Awards for Excellence 2016 CEE: And the awards we didn’t give…

.Best banking sector clean-up: Latvia

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It has been a long time coming but Latvia has finally moved to plug the holes that have made it a conduit for dirty money from Russia and the former Soviet Union for more than two decades. The threat of missing out on membership of the OECD concentrated authorities’ minds wonderfully and a raft of new regulation was introduced earlier this year, along with substantially increased penalties for misbehaviour. Hefty fines have already been handed out, banks have been closed down, and regulators are promising more of the same. A case of very late, but better than never.

Most egregious failure to clean up a banking sector: Moldova

Once again this year, there is no award for Moldova. This is because it is hard to pick a winner in a country where three leading banks were closed last year due to involvement in a $1 billion fraud and the three largest lenders still standing are under audit for governance issues. One, Victoriabank, has not had a functioning board since September.

New central bank governor Sergiu Cioclea, formerly of BNP Paribas, looks to be making valiant efforts to restore confidence in the sector but will face an uphill struggle against Moldova’s notorious political power brokers. It may be a while before we have a Moldovan winner again.

Hardest-driven bargain: Banca Transilvania/Volksbank

CEE ones to watch

PZU: Poland’s state-controlled insurer has snapped up challenger bank Alior and former GE subsidiary BPH Bank in the past year. Other rumoured targets include Raiffeisen Polbank and UniCredit subsidiary Bank Pekao – which would fit with deputy prime minister Jaroslaw Gowin’s recent statement that Poland should renationalize banks and push out foreign owners. Challenger banks: CEE’s foreign-dominated banking sectors have been slow to breed disrupters but a few are finally starting to emerge. They include digital lenders Air Bank in the Czech Republic and Touch Bank in Russia, owned respectively by PPF and OTP, as well as new Polish SME lender Idea Bank. Next out of the door: The possibility that UniCredit might sell out of Poland and Turkey in a bid to boost its capital base has been a hot topic in CEE since chief executive Federico Ghizzoni resigned in May. Rumour also suggests that Sberbank may look to ditch its Turkish subsidiary, DenizBank, just four years after buying it, as well as the six banks left in its central and south-eastern European network.

There is nothing like being in the right place, at the right time, with a healthy balance sheet – as Romanian rising star

Banca Transilvania

found last year, when it snapped up the last remnant of Volksbank’s Balkan network. So desperate were shareholders in the failed Austrian lender to get rid of its Romanian subsidiary before a December deadline that Banca Transilvania was able to demand a substantial cash bonus with the deal.

So lavish, indeed, was the sweetener that the new owner was able to spend L1.5 billion ($376 million) settling potential claims against Volksbank Romania and converting its Swiss franc mortgage portfolio, and still have some left over.

Least transparent bank sale: MKB Bank

The plot continues to thicken around the

privatization of failed lender MKB Bank

, taken over by the Hungarian government in 2014 and, in theory, sold to a group of financial investors this March. Reports surfaced in June that one of the main buyers, a fund called Blue Robin, currently has less than $10,000 in assets. Unsurprisingly, this has done little to quell persistent speculation in Budapest that Hungary’s central bank, already at the centre of a scandal about sub rosa purchases of property and other assets, is behind the acquisition.

Best bank at holding its nose: Intesa Sanpaolo

Lucy Fitzgeorge-Parker, Euromoney

Most western banks are fighting shy of involvement with sanctioned Russian entities. Not so Intesa Sanpaolo, which happily signed up as adviser to the Russian government on the privatization of Rosneft in May. The Italian bank has also recently shown an unusual tolerance for Belarusian exposure, featuring alongside a raft of Russian and Kazakh banks in loan syndications for Belagroprombank and Development Bank of Belarus.

Biggest flop: Russia’s $1.75 billion sovereign sale

It was supposed to be the deal that demonstrated that western sanctions could not stop Russia funding itself in international markets. Instead, it proved that most international banks were steering well clear. More than 20 banks were asked to pitch for the bond sale but in the end the sole lead was state-controlled player VTB Capital. The deal also showed that talk of big bond buyers out of Asia replacing western fund managers remains pie in the sky – just in case anyone was in doubt.