Austria's two biggest banks face a slowdown in their profitable expansion in eastern Europe as potential acquisitions have become expensive, investment bank Sal. Oppenheim said on Wednesday. But Bank Austria-Creditanstalt , a unit of Germany's HVB Group , and Erste Bank will continue to benefit as they consolidate their businesses across eastern Europe from the Balkans to Poland.
"There is very strong competition among bidders and prices are being driven up," said Metehan Sen, head of Oppenheim's banking and insurance research.
"This is now more a time for consolidating existing acquisitions," Sen told a news conference.
Sal. Oppenheim initiated coverage of BA-CA and Erste Bank earlier this month, starting Erste with a "buy" rating and BA-CA "neutral".
Both banks have said they want to continue expanding in eastern Europe, either through acquisitions or internal growth, to take advantage of higher economic growth rates than in western Europe.
Sen said Erste Bank and BA-CA were among the top five European banks by share performance, with Erste up 25 percent this year and BA-CA up 19.5 percent, compared to a decline of 4 percent in a broader index of European bank stocks.
Erste Bank has a leading market position in four former Communist countries -- the Czech Republic, Slovakia, Hungary and Croatia -- and is also active in Slovenia.
BA-CA, which runs the eastern European business of HVB, has a strong focus in Poland and a presence in 10 other eastern and southeastern European countries.
Sen said BA-CA did not have a market-leading position in those 10 countries, giving it a weaker growth outlook than Erste Bank, whose strategy is to be a market leader in each country.
Source: Reuters
29.07.2004