Financing in Serbia 15 th European Annual Meeting European
Consultants Unit
Slide 2
Development of Banking Sector Banking and Economy Development
of Raiffeisenbank a.d. Precondition of Financing & Limitations
Outlook TABLE OF CONTENTS
Slide 3
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
DEVELOPMENT OF BANKING SECTOR Prior to Political Changes in October
2000
Slide 4
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 After Political Changes
DEVELOPMENT OF BANKING SECTOR
Slide 5
Development of Banking Sector Banking and Economy Development
of Raiffeisenbank a.d. Precondition of Financing & Limitations
Outlook TABLE OF CONTENTS
Slide 6
BANKING AND ECONOMY CONCLUSION: 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. Banks Assets - Share in
GDP
Slide 7
CONCLUSION: 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) Total
Credits - Share in GDP BANKING AND ECONOMY
Slide 8
CONCLUSION: 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. Retail Loans
- Share in GDP BANKING AND ECONOMY
Slide 9
1M BELIBOR
Slide 10
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. 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%
BANKING AND ECONOMY EUR/CSD ANALYSIS AND FORECAST
Slide 11
Market position and growth rates ____________________ (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 % Bosnia and Herzegovina CroatiaSlovakia Serbia Kosovo
Albania Romania Belarus (1) Bulgaria Hungary Czech Rep. Russia (3)
Poland Ukraine (2) Slovenia 0%2%4%6%8%10%12% Market- position -
Average nominal GDP-growth 2004e 2007 p.a. Top 1 - 3 >6 EU-12
3,6% p.a. No. of NWBs 8 3 4 Top 4 - 6 >
Slide 12
Development of Banking Sector Banking and Economy Development
of Raiffeisenbank a.d. Precondition of Financing & Limitations
Outlook TABLE OF CONTENTS
Slide 13
RZB Group in CEE
Slide 14
First bank established with 100% foreign capital in the country
The Banks shareholders: Raiffeisen International IFC, World Bank
Group Equity EUR 200 mio More than 365,000 clients 54 branches
Universal bank for 4 main business segments: Corporate Banking
Retail Banking Private individuals Retail Banking SMEs (small &
micro enterprises and professionals) Treasury & Investment
Banking RAIFFEISENBANK a.d. Belgrade
Slide 15
TOP 15 BANKS - by total assets As at: 30/06/2006 in million EUR
Source: NBS, under local statutary requirements, prepared by:
Raiffeisenbank
Slide 16
Development of Banking Sector Banking and Economy Development
of Raiffeisenbank a.d. Precondition of Financing & Limitations
Outlook TABLE OF CONTENTS
Slide 17
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 Preconditions for
financing-limitations
Slide 18
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 Preconditions for
financing-limitations
Slide 19
TOP 15 BANKS - by total loans As at: 30/06/2006 in million EUR
Source: NBS, under local statutary requirements, prepared by:
Raiffeisenbank
Slide 20
Development of Banking Sector Banking and Economy Development
of Raiffeisenbank a.d. Precondition of Financing & Limitations
Outlook TABLE OF CONTENTS
Slide 21
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 Outlook - Plans