Financing in Serbia
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Financing in Serbia 15 th European Annual Meeting European Consultants Unit. TABLE OF CONTENTS. Development of Banking S ector Banking and Economy Development of Raiffeisenbank a.d. Precondition of Financing & Limitations Outlook. DEVELOPMENT OF BANKING SECTOR.

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Financing in serbia 15 th european annual meeting european consultants unit

Financing in Serbia

15th European Annual Meeting

European Consultants Unit


Financing in serbia 15 th european annual meeting european consultants unit

TABLE OF CONTENTS

  • Development of Banking Sector

  • Banking and Economy

  • Development of Raiffeisenbank a.d.

  • Precondition of Financing & Limitations

  • Outlook


Financing in serbia 15 th european annual meeting european consultants unit

DEVELOPMENT OF BANKING SECTOR

Prior to Political Changes in October 2000

  • Steady deterioration in the past 12 years prior to political changes:

    • Large number of banks

    • Majority of banks undercapitalized

    • Most banks overstaffed

    • Banking sector small and not active enough

    • Politically directed loans dominate the market

    • Only basic banking products offered

    • Lack of public trust in the banking sector


Financing in serbia 15 th european annual meeting european consultants unit

DEVELOPMENT OF BANKING SECTOR

After Political Changes

  • NBS creates the basis for healthy development of financing sector

    • Significant reduction in number of banks through mergers & closures: Beobanka, Beogradska banka, Jugobanka, Investbanka..

    • Increased demand in terms of capital and quality

    • Level of trust increased

  • Increase in deposits volume:

    • June 2001 total retail deposits reached EUR 31 mio

    • September 2006 total retail deposits over EUR 2,74 bn

  • Increase in loans volume:

    • Until 2001 loans to customers were very modest

    • During the last 3 years loans volume is increasing

  • Payment system transferred to commercial banks

  • Ownership structure of banks changed


Financing in serbia 15 th european annual meeting european consultants unit

TABLE OF CONTENTS

  • Development of Banking Sector

  • Banking and Economy

  • Development of Raiffeisenbank a.d.

  • Precondition of Financing & Limitations

  • Outlook


Financing in serbia 15 th european annual meeting european consultants unit

BANKING AND ECONOMY

Banks Assets - Share in GDP

CONCLUSION:

Due to the closure of large banks and restructuring process undergoing in state-owned banks in Serbia the banks asstets‘ participation in Serbian GDP has declined. Nevertheless, result of new entrants into Serbian banking sector, this ratio is expected to increase.


Financing in serbia 15 th european annual meeting european consultants unit

BANKING AND ECONOMY

Total Credits - Share in GDP

CONCLUSION:

Evident decrease of this indicator is a result of assets restructuring of state-owned banks (i.e. Write-offs of bad loans). Following the resructuring of banking sector and presence of foreign banks, participation of total credits in GDP has begun to increase (126 % YoY 2003/04)


Financing in serbia 15 th european annual meeting european consultants unit

BANKING AND ECONOMY

Retail Loans - Share in GDP

CONCLUSION:

Retail market segment is the most dynamic in term of growth rates. The large increase is primarily generated through much larger supply of retail loans in recent years. There is still enough scope for further growth.


Bank ing and economy

BANKING AND ECONOMY

1M BELIBOR


Financing in serbia 15 th european annual meeting european consultants unit

BANKING AND ECONOMY

EUR/CSD ANALYSIS AND FORECAST

  • In 2005 CSD nominal depreciation towards EUR was 8.4%, effective depreciation was amounting to 7%

  • In 2006 up to now CSD depreciated for 1.29%

  • It is expected that the EUR/CSD would be around 87.5-88.5 level at the end of 2006

  • Expectations are that CPI would be in range 9.5%-13.5%

This commentary is for information only and the comments and forecasts are intended to be of a general nature and are current as at the date of issue.

Issued by Raiffeisenbank A.D., Belgrade who takes no responsibility for any individual investment decisions based thereon. This documentation is not intended as an offer, solicitation or recommendation to buy or sell currency. Information is obtained from sources that are believed to be reliable but their accuracy cannot be guaranteed.Relevant economic data has been taken from Statistical gazette of NBS, Economical gazette of NBS, Ministry of finance of Serbia internet page, NBS internet page, Republic of Serbia statistic department.


Financing in serbia 15 th european annual meeting european consultants unit

Market position and growth rates

Market-

position

-

No. of NWBs

Bosnia and Herzegovina

Albania

3

Serbia

-

Kosovo

8

(1)

Top 1

Belarus

Romania

Slovakia

Croatia

Bulgaria

6

-

3

Top 4

Hungary

Czech Rep.

(2)

Ukraine

Slovenia

Russia

(3)

4

>6

Poland

Ø EU-12

3,6% p.a.

>

0%

2%

4%

6%

8%

10%

12%

Average nominal GDP-growth 2004e – 2007 p.a.

____________________

(1)av. nom. GDP-growth 2004e-2007e (p.a.): 19,0 %

(2) av. nom. GDP-growth 2004e-2007e (p.a.):14,0 %

(3) av. nom. GDP-growth 2004e-2007e (p.a.):14,4 %


Financing in serbia 15 th european annual meeting european consultants unit

TABLE OF CONTENTS

  • Development of Banking Sector

  • Banking and Economy

  • Development of Raiffeisenbank a.d.

  • Precondition of Financing & Limitations

  • Outlook


Financing in serbia 15 th european annual meeting european consultants unit

RZBGroup in CEE


Financing in serbia 15 th european annual meeting european consultants unit

RAIFFEISENBANK a.d. Belgrade

  • First bank established with 100% foreign capital in the country

  • The Bank‘s shareholders:

    • Raiffeisen International

    • IFC, World Bank Group

  • Equity – EUR 200 mio

  • More than 365,000 clients

  • 54 branches

  • Universal bank for4main business segments:

    • Corporate Banking

    • Retail Banking – Private individuals

    • Retail Banking – SMEs (small & micro enterprises and professionals)

    • Treasury & Investment Banking


Financing in serbia 15 th european annual meeting european consultants unit

TOP 15 BANKS -

by total assets

As at:30/06/2006 in million EUR

Source:NBS, under local statutary requirements, prepared by: Raiffeisenbank


Financing in serbia 15 th european annual meeting european consultants unit

TABLE OF CONTENTS

  • Development of Banking Sector

  • Banking and Economy

  • Development of Raiffeisenbank a.d.

  • Precondition of Financing & Limitations

  • Outlook


Financing in serbia 15 th european annual meeting european consultants unit

Preconditions for financing-limitations

  • Profile of the borrower:

    • Privately owned companies with undisputable ownership rights

    • Subsidiaries of Multinationals

    • State owned and mixed companies with good prospects of privatization

    • Track record of at least 2-3 years

  • Credit profile

    • Purpose:working capital financing, financing of investments, project/trade financing

    • Amounts:up to EUR 50 mio (current legal lending limit)

    • Tenors:working capital financing: up to 2y

      • investments/project financing: up to 10y

  • Collateral:Mortgage, pledge on equipment and inventory, bank/corporate guarantees and cash deposits, assignment of receivables, unsecured etc


  • Financing in serbia 15 th european annual meeting european consultants unit

    Preconditions for financing-limitations

    • Limitations

      • Country risk: maximum tenor, costs of refinancing, maximum country limit

      • Lack of country-wide land register

      • Lack of available construction/industrial land in towns

      • Legal restrictions: Law on Foreign Credit Transactions, necessity of registration of international financing with National Bank of Serbia (reduction of flexibility)

      • Costs of refinancing: mandatory reserve costs (60%), costs for political risk

      • Still limited transparency of balance sheets but strongly improving

    • Improvements

      • Significance of balance sheet, International Accounting Standards

      • Positive track record with the bank, willingness and capability to repay

      • Increasing of competition in the banking area


    Financing in serbia 15 th european annual meeting european consultants unit

    TOP 15 BANKS -

    by total loans

    As at:30/06/2006 in million EUR

    Source:NBS, under local statutary requirements, prepared by: Raiffeisenbank


    Financing in serbia 15 th european annual meeting european consultants unit

    TABLE OF CONTENTS

    • Development of Banking Sector

    • Banking and Economy

    • Development of Raiffeisenbank a.d.

    • Precondition of Financing & Limitations

    • Outlook


    Financing in serbia 15 th european annual meeting european consultants unit

    Outlook - Plans

    • Outlook

      • Increased competition due to entrance of new banks into the market

      • Increased mandatory reserve requirements

      • Positive development of the country – current country rating: Standard & Poors BB-

      • More foreign Greenfield investments expected

      • EU entry and further stabilization expected on mid term

    • Summary

      Serbia is no longer a high risk country, currently ideal proportion between opportunity and risk


    Financing in serbia 15 th european annual meeting european consultants unit

    Thank you for your attention!


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