The process will increase consumers’ access to banking services, those attending the first day of the fourth edition of ZF Bankers Summit concluded.
“Going digital will speed up penetration of banking services among Romanian consumers. The Romanian banking system will take advantage of it, we are betting a lot on the introduction of the mobile banking services,” said Radu Ghetea, CEC Bank chairman.
The ZF Bankers Summit ’15 was organized by ZF in partnership with Alpha Bank, MasterCard, Vodafone, CEC Bank, Imobiliare.ro, Garanti Bank, Marfin Bank and PwC.
The banks’ main solution to cut costs has been to cut the number of branches and employees over the last few years, a model they no longer see as viable. The 40 local banks had 5,330 branches in December, 2,000 fewer than in 2008. The number of employees shrank by 10,000 to about 50,000.
“Technology is a challenge for the local banking system and for us. We are focusing on online banking,” said Rasvan Radu, chief executive officer of UniCredit Tiriac Bank.
“Customers regard online banking as more secure than mobile banking. Commercial companies are the heaviest users of online services. Cost cutting cannot be achieved only through organic models such as closing branches. Moving to the technology area is the key to cost cutting and efficiency improvement.”
Besides going digital, bank officials say the banking system will improve efficiency by continuing the consolidation process through mergers and acquisitions. The banking M&A market has seen a number of transactions involving loan portfolios or even entire banks over the past two years.
“The consolidation process has begun and I think it will continue,” said Ufuk Tandogan, Garanti Bank chairman.
Rasvan Radu says there are enough banks for sale but no buyers for the time being, and believes the easiest way for a market consolidation is portfolio acquisitions and not lenders buying entire lenders.
Another conclusion of those attending the first day of the ZF Bankers Summit ’15 is that the system is expecting a return to profit this year, following the record loss of almost EUR1 billion in 2014, as it got rid of a hefty chunk of non-performing loans, which are no longer generating provision cost pressure.
“Every bank expects a return to profit this year, because the system has cleaned up the non-performing loans. What we are seeing now is a normalized risk cost, directly proportional to the lending activity of the last five years,” said Sergiu Oprescu, Alpha Bank chief executive officer and chairman of the Romanian Banking Association (ARB).
UniCredit Tiriac Bank’s CEO Rasvan Radu believes the banking system will look better soon.
“The banking system has stabilized and will definitely look better in the coming years. We may see fewer banks on the market, but under no circumstances their number will drop to half.”
As the banking system is unable to boost revenue from interests at the moment, its return to profit might also come from the one-off revenue generated by the sale of the tens of thousands of foreclosed assets from customers who stopped repaying their loans.
(English version by Loredana Fratila-Cristescu)