Describing Raiffeisen Bank International’s new strategy for its extensive network in emerging Europe, incoming CEO Karl Sevelda uses a phrase that neatly captures the prevailing ethos among the leading regional players: "continuity, but selective continuity".
Of course, in some respects this is nothing new. Since the financial and eurozone crises, both of which hit central and eastern Europe hard, the western European houses that dominate banking in the region have been quietly reducing their exposure to its most difficult markets. In Hungary, for example, where swingeing taxes have wiped out profits, foreign banks have trimmed their balance sheets by as much as 40% since 2007.
What has changed is that bankers have become bolder in articulating more selective strategies. For several years after the financial crisis, with the European Bank for Reconstruction and Development (EBRD) and other multilateral signatories to the two Vienna Initiatives repeatedly raising the spectre of catastrophic deleveraging in CEE, there was a widespread reluctance among its larger lenders to be seen to be pulling back from individual markets.
In the past 12 months, however, fears for the region’s economic health have been receding. Indeed, with stability and even growth returning to its key export markets in western Europe, the outlook for CEE is brighter than at any time since 2007.
