Europe

Capital Performance

The past year has been one of continuing struggle for much of the European banking sector. After a bruising 2009, which was characterized by banking failures and government bailouts, 2010 brought the European sovereign debt crisis. High sovereign debt levels and soaring deficits in countries including Spain, Ireland, Portugal, Greece and Belgium led to a crisis of confidence in European sovereign and banking sector strength.

Not only were developed sovereigns affected, but so too were their trading partners in developing Europe, as contagion spread. In the banking markets, subsidiaries of major Western banks in Central and Eastern Europe dealt with the double-whammy of deteriorating conditions and rising recapitalization needs for their parent companies plus poor economic conditions at home.

The second half of the year brought some relief and renewed hope to the banking markets across Europe. Stress tests conducted in mid-2010 were criticized for not being stringent enough, but they did act as a catalyst to move banks further down the road to recapitalization and risk-reduction. Many banks began the process of building their capital backstops, through a combination of asset sales and capital raising exercises.

With new, more stringent stress tests under way, it will soon become clear how well capital improvement efforts have paid off and whether Europe’s banks have become more prudent lenders. Meanwhile, the latest round of bank recapitalizations is under way, providing more reason for optimism in a battered sector.

Regional Winner—Western Europe

BNP Paribas

BNP Paribas weathered the financial crisis better than most. Having entered the crisis with less risk exposure than many of its peers, it also benefited from a quicker economic recovery in France than in many neighboring countries, and took advantage of the turmoil to pick up some bargains, including most of Fortis Bank in Belgium in 2009 and Fortis’ Swiss bank and its investment activities in Australia last year. This acquisition complemented the bank’s existing portfolio and is helping the bank to rise above its peers in the European banking landscape. BNPP is now the largest bank in the world, by assets, with some €2.2 trillion ($2.9 trillion) on its balance sheet. It is expected to provide good returns to investors over the next few years, and it has a well-diversified book of business, with no single unit weighing too heavily on its overall risk profile, adding to its strength and safety. The bank has also been steadily increasing its capital ratios: Its core Tier 1 capital ratio is at 9.2% and continues to rise.

Baudouin Prot, CEO

www.bnpparibas.com

Regional Winner—CEE

Raiffeisen Bank International

Raiffeisen Bank International has taken advantage of its relatively strong financial position and regional coverage to grow through acquisitions in order to become one of the largest and most far-reaching regional banks in Central and Eastern Europe. Most recently, the bank announced that it was taking a 70% stake in Poland’s Polbank EFG, giving RBI a deeper profile in what is probably the fastest-growing market in the region.

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"Our business model is both basic and sustainable. We focus on classic financial intermediation"

"We intend to continue increasing our fee-generating business by also stepping up our investment banking activities" – Herbert Stepic, CEO, RBI

Herbert Stepic, CEO of RBI, says: “Our business model is both basic and sustainable. We focus on classic financial intermediation, offering our customers safe and attractive ways to deposit their funds and making those funds available to the productive industry and to our millions of private customers in CEE. That kind of business will never fail if you do it according to the old Raiffeisen principle of always being close to your customers and understanding their needs.”

The bank also took a chance early on in some markets that other banks were avoiding, giving RBI an early-mover advantage in the region with which few others could compete. Stepic points out that the bank has never left a market just because it was in a crisis. He adds: “I am quite optimistic regarding our business performance in the current year, especially as all Central and Eastern European economies are growing once again. We intend to continue increasing our fee-generating business by also stepping up our investment banking activities.”

Herbert Stepic, CEO

www.rbinternational.com

Country Winners

Albania

International Commercial Bank

Albania has been plagued by corruption, political unrest on the back of a still-disputed June 2009 election, and the economic woes of its main trading partners. Its request for EU accession was recently denied, and the country is still on edge after a series of political rallies in January that led to the deaths of four people. The economy has been affected by the deteriorating economic conditions in Greece and Italy, which are its two biggest trading partners. The banking market is dominated by foreign players, and Switzerland-based International Commercial Bank (ICB) has built up a strong presence in the country, enjoying the benefits of strong growth over the past decade and weathering the economic crisis and current political crises relatively well. ICB’s Albanian unit saw good returns in the first half of 2010, almost doubling pre-tax profits over the same period a year earlier. ICB increased loan volumes by more than a quarter over the period and is benefiting from a restructuring plan implemented in 2009.

Michael Robert Hanlon, chairman

www.icbank-albania.com

Austria

RZB/Raiffeisen Bank International

At a time when all the big banks in Austria are dealing with the triple-whammy of Basel III, €500 million in overall bank levies on Austrian banks, and an unclear economic picture, RZB focused on performing well in its home market while also providing easy access to CEE markets for Austrian and global companies. RZB Group had profit before tax of €1.29 billion in 2010, up 56.8% over 2009. Return on equity before tax rose 3.7 percentage points over the previous year, up to 12.5%. Plus, the bank brought down impairment loss provisioning by 46.7%. In 2010 it grew its Tier 1 ratio to 11.6%. Last year was a year of big change for the bank, as it restructured its businesses to streamline group structure. As part of this restructuring, the group’s corporate customer segment, product fields and investment merged into Raiffeisen International Bank-Holding to create Raiffeisen Bank International (RBI). RZB holds a 78.5% stake in the new entity. Karl Sevelda, deputy CEO at RZB, says: “Winning the ‘Best Bank in Austria’ distinction underlines the success of our relationship-based approach to providing highly-developed and customized products to the country’s leading corporations.”

Walter Rothensteiner, chairman and CEO

www.rzb.at

Belarus

Belarusbank

Belarusbank holds around 40% of the total banking assets of the Belarus market. As of February 2011 the bank had a liquidity ratio of 2.8% and a capital adequacy ratio of 15.7%, up from 12.8% a year earlier. The bank is reengineering its processes to increase the quality and quantity of product offerings and improve profitability. It is implementing a new core banking technology system, which it will use to provide greater service offerings to customers, improve channel access and increase efficiency. One major area of focus for the bank this year will be the further development of its cards business. The bank is a big provider of foreign exchange services and products, will continue to build on its trade finance profile through increased cooperation with export credit agencies and is a main player in project financing. It is also promoting its international development, primarily through partnerships, and is building out its international financial product offerings for the corporate market.

Nadezhda Ermakova, chairperson

www.belarusbank.by/en

Belgium

KBC

In the wake of the financial crisis, KBC refocused its strategy to concentrate more on core businesses—with impressive results. Its 2010 fourth-quarter net profit rose to €724 million—more than double the €304 million of the same quarter in 2009. The bank had rising loan loss provisions in Ireland and additional provisions to cover irregularities at its UK leasing subsidiary but nonetheless beat analyst forecasts for the quarter. CEO Jan Vanhevel says: “On 18 November 2009, KBC Group presented its updated strategy. In this plan we reconfirmed our focus on our core bancassurance activities to retail customers, SMEs and local midcaps in our core markets—Belgium, the Czech Republic, Poland, Hungary, Slovakia and Bulgaria. In these markets KBC owns banking, insurance and asset management operations and has a platform for sustainable organic growth.” According to the bank, much of the rise in profits can be attributed to strategic banking and insurance operations in Belgium and CEE. “Over the whole of 2010, KBC generated net profit of €1.86 billion, a clear break from the results of the previous two years,” says Vanhevel. The company reported losses in both of the previous two years.

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Jan Vanhevel, CEO

www.kbc.be

Bosnia and Herzegovina

Raiffeisen Bank dd Bosna i Hercegovina

Although Raiffeisen did not have the strongest growth among the top three banks in Bosnia, it did introduce a number of solid, new corporate-focused products, significantly expanded its offerings to the smaller business segment and invested in new technology to support an ever-expanding solution range. It holds more than 18% market share of the Bosnian banking market. The bank has a loan/deposit ratio of 116%. Raiffeisen Bank dd Bosna i Hercegovina put in place a cost control program over the past year that saw its cost/income ratio improve by 6% over the previous year. CEO Michael Müller says: “The period behind us was extremely challenging for the entire banking sector of Bosnia and Herzegovina, as was the case with the rest of the world. We managed to cope well with all challenges by taking the right countermeasures and remaining true to our business strategy.” Müller adds: “We managed, on the one hand, to keep our market position. On the other hand, we proved that Raiffeisen is a trusted brand and that we are a reliable financing partner, in both private and corporate banking.”

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Michael Müller, CEO

www.raiffeisenbank.ba

Bulgaria

DSK Bank

In 2010, DSK Bank had a capital adequacy ratio of 23.7%, while the overall banking system in Bulgaria averaged around 17%. It saw 2010 full-year profits after tax of 130.4 million Bulgarian lev ($88.4 million) and a return on equity of 8.9%. The bank holds a 14% loan market share and 12.7% market share of deposits. DSK invested significant resources in 2010 in extending its technology backbone for payments and electronic banking channels. In addition, the bank began development of a data warehouse with advanced analytics tools for control and profitability management and Basel II analysis. DSK is also known for its corporate social responsibility and has made big strides in integrating that into its governance and business processes. The bank benefits from being part of the OTP group by having access to a wide range of regional and international investment banking and transactional banking offerings for corporate clients.

Violina Marinova, CEO

dskbank.bg

Croatia

Privredna Banka Zagreb

Privredna Banka Zagreb is one of the largest banks in Croatia, with a market share of total banking assets at year-end 2010 of 17.33%. It holds 20% of the retail banking market and 31% of the credit cards market. The bank made a net profit for the year of €118 million and provided a return on equity of 8.61%. Part of the Italian banking group Intesa Sanpaolo, PBZ is one of the key corporate banks in the country, working with customers both small and large, and offers a wide range of domestic and international banking products to its commercial customers. It is a major player in the trade finance market and actively works with the European Bank for Reconstruction and Development (EBRD) and other international organizations to promote Croatia’s export growth. The bank is also the lead underwriter of debt securities in Croatia and one of the biggest fixed-income and foreign-exchange dealers in the country.

Božo Prka, president

www.pbz.hr

Cyprus

Bank of Cyprus

Ratings agencies Moody’s and Standard & Poor’s recently downgraded Cyprus’ sovereign rating, and banks in the country are dealing with the fallout from that as well as their exposure to Greek financial institutions, all of which is making it a tough liquidity environment for the Cypriot financial sector. Bank of Cyprus is addressing the difficulties by focusing on innovation, such as creating a form of contingent convertible—a convertible enhanced note, which lets investors convert to shares at set quarterly periods. Group CEO Andreas Eliades notes: “The adoption of proper risk management procedures, the avoidance of high risk investment products and our business model geared towards strong relationship management enabled Bank of Cyprus’ successful performance for another year.” He adds: “The continued focus on the four main pillars of our strategy—strong liquidity, capital adequacy, effective risk management and disciplined growth—will enhance the group’s ability to implement its growth plans and benefit from opportunities that will emerge once the economy recovers, and thereby establish the group as a powerful regional banking institution in southeastern Europe.”

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Andreas Eliades, group CEO

www.bankofcyprus.com

Czech Republic

Ceskoslovenska Obchodní Banka (CSOB)

CSOB suffered less than many banks during the financial crisis and emerged in good stead to benefit as the Czech economy began to recover. In 2010 the bank reported net profit of 13.5 billion koruna ($709 million) and return on average equity of 19.6%. It has a healthy liquidity profile, with a capital adequacy ratio of 18%, cost of risk decreasing to 0.75% by year-end 2010, and a cost/income ratio below 45%. Plus it holds a loan-to-deposit ratio below 70%. The bank underwent a major de-risking exercise in 2010 as it sold its collateralized debt obligations portfolio, reduced exposure to risky sovereigns, including Greece, Italy and Hungary, and improved its lending practices by taking a more conservative approach to certain sector exposures.

Pavel Kavánek, CEO

www.csob.cz/en

Denmark

Danske Bank

Danske Bank’s performance continues to be affected by its Irish banking exposure. However, the group saw great improvements in its home market of Denmark. The firm racked up a net profit for 2010 of 3.7 billion kroner ($668 million), which was above forecast, and brought loan impairment charges down almost 50% to 13.8 billion kroner, thanks in large part to reduced charges in Denmark and the Baltic states. Danske Bank also took advantage of its strong position to grow its liquidity cushion with the issue of 22 billion kroner in bonds and 30 billion kroner of covered bonds.

“With a solid capital base, Danske
Bank offers our customers a strong
partnership and easy banking”

“Danske Bank aspires to deliver the most dedicated
customer service in the finance sector” — Tonny Thierry Andersen, Danske Bank

The bank grew its Tier 1 capital adequacy ratio (CAR) to 14.8% at the end of 2010 from 14.1% at year-end 2009. Tonny Thierry Andersen, Danske’s head of banking activities, Denmark, says: “Danske Bank aspires to deliver the most dedicated customer service in the finance sector. Our large branch network makes us easily accessible when it comes to more complex advisory needs for both private and corporate customers.” Andersen adds: “With a solid capital base, Danske Bank offers our customers a strong partnership and easy banking.”

Tonny Thierry Andersen,
head of banking activities, Denmark

www.danskebank.com

Estonia

Swedbank

Swedbank Estonia reported a profit of €32 million for full-year 2010, a huge change from its losses in 2009. It had a cost/income ratio of 42% and return on equity of 1.8%. The bank has made huge strides in overcoming very tough market conditions in 2009, reducing net credit impairments to €352 million from €1.4 billion in 2009 and bringing its credit impairment ratio down to 2.12% from 6.79% the year before. Swedbank in Estonia had a capital adequacy ratio of 15.24% at year-end 2010 and a Tier 1 ratio of 11.81%.

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"A bank can be good only with the support of its clients"

Swedbank’s goal is to promote a financially sound and sustainable situation for the many households and enterprises, "which is why we keep developing new andinnovative solutions, for example in the bank’s e-channels" – Priit Perens, CEO, Swedbank Estonia

Priit Perens, CEO of Swedbank Estonia, says: “We see this award as recognition of the commitment of all of our employees as well as the trust our clients have in us—a bank can be good only with the support of its clients.” He adds that Swedbank’s goal is to promote a financially sound and sustainable situation for the many households and enterprises, “which is why we keep developing new and innovative solutions, for example in the bank’s e-channels.”

Priit Perens, CEO

www.swedbank.ee

Finland

Nordea

Nordea was in relatively good shape coming out of the crisis. It launched a rights issue in 2009, giving it a liquidity cushion and allowing the bank to provide its shareholders with steady return on equity and still have capital available to invest in efficiency improvement and technological advancements. From a capital strength perspective, the bank brought net loan losses down from €1.5 billion in 2009 to €879 million in 2010. Its Tier 1 capital ratio sits at 9.8% while its core Tier 1 ratio is 8.9%, including transition rules. Nordea in 2010 launched a number of initiatives aimed at enhancing growth capital efficiency. In addition to maintaining its strength in both foreign exchange product offerings and trade finance—critical pieces of the picture for Finnish and Nordic corporates—the bank is focused on deeper penetration in corporate risk management products and solutions. Nordea is also investing heavily in its technology backbone for cards and cash management. In Finland the bank is increasing its spotlight on high-growth markets.

Christian Clausen, president and group CEO

www.nordea.com

France

BNP Paribas

A leader in trade finance and foreign exchange, BNP Paribas continues to provide a well-rounded offering and global coverage to its corporate clients. A large stable deposit base, high retained earnings and a reduction in risk-weighted assets—down €20 billion from 2009 to €601 billion at year-end 2010—helped the bank further strengthen its liquidity position. The bank has a common equity Tier 1 ratio of 9.2% and a Tier 1 ratio of 11.4%. BNP Paribas saw net income in 2010 rise by 34.5% over 3009 to €7.8 billion. The bank attributes this primarily to a big decline in its cost of risk in 2010—a drop of 42.6% over 2009, at €4.8 billion. It moved forward with its integration of Fortis Bank into the BNPP stable, which adds a much broader solution line for existing BNPP corporate customers, and continued its investment in best-of-breed technological solutions to better enable corporate clients to manage their banking and cash management. On the trading and research front, for example, the bank recently launched a MobileMarket iPad app.

Baudouin Prot, CEO

www.bnpparibas.com

Germany

Deutsche Bank

For Deutsche Bank, 2010 was a year of change. The bank acquired private bank Sal Oppenheim, vastly increasing its reach in the wealth management sector, and its acquisition of Postbank further extended its reach in the German retail market. This provides a solid addition to its deposit base to further complement the firm’s strong investment banking arm. The bank has long been a leader in transaction banking as well, with a high-end technological infrastructure to support it.The bank completed a €10.2 billion capital increase, bringing its Tier 1 ratio to 12.3% and core Tier 1 ratio to 8.7%.

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"Our investment bank has demonstrated that it can consistently deliver outstanding results"

"2011 will be the year in which we aim to fully leverage the strong, forward-looking market position built up in 2010" –Josef Ackermann, chairman and CEO, Deutsche Bank

Josef Ackermann, Deutsche Bank’s chairman and CEO, says: “The year 2010 once again demonstrated the strengths of our business model with its diversified business structure.” Acquisitions in Germany and Europe have strengthened the group’s retail banking and asset management businesses, and the bank has focused on building a balanced revenue mix and lower revenue volatility. Ackermann adds: “Our investment bank has demonstrated that it can consistently deliver outstanding results—and that it can do so with a more conservative risk profile. 2011 will be the year in which we aim to fully leverage the strong, forward-looking market position built up in 2010.”

Josef Ackermann, chairman and CEO

www.db.com

Greece

National Bank of Greece

Although the Greek financial landscape provides a clear example of the worst of the European economic crisis, National Bank of Greece showed great signs of improvement over the past year and is getting its house in order. Despite operating in a tough landscape, the bank launched a comprehensive capital management plan, including a pre-emptive equity rights offering for €1.8 billion. As a result, the bank now has a Tier 1 capital ratio of 13.1% and core Tier 1 ratio of 12.0%, which are among the highest ratios in the European banking sector. It also brought operating costs down by 7% in 2010 over 2009, to €1.541 billion. National Bank of Greece also launched a bid for close rival Alpha Bank. Although the initial deal was rejected by Alpha, the courting has just begun, according to analysts. A merger could be good for both banks, which are performing relatively well versus other rivals in the country.

Apostolos Tamvakakis, CEO

www.nbg.gr

Hungary

OTP Bank

OTP Bank has focused on improving its capital adequacy ratios and Tier 1 capital. It has a consolidated group CAR of 17.5% and Tier 1 ratio of 14.0%. In addition, OTP Bank Hungary has a stand-alone CAR of 18.1%—far above the regulatory minimum of 8% under Hungarian accounting standards. In March 2010, the bank made an early repayment of the €700 million balance on its €1.4 billion Hungarian state loan. OTP continues to focus on strengthening its capital position and growing services and market share within both Hungary and the region.

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"OTP Bank is recognized as a leader in innovation, providing great and continuously improving … service"

"Running this international group of banks from Hungary makes a positive difference since we … understand these markets better" – Sándor Csányi, chairman and CEO, OTP

Sándor Csányi, chairman and CEO of OTP Bank, says: “OTP Bank is recognized as a leader in innovation, providing great and continuously improving customer service and being competitive in pricing.” He says the bank is focused on maintaining market share in the retail market while further strengthening its position in the corporate sector. OTP has a market presence in eight countries in Central and Eastern Europe and plans to continue to grow through partnerships and through acquisitions. Csányi adds: “Running this international group of banks from Hungary [rather than from a Western European country] makes a positive difference since we simply understand these markets better.”

Sándor Csányi, chairman and CEO

www.otpbank.hu

Italy

UniCredit

UniCredit has a broad reach in the region and a range of regional transaction banking solutions that few can compete with. Although it suffered a big hit to earnings as a result of its exposure to the Kazakh market, it still managed to perform above expectations in 2010, according to analysts. Net income for the fourth quarter of 2010 was €321 million. Although lower than a year previous, it was far above analyst expectations of around €210 million. In Italy, 2010 was a year of integration and change as the bank saw a big shift in senior management—former CEO Alessandro Profumo resigned in September under pressure from above and Federico Ghizzoni, a 30-year veteran of the firm, took over. UniCredit also worked to bring together its disparate businesses into a tighter, more centralized configuration for better customer service and more unified product offerings. The bank’s vast spread in Central and Eastern Europe, which was something of an albatross during the worst of the crisis, is once again becoming an advantage as growth takes off in the region. However, Italian banks are among the lowest capitalized in Europe, and UniCredit is no exception, with core Tier 1 capital ratios of around 7.6%. Nonetheless, conservative lending practices and high deposit rates on the retail side have helped UniCredit to perform relatively well—as it awaits the benefits it expects to glean this year from growth in most of its main markets.

Federico Ghizzoni, CEO

www.unicreditgroup.eu

Kosovo

Raiffeisen Bank Kosovo

Raiffeisen is a key player in many CEE markets, and its arm in Kosovo is no exception. The bank is one of the two largest in the country, holding a market share of deposits of 28.8% and total loan market share of 26.3%. Over the past year, the bank has striven to increase the quality of its loan book, reducing overall lending activities by 2.82% but increasing related profits by almost 13% in the process. The bank has invested heavily in a high-end banking technology framework and risk-management system to ensure it is Basel II-compliant—the only bank in Kosovo to have achieved that so far.

Robert Wright, CEO

raiffeisen-kosovo.com

Latvia

Swedbank Latvia

Structural reforms continue apace in Latvia, and the country was recently upgraded by Fitch Ratings to BBB- on the back of that. The economy is recovering well, with GDP growing, unemployment falling, improving stability in the financial system and a shrinking government deficit. All of which is good news for the country’s banks, including Swedbank Latvia, which is capitalizing on the improving environment by increasing its investment in better technological infrastructure to attract a broader customer base—both on the commercial and the retail side. It recently launched vastly improved payments and e-banking systems for both the retail and corporate side, for example. In addition, the bank is closely involved in promoting the business interests of the country, which lags behind neighboring Baltic states on a number of key indicators, including governance, infrastructure and tax policy.

Maris Mancinskis, chairperson

www.swedbank.lv

Lithuania

SEB

Although the SEB Lithuania saw a net loss over 2010, its second half was very much in the green with half-year net profits 142.9 million litas ($54.9 million). With Lithuania’s economic recovery expected to pick up pace in 2011, this profit trend should continue. The bank focused on reducing risk in its loan book, and managed to decrease provisions for distressed loans in the second half of the year. It invested heavily in an IT systems upgrade that will benefit both corporate and retail customers—part of which was an integration exercise to bring together disparate systems. Companies in Lithuania can benefit from the broad reach of SEB in the region and beyond, with high-end transaction banking solutions, such as its recently-launched SEPA payments offering.

Raimondas Kvedaras, president

www.seb.lt

Luxembourg

Banque et Caisse d’Epargne de l’Etat

BCEE underwent a big cost-cutting and process-reengineering exercise over the past year, bringing operating costs down by 0.9% and increasing integration and automation within bank operations. It has a Tier 1 CAR of 11.3 %. Jean-Claude Finck, CEO and president of BCEE, says: “We consider the facts that we had excellent results in the European Stress Test and that we could keep the solvency ratios at very high levels as main successes. We continue to be confident in BCEE’s ability to continue to develop its activities and to act as a responsible player serving the best interests of its existing and future clients and of the national economy.”

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Finck adds: “The main challenges we faced over the last months were increasing efficient cost management, offering innovative low-risk products and strong development of SME pools in our branch network.” Luxembourg came out of its recession last year and saw stronger than expected GDP growth. However, the banking market in Luxembourg continues to face some risks as a result of large intra-group exposures and sovereign bond holdings.

Jean-Claude Finck, president and CEO

www.bcee.lu

Macedonia

Komercijalna Banka AD Skopje

Komercijalna Banka AD Skopje continued to build reserves in 2010 to improve its capital cushion. The bank built its capital adequacy ratio at the end of 2010 to 11.1 %. The bank saw ROE of 17.9% and ROA of 2.0% for the year. Komercijalna Banka built out its product offerings this year as well, in order to offer a full suite of regional products and services.

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"At the end of the 2010 [the bank] undertook concrete actions aimed at increasing its equity"

The bank’s aim was "to achieve better compliance …additional growth and maintenance of its market share" – Hari Kostov, CEO, Komercijalna Banka

Hari Kostov, the bank’s CEO, says: “In 2010, which marked the 55th anniversary of Komercijalna Banka, the total bank’s assets increased by 16.6% to €1.2 billion and its market share increased to 23.2%. The bank achieved a positive gross financial result in total of €23.3 million,” Kostov adds: “In order to achieve better compliance with the supervisory standards, additional growth and maintenance of its market share, Komercijalna Banka at the end of the 2010 undertook concrete actions aimed at increasing its equity.” In February this year the bank launched a public equity offering of 265,000 shares, which brought in €15 million.

Hari Kostov, CEO

www.kb.com.mk

Malta

Bank of Valletta

The Bank of Valletta increased its profits by 21% in the 2010 financial year, achieving an operating profit before tax of €98.9 million. It brought shareholders a 21.9% return on equity in 2010—up from 19.8% in 2009—and decreased its cost/income ratio from 47.3% in 2009 to 41.3% in 2010. It holds a market share of 45% of total bank deposits in Malta. The bank has weathered the crisis of the past few years well and come out stronger for it. It focuses on prudent balance sheet management and continues to build up its capital and liquidity ratios, achieving a Tier 1 ratio of 9.3% under the European stress tests. It increased its lending portfolio by 10% in 2010, while ensuring conservative underwriting policies were maintained. It also launched a number of new products and services aimed at both the retail and corporate sectors—particularly in the cards space. The bank launched a new corporate card program in November last year.

Tonio Depasquale, CEO

www.bov.com

Moldova

Moldova Agroindbank

Moldova Agroindbank worked on growing market share and return on equity in 2010, achieving a 19.5% market share for overall banking assets, 20.5% for loans, and ROE of 12% by the end of the year. It has also put significant effort into maintaining prudential risk management and improving internal controls to protect its profitability and reduce exposure to nonperforming loans. The bank has a strong foreign exchange franchise and is a central intermediary in the trade finance business in Moldova. It has a financing line for international commercial transactions through the EBRD Trade Facilitation Programme, which is used to support Moldovan export and import growth. The bank offers Moldovan commercial entities a full range of trade finance tools.

Natalia Vrabie, chairman

www.maib.md

Netherlands

Rabobank Group

With something of an upturn in the economy in the Netherlands, 2010 was a year of performance improvement for Rabobank Group, with a drop in costs associated with bad debts, improved margins on savings deposits and strict cost control. As a result, net profits at the bank rose by 26% to €2.8 billion. Piet Moerland, chairman of Rabobank Group, says: “Much of this profit was used to strengthen equity so that we can carry on guaranteeing the continuity of our services.” The bank will face a somewhat tougher landscape in 2011. The economic recovery in the Netherlands is expected to level off during 2011. Moerland notes: “Government cutbacks and uncertainty regarding house prices and pensions, as well as employment and purchasing power to a lesser extent, will affect consumer and producer confidence. Moreover, solvency and liquidity requirements will become tighter under the new Basel regulations.”

Piet Moerland, chairman

www.rabobank.com

Norway

DnB NOR

DnB NOR is one of the most highly capitalized banks in the world, ranking 11th on a list produced by Standard & Poor’s of the 75 largest international banks. Rune Bjerke, group CEO at DnB NOR, notes: “More than 80% of DnB NOR’s income stems from our operations in the domestic market, and we have clear ambitions to grow in Norway. At the same time, DnB NOR is becoming increasingly international.” The bank has benefited from growth in the shipping, energy and seafood sectors because that is where it maintains its primary focus. In particular, it grew its presence within the renewable energy sector, both in Norway and globally. At year-end 2010, DnB NOR had a Tier 1 capital ratio of 10.1%, up from 9.3% in 2009. Bjerke adds: “We have strengthened our position relative to other banks. This gives us good access to funding in the markets, which in turn makes us competitive and well positioned for the future.”

Rune Bjerke, group CEO

www.dnbnor.no

Poland

BRE Bank

BRE Bank is one of the largest universal banks in Poland. In 2010 it grew profit before tax to 872.5 million zloty ($291.5 million)—almost four times its 2009 figure. It saw return on equity before tax of 17.8%. The bank has grown its capital cushion steadily since 2008, building a capital adequacy ratio of 11.1% by year-end 2010, up from 10.39% in 2009. The bank is a key provider of corporate banking and investment solutions in Poland. It holds a 6.2% market share of corporate loans and 8.6% of corporate deposits in Poland. It has significant factoring operations in Poland and its neighboring countries and holds 7.1% of the Polish leasing market, down from 8.1% in 2009. The bank’s corporate and institutional unit saw double-digit growth in 2010, and it grew its income from transactional banking activities and cash management by more than 10% year-on-year.

Cezary Stypułkowski, president and CEO

www.brebank.pl

Portugal

Banco Santander Totta

None of Portugal’s banks are having an easy time. The main banks in the country all recently underwent a rating downgrade by Standard & Poor’s on the back of weakening sovereign creditworthiness. But of Portugal’s banks, Banco Santander Totta is in the best state. It had a return on equity of 15% in 2010 and improved its cost-to-income ratio to 45.7%. The bank had the strongest solvency ratio of all Portuguese banks in the most recent European stress tests and has continued to focus on improving is capital strength. Nuno Amado, CEO of Banco Santander Totta, says: “The evolution of activity was constrained by tight restrictions on international financial markets due to increasing tensions around Portugal’s sovereign debt and those of other countries in the eurozone.” He adds: “In 2011 our strategy will continue to be based on our efficiency and strong capital ratios as competitive advantages, but we will proceed with the deleveraging, reducing the loan book, due to the difficult conditions of the financing of the Portuguese economy, and we will maintain a strong focus on the control of the credit quality of our portfolio.”

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"The evolution of activity was constrained by tight restrictions on international financial markets"

"In 2011 … we will maintain a strong focus on the control of the credit quality of our portfolio" – Nuno Amado, CEO, Banco Santander Totta

Nuno Amado, CEO

www.santandertotta.pt

Romania

BRD-Groupe Société Générale

Romania continued to present a challenging market for financial institutions. BRD-Groupe Société Générale focused on increasing efficiency and customer retention. The bank saw an operating profit of 2.25 billion lei ($693 million) and a net consolidated profit of 533 million lei. It had a return on equity of 11.92% at year-end and capital adequacy ratio at midyear 2010 of 14.03%. Guy Poupet, chairman and CEO, says: “The past year was a difficult one, with uncertainties regarding macroeconomic developments. For us it was an exercise of flexibility and capability to adjust to the effects of the crisis. We remained profitable and controlled our cost of risk in a manner that allowed us to remain very present in the market.” Poupet says the bank will be focusing this year on innovation as well as “improving the quality of our customer relationship management.”

Guy Poupet, chairman and CEO

www.brd.ro

Russia

Sberbank

Sberbank is the largest credit institution in Russia and CIS with a 27% market share of the overall Russian banking market. The bank is midway through a five-year development plan that includes investment in new technology infrastructure, centralization of operations and expansion through organic growth and acquisitions.Most recently, Sberbank announced plans to purchase Russian investment bank Troika Dialog, which will vastly increase the scope of its corporate banking services and solutions.

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Herman Gref, CEO and chairman of Sberbank, says: “Our services have risen to a totally different technological level, moving at a totally different speed. The elephant is now learning how to waltz. I am absolutely positive that Sberbank will be up to the task of creating one of the most technological banks in the world.” Gref says that the biggest change is centralizing operational functions. “In terms of complexity and significance for our entire organization, we may well refer to it in terms of a heart surgery,” he says.

Herman Gref, CEO and chairman

www.sbrf.ru/en

Serbia

Komercijalna Banka a.d. Beograd

Serbia is in the process of major reforms including freezing public sector wages and salaries and passing a fiscal responsibility law, which would allow spending to rise only in line with revenue. The country has long been an underperformer economically, creating tough conditions for its banks. Komercijalna Banka a.d. Beograd saw profits drop last year but has managed to build deposits, increase capital and reduce bad loan provisioning. The bank received an injection of €120 million from a group of international investors in early 2010, which helped build its capital cushion. Its loans and advances grew by 8.4% in 2009 (the latest figures available) to 115.1 billion dinars ($1.7 billion), and the bank built its deposit base by 25.4% to 134.8 billion dinars. It saw profits before taxes of 2.1 billion dinars. Komercijalna had a capital adequacy ratio of 14.82%, up from 13.6% a year earlier. Despite the downturn, the bank managed to reduce provisioning and indirect write-offs for bad loans by 10%, compared with 2008, to 1.36 billion dinars, thanks to increasingly conservative credit policies.

Ivica Smolic, president

www.kombank.com

Slovakia

Slovenská sporitelna

Slovakia, traditionally one of the more stable countries in the area and renowned a few years ago for turning in the highest GDP growth rates in the EU, had a tough year in 2010. The country endured significant spending cuts aimed at reining in a substantial budget deficit—although it still managed to clock up GDP growth of over 4%. This year, the spending cuts will bite harder