Home AWARDS The International Banker 2016 Western & Eastern European Awards Winners

The International Banker 2016 Western & Eastern European Awards Winners

by internationalbanker

Banks in Europe have been facing challenges on several fronts since the great financial crisis of 2008. The spreads that they earn between their borrowing costs and the rates at which they lend have been under pressure. At the same time, nonperforming loans have been mounting. These problems are compounded by the fact that the economies of several countries in Western Europe are growing very slowly. Unfortunately, there is nothing to indicate that a revival is possible in the near future. Stagnant economies, depressed interest spreads and mounting bad loans have resulted in Europe’s banks getting caught in a downward spiral from which they find it hard to escape.

The net-interest margins that banks earn across the European Union (EU) stand at an average of 1.2 percent. This compares poorly with the 3 percent that US banks earn and the average net-interest margin of 2 percent of Canadian banks. Banks already pay depositors near-zero interest rates and do not have any scope for lowering rates further. In fact, pushing effective rates down by levying fees on deposit accounts may prompt customers to pull out their money and put it into alternative forms of investment or simply hold cash. Nonperforming loans add to the banks’ woes. Just before the great financial crisis, the level of nonperforming loans was at approximately 1.5 percent of total loans. By 2013, this had risen to more than 5 percent. Defaults by borrowers continue to drag down bank profitability.

In addition to these challenges and that from the shadow-banking system, Western Europe’s banks also face competition from the growing number of financial-technology companies that are invading their turf, such as peer-to-peer lenders. New companies with web-based models and low overheads are taking away market share from incumbent banks in areas as diverse as wealth management and payment services.

Eastern Europe’s banks weathered the great financial crisis of 2008 reasonably well. But their balance sheets have seen significant changes since that time. Loan-to-deposit (LTD) ratios across the region fell 30 percent across the board in six years.

The Czech Republic’s banks are among the most conservative with an LTD ratio of only 77 percent. Slovakia’s ratio is also fairly low at 86 percent. But Poland had a ratio of more than 100 percent as of this year, indicating that its banks may need to adopt a greater degree of prudence in their lending policies.

Although Eastern Europe’s banks have seen a certain degree of deleveraging, some countries outside the region witnessed a greater reduction in their loan portfolios. In Ireland, the amount of credit as a proportion of the country’s gross domestic product (GDP) fell from 200 percent at the time of the great financial crisis to a little over 100 percent at the end of last year.

2008 saw a steep fall in oil prices. The Russian economy went into a tailspin as foreign hedge funds and retail investors withdrew money from the country. There was an 8-percent contraction in the country’s GDP in 2009. But a number of measures taken by the Central Bank of Russia (CBR), including deepening the domestic investment market, helped the country’s banks gain a certain degree of stability. In 2015, when oil prices fell again, CBR diverted a portion of the country’s dollar reserves to its banks to enable them to pay off external debt.

The Russian government is spending a sum equal to 3 percent of the nation’s GDP to recapitalise well-managed banks. It is also compensating individuals with savings in those banks that are unable to repay depositors. The recent past has seen a purge of Russia’s worst banks, many of which regularly participated in fraudulent transactions. In the last three years, 276 banks have been ordered to close by the CBR. Another 28 are the subject of a “financial rehabilitation programme” devised by the central bank.

The region’s banks face several challenges, not the least of which is managing their portfolios of impaired loans. At the end of 2014, about 7 percent of the loans on Polish banks’ books were impaired. The ratios in other countries were even worse, with Serbia’s banks registering an impaired loan ratio of 23 percent and Albania’s banks recording a similar ratio. The prospects for Eastern Europe’s banks appear to be mixed. A recent survey carried out by the European Investment Bank found that while 55 percent of bank owners in the region are planning to expand, about one-third of them say that they will reduce their levels of operations.

In both Western and Eastern Europe, banks will need strong leadership, continued prudence and dedication to innovation in order to strive in what would otherwise be an environment of low profitability.

 

 >>>WESTERN EUROPE AWARD WINNERS  

 

               BANKING CEO OF THE YEAR                  
Western Europe
Johan Thijs

KBC Group (Belgium)

**********

BEST CUSTOMER SERVICE
PROVIDER OF THE YEAR

Western Europe
Handelsbanken (Sweden)

**********

Best Investment Bank Of The Year France
Société Générale

Best Investment Bank Of The Year Portugal
Banco Invest

Best Investment Bank Of The Year Switzerland
Credit Suisse

Best Investment Bank Of The Year UK
Barclays

Best Commercial Bank Of The Year France
BNP Paribas

Best Commercial Bank Of The Year Germany
Commerzbank

Best Commercial Bank Of The Year Ireland
Bank of Ireland

Best Commercial Bank Of The Year Portugal
Santander Totta

Best Commercial Bank Of The Year Switzerland
Banque cantonale de Genève

Best Private Bank Of The Year Belgium
KBC Group

Best Private Bank Of The Year France
BNP Paribas Banque Privée

Best Private Bank Of The Year Germany
Berenberg

Best Private Bank Of The Year Switzerland
Pictet & CIE

Best Innovation In Retail Banking Belgium
KBC Group

Best Innovation In Retail Banking France
Groupe La Banque Postale

Best Innovation In Retail Banking Germany
DZ Bank AG

Best Innovation In Retail Banking Iceland
Landsbankinn

Best Innovation In Retail Banking Ireland
Bank of Ireland

Best Innovation In Retail Banking Norway
DNB

Best Innovation In Retail Banking Portugal
Banco BPI

Best Innovation In Retail Banking UK
Metro Bank

Best Practice Investor Relations Spain
CaixaBank

Best Practice Investor Relations UK
Barclays

 

 

 

 >>>EASTERN EUROPE AWARD WINNERS  

 

BANKING CEO OF THE YEAR
Eastern Europe
Umut Shayakhmetova

Halyk Bank (Kazakhstan)

**********

BEST CUSTOMER SERVICE
PROVIDER OF THE YEAR

Eastern Europe
AIK Banka (Serbia)

**********

Best Banking Group Kazakhstan
Halyk Bank

Best Banking Group Slovenia
NLB Group

Best Investment Bank Of The Year Belarus
Belarusbank

Best Investment Bank Of The Year Poland
Bank Pekao

Best Commercial Bank Of The Year Albania
Credins Bank

Best Commercial Bank Of The Year Belarus
Belarusbank

Best Commercial Bank Of The Year Estonia
Krediidipank

Best Commercial Bank Of The Year Moldova
ProCredit Bank

Best Commercial Bank Of The Year Montenegro
Crnogorska komercijalna banka

Best Commercial Bank Of The Year Poland
PKO Bank Polski

Best Commercial Bank Of The Year Serbia
AIK Banka

Best Commercial Bank Of The Year Slovenia
Abanka

Best Private Bank Of The Year Estonia
Krediidipank

Best Private Bank Of The Year Russia
Bank ZENIT

Best Innovation In Retail Banking Albania
Banka Kombëtare Tregtare

Best Innovation In Retail Banking Moldova
Comertbank

Best Innovation In Retail Banking Montenegro
Crnogorska komercijalna banka

Best Innovation In Retail Banking Poland
Bank Zachodni WBK

Best Innovation In Retail Banking Slovakia
Poštová banka

Best Innovation In Retail Banking Slovenia
Nova Kreditna banka

Best Practice Investor Relations Albania
Banka Kombëtare Tregtare

Best Practice Investor Relations Poland
PKO Bank Polski

Best Practice Investor Relations Slovenia
NLB Group

 

 

 

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