It will not be long before it returns to the lending market, making its presence felt as soon as possible, so the rebound will show in figures in the second quarter, said Andreas Treichl, chief executive officer of Erste Group, which owns some 93.6% in BCR.
He said he still has patience with BCR because it is like a big ship that is hard to turn, but the management in Bucharest did a good job in 2013, the bank is making some money again and 2014 will be a better year.
“I am not that concerned about financial results. I would be happier if customers recognized BCR as the best bank a year from now, but the management has a lot of work to do until then. Anyway, the worst is behind us,” the Austrian banker confidently says.
Eight years ago he bet he could turn the Romanian bank into a major growth driver of his group and paid EUR3.75 billion to acquire control in it.
Treichl says the time of cuts, especially visible last year, is over now and the bank is ready to get back to business. He is pleased with the cost cuts and the efficiency the bank gained.
On the other hand, he admits the loan volume did go down because of the high stock of non-performing loans that piled up. Non-performing loan ratio came close to 30% in September 2013, much higher than the market average, while loan volume fell by EUR1.2 billion compared with September 2011.
In two years, BCR fired about 2,200 people and closed more than 100 branches.
He admits BCR was not really aggressive in lending in 2013 but will be more aggressive in 2014. “We cannot force customers to take out loans but at least we are ready for business.”
BCR’s owner, Erste Group, will turn out to be one of the sound European banks when the European Central Bank finishes its asset quality assessment, Treichl says. If thoroughly done, it will leave a number of banks with only three choices: either sell stakes at very low prices, sell assets at very low prices or be nationalized at very low prices again. To Erste this means opportunities to buy banking stocks and assets really cheap, Treichl says.
Erste had made a number of acquisitions in Central and Eastern Europe before the crisis, but had to leave the Ukrainian market in 2012. The onset of the crisis also did not give it the time it needed to enter Poland, the most coveted market in the region, where strong Western banks built a strong presence ever since the nineties.
Still, Treichl says his initial vision of turning Erste into a leading regional group continues to make a lot of sense, despite the transformations the European banking system is going through.
“Today more than even in 2000 I believe the region has the best potential in Europe by far.” The only thing that can ruin it is the political class, which he hopes will not happen.
The countries in the region reacted faster, more harshly and more profoundly to the crisis that the Western countries, which includes Romania to a certain degree, Treichl says.
These countries also have the huge advantage of European funds, as they are expected to get EUR120 billion in 2014-2020. Growth prospects of the region are substantial, largely because countries’ debts are low, except maybe Hungary, he added.
As for Romania, where does Andreas Treichl see BCR in five years from now?
“I hope it will have a really balanced corporate-retail portfolio,” he says, adding it will not leave the corporate market under any circumstances and there is no way that could happen since it is the biggest lender of the economy, of the government and of municipalities. What it needs is to consolidate its position.
Erste has always relied on retail more than anything else in its business, so it does not have a tradition on the corporate segment, Treichl agrees, but has become strong, because the corporate segment is an avenue of growth for the group.
Erste is Romania’s largest private lender by far, its CEO says. The group’s exposure to Romania stood at some EUR7.5 billion to EUR8 billion.
Lending will improve this year, and formation of non-performing loans is already going down, and so will the necessary provisions, says Treichl optimistically.
BCR does not need a new capital increase, except maybe if it saw a substantial increase in lending. The Erste CEO still does not believe listing BCR on the Bucharest Stock Exchange would have been a good move. “The cleaner the shareholder structure, the better.”
On the other hand, BCR is saddled with the burden of the huge non-performing loan stock, estimated at some EUR4 billion. Erste’s boss says he has a lot of experience with cleaning up a bank balance sheet and solutions in BCR’s case will be a mix of asset sales and internal efforts.
The process will be a lengthy one because the economic growth is not strong enough to offset six years of crisis yet and many companies are still experiencing problems.
Treichl believes in BCR’s CEO, Tomas Spurny, whom he expects to show he is not only an expert in restructuring but also a manager for times of growth. After persuading him to agree to stay for a longer term, Treichl praises Spurny, saying he is one of the best bankers he has met in his entire career, who is knows about business, controlling and accounting. The entire management team of BCR is a very good team, he adds.
(English version by Loredana Fratila-Cristescu)