Awards for Excellence 2000: The end of the world as we know it
This year's awards for excellence are a final farewell to domestic banking. Definitions of domestic or foreign have acknowledged that while local banks may have the best retail and local currency wholesale operations in a country, foreign institutions, with a handful of branches, often offer the best in cross-border financing and transaction services. Consolidation will ensure this year will be the last in which this distinction has any meaning. By Simon Brady.
Local banking systems in vast swathes of the world are in foreign hands. In Latin America, HSBC and BSCH are part-way through expansions that will leave domestic players scratching for profits in a barren middle ground. In central and eastern Europe, Bank Austria Creditanstalt and Raiffesen Zentralbank have been joined by Belgian KBC and others in a battle that has left markets such as Poland and the Czech Republic without a large truly domestic player.
In the Baltics, Swedbank and SEB have annexed the best of the locals and in Asia all the major global players have snapped up distressed domestic institutions at knock-down prices. They have not finished. As Euromoney went to press, HSBC was on the verge of having purchased 75% of Bangkok Metropolitan Bank.
In an interesting development that underscores this effective foreign takeover of these banking systems, but which also raises important questions for acquirers in these countries, KBC - buyer of a majority stake in Ceskoslovenska Obchodni Banka in the Czech Republic - has been prompted to bail out a troubled (and politically sensitive) Czech bank, Investicni a Postovni Banka (IPB). Will governments force foreign institutions to rescue banks they would otherwise have had to rescue? And what happens when foreign buyers balk?
One global player whose strategy will surely have to change as the foreign banks establish themselves in these markets is Citibank.