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Saturday, September 04, 2004
Very interesting news... according to Bloomberg, Commerzbank plans to expand in Romania.
Commerzbank to Raise Eastern European Profit by 50% (Update1)
Sept. 2 (Bloomberg) -- Commerzbank AG, Germany's No. 4 bank, plans to boost pretax profit from Eastern Europe by at least 50 percent by 2006 amid surging economic growth in the region, management board member Nicholas Teller said.
``We want to allocate more resources and capital to the region,'' Teller said at a briefing in Warsaw. He declined to say how much profit the Frankfurt-based bank is generating in the region, where it mainly sells corporate-banking services.
Commerzbank and competitors such as HVB Group are taking advantage of demand in Eastern Europe as people in former communist countries open accounts and take out loans for the first time. Commerzbank owns 72 percent of BRE Bank, the No. 5 lender in Poland, where the government expects the economy to expand 5.7 percent this year. The German government expects Europe's biggest economy to grow 1.5 percent in the same period.
The bank plans to make earnings from Eastern Europe account for 25 percent to 30 percent of total pretax profit at its corporate-banking unit by 2006, Teller said, without giving the current percentage. The unit was Commerzbank's most profitable business in the first half, accounting for 35 percent of total pretax profit.
The German bank is trying to boost revenue, which is being hampered at home as state-owned banks control about half the lending industry and have more pricing power, according to analysts. Commerzbank this month said second-quarter profit more than tripled after job cuts and a gain from selling a stake.
Commerzbank plans to expand in countries including Romania and Bulgaria, which are expected to join the European Union in 2007, Teller said. The lender has offices in the Czech Republic, Slovakia, Hungary, Serbia, Russia, Ukraine and Kazakhstan. About 80 percent of the bank's employees are in Germany.
Teller said Commerzbank isn't interested in buying a stake in Banca Comerciala Romana SA, Romania's biggest bank by assets. Romania may sell another 25 percent in the bank this year, officials including Prime Minister Adrian Nastase said in March.
To cut costs further, the bank is considering shifting some of its back-office functions to Poland and it is currently assessing whether it can use BRE Bank's technology, Teller said.
The German bank isn't interested in increasing its stake in BRE Bank to more than the 75 percent it is currently permitted to hold, and it isn't planning to sell shares in the lender, Teller said. Foreign investors aren't allowed to own more than 75 percent of a domestic bank, according to Polish regulations.
At home, Commerzbank is aiming to attract 9,000 smaller companies, or those that make as much as 250 million euros ($304 million) in annual sales, by the end of 2006. By July, the bank had won 2,279 of the targeted corporate clients, close to its goal of 3,000 for the year, Teller said.
Commerzbank stock was little changed at 13.70 euros. The stock has fallen 12 percent this year while the Bloomberg Europe Banks and Financial Services Index has gained 1 percent.
Posted by Mihai : 9/04/2004 01:29:00 am
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