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Banking

CEE plays catch-up on cash management

Central and eastern Europe is not a single entity when it comes to cash management. EU members in the region are committed to the union’s payment principles. By contrast, Russia and other non-EU states have much more ground to make up. Laurence Neville reports.

CONTRARY TO ALMOST all expectations, central and eastern Europe has avoided catastrophe following the financial crisis. While Greece, Ireland and some other western European periphery countries continue to totter on the brink of default, CEE has defied the doomsayers and – following tough action by regional governments and a strong performance from the German economy – has returned to growth. UniCredit expects growth of 3.6% in the CEE region for 2010 and 3.8% in 2011. Moreover, the bank believes that for the first time in four years all countries in the region should enjoy gains in economic activity.

The return to growth is good news for cash management banks operating in CEE. “The economies in many countries in CEE remain fragile but are in recovery mode,” says Frank Kutschera, head of cash management for corporates, CEE, global transaction banking, at Deutsche Bank. “Business volumes are picking up and new foreign direct investment is flowing. As a result, a number of projects that had been shelved have now been restarted.”

Kai Grosse, head of CEE, cash management and international business at Commerzbank, says that many banks remain focused “on trying to get back loans they made before the crisis” and that the “days of double-digit growth in the CEE cash management business may be over for now”.

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