to expand its network, boasting 70 branches and 24 representative offices. At the same time it has also dedicated time and resources to improving its alternative distribution channels, increasing its ATM network to 123 and the number of point-of-sale terminals to 1,774.

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POLAND

BEST BANK
Bank Pekao

BEST DEBT HOUSE
HSBC

BEST EQUITY HOUSE
UniCredit

BEST INVESTMENT BANK
Deutsche Bank

Despite Poland’s achievement in being the only EU country to record GDP growth last year, the country’s banks did not come through the financial crisis unscathed. Profitability was hit across the sector as banks and their customers took a more cautious approach to credit. This played to the strengths of Bank Pekao, known for its traditionally conservative approach to risk. Poland’s second-largest bank, a UniCredit subsidiary, reported returns down 31.6% in 2009 but still posted a net profit of €587.1 million, the highest in the sector. This was partly thanks to an NPL ratio of 6.8%, nearly a percentage point below the sector average, and was achieved in a year when the bank also boosted its capital adequacy ratio from 12.2% to 16.2%. Bank Pekao continued to perform solidly in the first quarter this year, with a substantial increase in fee and commission income contributing to a net profit of €146.3 million, 6.4% up on the same period in 2009.

HSBC wins the award for best debt house for its unrivalled success in obtaining mandates on all four sovereign issues in the period covered. These included Poland’s first US dollar deal since 2005 and, in January this year, a €3 billion 15-year benchmark that was the largest Eurobond in central and eastern Europe since 2006. HSBC also achieved its first non-sovereign mandate in the country with its appointment in March as joint bookrunner on PKO Bank’s first euro-denominated deal since 2007, although pricing was subsequently postponed following the sovereign debt crisis.

UniCredit takes the title of best equity house for its involvement in Poland’s two biggest IPOs of the past year. It was the only bank to act on both the €1.4 billion listing of Polish utility PGE – the largest in Europe in 2009 – and the €1.2 billion listing of PKO Bank, and topped Dealogic’s ECM rankings with a total of eight deals for a value of $1.9 billion equivalent. UniCredit also demonstrated its corporate credentials by advising on a range of M&A deals including AgustaWestland’s acquisition of Poland’s second-largest aviation company, PZL Swidnik.

The award for best investment bank, however, goes to Deutsche Bank for the breadth of its expertise across both debt and equity markets. Although it didn’t achieve a sovereign mandate last year, Deutsche Bank acted on DCM deals including vodka company CEDC’s $950 million dual-currency high-yield issue in November and a Zl650 million ($194.4 million) domestic bond for national railway operator PKP. On the equity side, the bank was joint global coordinator and joint bookrunner on the PKO Bank IPO and acted in the $717 million accelerated book-build of KGHM shares on behalf of the Polish state treasury. It also advised on deals including AIG’s combination of its consumer finance operations in Poland with those of Santander, RWE’s proposed takeover of Enea and Deutsche Börse’s pursuit of the Warsaw Stock Exchange.

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RUSSIA

BEST BANK
MDM Bank

BEST INVESTMENT BANK
Credit Suisse

BEST DEBT HOUSE
VTB Capital

BEST EQUITY HOUSE
VTB Capital

BEST M&A HOUSE
Bank of America Merrill Lynch

MDM Bank wins the best bank award for Russia on the back of its landmark merger with Ursa Bank in August 2009, which created the country’s second-biggest private bank. The marriage of the two institutions has created a real financial services powerhouse, which combines the retail banking strengths of Ursa Bank with the corporate banking strengths of MDM Bank. The resulting institution, which it is hoped marks the start of a long-overdue consolidation process in Russian banking, not only boasts a well-diversified range of business lines but has also won the backing of international investors. Shareholders include international financial institutions such as the International Finance Corporation and the European Bank for Reconstruction and Development as well as specialist private-sector emerging market investors such as Olivant and Siguler Guff & Co.

MDM Bank’s client base comprises about 3 million retail customers, more than 27,500 small and medium-sized enterprises and 11,500 corporate clients, which it serves through 332 offices in 159 cities. Reflecting its international ambitions, the bank has also opened representative offices in London, Beijing, Prague, and Almaty. Over the course of 2009, MDM Bank’s assets grew by 22.4%, equity by 49.9%, net loans increased by 21.5% and customer accounts by 69.1%. As a result of the merged bank’s strong balance sheet in October 2009 MDM Bank was the first privately owned Russian bank to sign an international syndication since the onset of the global credit crunch. The $250 million IFC B-loan attracted 16 banks from 10 countries and was increased from an initial amount of $175 million.

Recent good news include Fitch Ratings’ upgrading of the bank from BB– to BB, reflecting its ability to access liquidity, the fact that it was able to survive the asset-quality stress posed by the economic crisis without requiring emergency capital support, and the bank’s substantial loss-absorption capacity. The Fitch upgrade was viewed as a clear sign that MDM Bank’s cautious approach to capital and liquidity management had successfully brought it through the worst of the financial crisis. Previously, fellow rating agency Standard & Poor’s has awarded MDM Bank top billing in its study of "Transparency and disclosure by Russian banks".

Credit Suisse secures the best investment bank in Russia award on the basis of an impressive portfolio of deals spanning the debt, equity and M&A categories.

Among the key transactions to underpin the award are M&A advisory deals such as the $5.8 billion acquisition of Ukrainian telco KyivStar by Russia’s VimpelCom, the biggest announced M&A deal in central and eastern Europe in 2009. The deal created an enlarged group worth $12.6 billion, allowing the merged entity to drive industry consolidation in the Russia/CIS region. Credit Suisse also acted as global coordinator and joint bookrunner on the landmark $2.2 billion Rusal cross-border initial public offering, which was the first ever Russian listing in Hong Kong and the largest Russian metals and mining IPO. It also performed admirably on the debt front, lead managing a wide range of issues, including Russia’s $5.5 billion Eurobond, which marked the country’s return to the international bond markets after an absence of more than a decade. The firm also lead managed deals for Russian corporates such as Gazprom and Alliance Oil as well as running the books on transactions for Russian banks such as AK Bars, Tatfondbank and Bank of Moscow.

The bank has no intention of resting on its laurels and continues to add to its already extensive and experienced team of bankers covering the Russian market.

VTB Capital, which secured both the best debt and equity house awards, is a mere greenhorn in comparison to Credit Suisse. Barely three years after its foundation VTB Capital has in the past 12 months gone a long way to proving many of its doubters wrong. Erstwhile critics claimed that while the state-owned bank would undoubtedly secure mandates from Russian state companies it would not get a look in with private-sector firms. However, recent equity mandates for such companies as Magnit, Razgulay, Rusal and Russian Sea as well as debt deals for Alliance Oil, International Industrial Bank and TMK have comprehensively given the lie to that assertion, with the result that VTB Capital is now viewed as a feared and admired competitor by its peers.

Bank of America Merrill Lynch once again secures the best M&A house title in Russia, for its roles on landmark transactions that have helped to transform the corporate landscape. Key deals included its advisory role to Sistema on its sale of a 50.9% stake to MTS, which created the largest integrated mobile/fixed-line player in Russia and the CIS. Equally important was its role as adviser to the shareholders of Ursa Bank on the merger of equals with MDM Bank, creating the second-largest private bank in Russia. Finally, the US investment bank advised ENI/Gazpromneft on Gazprom’s 20% acquisition of Gazpromneft, the fourth-largest cross-border acquisition to date in Russia’s oil and gas sector, with BAML having advised on all four of those transactions.

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SERBIA

BEST BANK
Banca Intesa Beograd

Following the incorporation of Panonska Banka at the beginning of 2008, Banca Intesa Beograd became the dominant presence in Serbian banking. Panonska Banka’s universal banking expertise and northern network have rounded out Belgrade-based Banca Intesa’s offering and, with a customer base of 1.4 million and 210 branches throughout the country, the combined entity’s retail network is twice the size of its nearest competitor’s. The bank also now holds the top spot in terms of total assets, after overtaking Raiffeisen Bank for the first time in 2009.

By the year-end Banca Intesa’s balance sheet stood at €2.95 billion, a 22% increase year on year, while Raiffeisen’s had shrunk to €2.76 billion. Banca Intesa Beograd also posted excellent results in a difficult year for Serbian banking. Net interest income rose 15.2% to €145.9 million while net fee and commission income was up 8.3% at €45.6 million, contributing to a small increase in after-tax profit to €56.7 million.

A conservative approach to lending has so far paid off for the bank, with net impairment losses and provisions increasing by a relatively moderate 34.8% to €54.2 million in 2009, and a capital adequacy ratio of 17.76% that should be sufficient to cushion it against any further economic shocks.

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SLOVAKIA 

BEST BANK
Vseobecna Uverova Banka

Two banks stood out in the Slovak market last year but Vseobecna Uverova Banka (VUB) takes the award ahead of Raiffeisen subsidiary Tatra Banka in recognition of its superior profitability and cost control. With total assets of €9.85 billion, VUB is the country’s second-largest banking group by balance sheet size and accounts for 18% of the market, yet its net profit of €143.9 million comprised 52% of the sector total in 2009. This strong performance was continued into 2010, when the group once again surpassed its rivals with a first-quarter net profit of €34 million. VUB, a majority-owned subsidiary of Intesa Sanpaolo, was also the only big Slovak banking group to show consistent efficiency savings over the period covered by the awards, reducing its cost-income ratio from a market-best 49.5% at the start of 2009 to 46.9% by the first quarter of this year.

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SLOVENIA

BEST BANK
Abanka

Abanka, Slovenia’s third-largest bank, easily outperformed its larger rivals in 2009. While market leader Nova Ljubljanska Banka suffered its first loss in 15 years and Nova KBM’s net income slumped to just €2.9 million, Abanka’s after-tax profit was 3% up on 2008 at €22.9 million. As a result, the Ljubljana-listed group was able to announce a dividend of €0.62 for its shareholders, which include Slovenia’s largest insurer, Zavarovalnica Triglav. Abanka was also active in the capital markets, securing an €80 million syndicated loan in August – increased from €50 million following oversubscription – and taking advantage of a government guarantee to boost its asset base to €4.56 billion with an €500 million bond issue in September. At the same time, the bank kept a tight control over expenditure, bringing its cost-income ratio down by more than 10 percentage points to 47.25%.

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TURKEY

BEST BANK
Garanti


BEST DEBT HOUSE
HSBC

BEST INVESTMENT BANK
Is Investment

For the past few years, Turkey’s two leading private-sector banks have been involved in a complex game of mutual catch-up. While Akbank coveted Garanti’s returns, conventional bank balance sheet and technological innovation, Garanti envied Ak’s absolute profitability, its capital adequacy ratios and its coverage. Today the game is all but over. So similar are the banks’ basic numbers that only an expert in Turkish banking could tell one from the other. At the end of 2009, Garanti’s net income was TL3 billion ($1.9 billion) compared with Akbank’s TL2.7 billion; its total assets were TL105.5 billion compared with Ak’s TL102.8 billion; its return on assets was 3% compared with Ak’s 2.9%; its capital adequacy ratio was 21.2% compared with Ak’s 21.04%. Both banks are seven times leveraged and similar comparisons can be made across almost all core variables.

However, momentum is important and the fact that Garanti has now overtaken Akbank in net income and CAR is significant. And if all one-off items are excluded, Garanti’s net income rises to TL3.2 billion, putting real distance between the two institutions. Importantly too, Akbank has gone backwards in one key respect: reliance on income from holdings of government securities. While both banks have moved back into this traditional Turkish business, in the first quarter of 2010 securities contributed almost 60% of Akbank’s interest income.

Ergun Özen. CEO Garanti Bank: winner of a tight race with rival Akbank for best bank in Turkey award

Ergun Özen. CEO Garanti Bank: winner of a tight race with rival Akbank for best bank in Turkey award

Euromoney does not regard this activity as sustainable, high-quality banking business and focusing on it necessarily affects the making of loans to the real economy. At Akbank the share of loans to total assets (42%) has fallen below the share taken by securities (47%) for the first time in a number of years. Despite Garanti’s continued focus on increasing loan assets, its write-offs have been much lower than those at Akbank, which explains Ak’s nominally lower NPL ratios. On an adjusted basis it can be argued that Akbank’s ratio is some 25% higher than Garanti’s. For all these reasons, Garanti takes this year’s award by a whisker. But neither bank should be complacent. Isbank is also playing catch-up and its numbers are starting to resemble the top two. Perhaps next year their dominance will be properly challenged.

The Turkish debt markets remain disappointingly underdeveloped, with little issuance in the public bond markets and no indications that this will change soon. The Republic of Turkey has issued in the international markets and once again HSBC was chosen as the country’s key adviser. Its $2 billion 6.75% 30-year trade in January was the first emerging markets transaction of 2010, was Turkey’s longest maturity trade and was a spectacular success given market conditions. Oversubscribed by 3.5 times the deal gave Turkey 37% of its 2010 borrowing target in one chunk. Given the lack of bond issuance, it is in the loan markets where banks can truly distinguish themselves and again HSBC performed well as bank of choice for Turkey’s premier corporates. The bank acted as sole coordinator and bookrunner for Efes Breweries’ $300 million club facility, sole coordinator for Koc Holdings’ dual tranche refinancing, as mandated lead arranger for Isbank’s $350 million plus €293.5 million syndicated loan facility and as sole lead arranger in Akbank’s €584.5 million plus $437.5 million syndicated loan. In addition, in line with the trend in the loan markets towards secured pre-export financing rather than unsecured lending, HSBC has arranged facilities for a range of Turkish companies.

Limited equity and M&A

The credit crunch has had a profound effect on the Turkish equity and M&A markets. In equities the primary market has been effectively closed and in M&A the vast majority of the top 20 banks in the league tables have completed just one transaction in the awards period. However, Is Investment has maintained its market-leading presence in these markets and takes this year’s award as best investment bank. The bank has a 7.76% market share of equity trading on the Istanbul Stock Exchange and has been ranked first by this measure for the past seven years. It also has 13.13% of trading on the derivatives exchange and has been ranked first since the exchange was created in 2005. In M&A, deals have likewise collapsed but Is Investment still leads the tables in terms of deal number and is second to the Raiffeisen Group in terms of deal value.

The market has been dominated by privatizations involving the sugar, salt and electricity distribution industries. However, Is has also closed four private-sector deals in the period, including buy-side advisory mandates in the acquisitions of Firat, Van Golu and Coruh with sell-side advisory provided to Toreador Turkey in its acquisition by Norway’s Tiway Oil.

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UKRAINE 

BEST BANK
Raiffeisen Bank Aval

When the going gets tough, the tough get going. That’s the message behind Raiffeisen Bank Aval’s approach over the 2009/10 period when Ukraine was hit by the twin evils of a sharp economic contraction and a currency devaluation, which wreaked havoc on many of its rivals. Thanks to an activist approach to dealing with the effects of the crisis the bank has ultimately benefited from a flight-to-quality effect that has seen its stock among both retail and corporate clients rise sharply.

In 2009 Raiffeisen Bank Aval confirmed its reputation as a solid and reliable financial institution, in particular thanks to implementation of strict limits on lending in foreign currency even before the National Bank of Ukraine imposed the relevant prohibition. The bank also paid special attention to its liquidity levels, which enabled it to meet all its liabilities on a timely basis, including borrowings on the international capital markets, which exceeded $700 million in 2009.

In retail banking Raiffeisen Bank Aval attracted an additional Hrn169 million ($21.3 million) of deposits, while it also successfully implemented a retail loan restructuring programme, under which it renegotiated thousands of loans totalling several billion hryvnia. This allowed the bank to avoid large-scale defaults and costly litigation, and improve the overall quality of its loan portfolio.

In 2009, Raiffeisen Bank Aval also acquired 1,500 new corporate customers representing all major sectors of the Ukrainian economy and proving that in times of crisis banks offering superior or premium customer service quality will always attract new business. As always, the bank paid close attention to cooperating with the agrarian sector of Ukraine’s economy, maintaining credit relations with more than 4,000 agricultural producers or food-processing businesses. Based on its modern risk management approach, the bank has successfully renegotiated and restructured more than 70% of its corporate loan portfolio of Hrn23.6 billion.

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UZBEKISTAN

BEST BANK
Credit-Standard Bank

In 2009 US credit rating agency Moody’s Investors Service recognized the systemic importance of Credit-Standard Bank when it upgraded its long-term foreign currency deposit rating for the bank to B2 and maintained the stable outlook on its E+ financial strength rating.

Moody’s decision reflected the progress the bank made in 2009 when it increased its deposit base by over a third and increased its lending by two-thirds. While the political and economic environment in Uzbekistan remains highly challenging, Credit-Standard Bank has endeavoured to maximize its position as one of the country’s leading banks through a number of initiatives. As part of its 2008-13 development strategy one of the main priorities of the bank has been to further develop its retail banking business through the expansion of its network. At the end of 2009, it boasted three branches in Tashkent, Samarkand and Fergana, and 14 mini-banks, both in metropolitan and regional cities. As well as upgrading its network, the bank has also sought to expand the range of its retail banking services, most recently launching a troika of new deposit accounts and introducing a new consumer credit product enabling customers to fund the purchase of goods and services produced in Uzbekistan.

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