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BANKING IN CEE: THE NEW GROWTH MODEL
Vienna, 19 January 2011
Gianni Franco Papa, Head of CEE Division
Debora Revoltella, Head of CEE Strategic Analysis
2
CEE banking study 2011: key findings
The CEE convergence model holds
CEE banking holds as an opportunity, with some reshaping of the banking model
2011 is the year of (moderate) recovery for CEE banking, with continued focus on
efficiency and risk control
The competitive environment is changing in the context of increasing regulatory
risk, opening opportunities for re-positioning and some newcomers
UniCredit is strongly committed to CEE and well positioned to take the upside,
having enough capital, liquidity, risk appetite and good franchise
333
AGENDA
CEE economic outlook: convergence model vs short term risks
CEE banking: an opportunity, with some rebalancing
2011 the year of (moderate) recovery
Changing competitive environment and regulatory risk
UniCredit in CEE
Conclusions
4
CEE economic convergence holds – long term potential growth at 4% abovemore mature economies but below pre-crisis
SOURCE: UniCredit Group CEE Strategic Analysis, UniCredit Research, Eurostat
Long term economic trends CEE vs Eurozone(GDP yoy growth %)
Economic growth model based on the “convergence story”
Standards of living
Productivity and competitiveness
Per capita GDP in PPS(2009, % EU-25)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Slove
nia
Cze
chR.
Slova
kia
Hun
gary
Cro
atia
Eston
ia
Polan
d
Lith
uania
Latvia
Turke
y
Rom
ania
Bulga
ria-6
-4
-2
0
2
4
6
8
201520142013201220112010200920082007200620052004
EUROZONE
CEE Averages
CEE_17
-6
-4
-2
0
2
4
6
8
201520142013201220112010200920082007200620052004
EUROZONE
CEE Averages
CEE_17
5
Countries differ in terms of timing of recovery, focus towards sustainablestrategies and exposure to risk
3.8
5.3
4.3
5.0
4.1
2.7
1.8
1.6
2.8
1.7
3.9
3.9
3.7
2.5
3.1
1.8
2.5
4.4
2011f
4.23.6CEE-17
5.56.0Kazakhstan
4.13.4Russia
5.04.0Ukraine
5.17.4Turkey
3.51.8Serbia
2.50.5Bosnia
2.0-1.5Croatia
3.50.1Bulgaria
3.4-2.5Romania
4.02.4Estonia
4.0-0.9Latvia
3.60.9Lithuania
2.81.2Slovenia
4.53.9Slovakia
3.32.3Czech R.
3.41.2Hungary
3.93.8Poland
2012f2010eReal GDP % Yoy
1. EMU Core: AT, BE, DE, FI, FR, NL, FI; EMU Periphery: GR, ES, PT, IE, IT; CE: CZ, HU, PL, SK; SEE:BG, HR, SRB, RO; Other: RU, KZ, TK, UA
SOURCE: UniCredit Group CEE Strategic Analysis, World Bank, Bloomberg
CEE Macroeconomic forecasts Quality of the business environment
145
123110
8984706559635651464241
242317
UASKLVLT RUBHSRBHRPLTKKZCZROBGHUSIEE
World Bank Ease of doing business rank in 2010Positioning out of 183 countries in the world
Cost of country risk by sub-regions(1)
5Y CDS USD
0
50
100
150
200
250
300
350
400
450
Jan-10
Feb-10
Mar-10
Apr-10
May-10
Jun-10
Jul-10
Aug-10
Sep-10
Oct-10
Nov-10
Dec-10
Jan-11
EMU Core EMU Periphery CE SEE Other
666
AGENDA
CEE economic outlook: convergence model vs short term risks
CEE banking: an opportunity, with some rebalancing
2011 the year of (moderate) recovery
Changing competitive environment and regulatory risk
UniCredit in CEE
Conclusions
77
CEE banking holds as an opportunity, provided some rebalancing
1. EMU average refers to 2005-20082. 2005-07; EMU proxy including AT, DE, IT (2005-2008)SOURCE: UniCredit Group CEE Strategic Analysis, ECB
CEE expected to recover towards a lower growth path…
CEE-17 total CEE banking revenues - bn euro
… yet maintaining a significant advantage vs.Western Europe(1)
Post-crisis scenario
Pre-crisis scenario
-20
20
60
100
140
180
220
260
300
2004 2005 20062007 2008 20092010 2011 20122013 2014 2015
Pre-crisis‘05-’08Pre-crisis‘05-’08
CEE Cost ofrisk (bp)(2)
CEE ROA (%)
Post-crisis‘12-’15Post-crisis‘12-’15
CEE Lendinggrowth (%)
CEE Cost-to-income (%)
16
32
EMU Ø 9
156142
EMU Ø 55
4852 EMU Ø 62
1.52.0
EMU Ø 1.0
106101 EMU Ø 122CEE Loan-to-depo ratio (%)
CEE CDS (bp)158148
88
Financial products penetration gap holds as a base for the upside in CEEbanking, but strategies towards new services and new segmentspenetration become a must
1.EMU-12 as of 20092.CEE-9: PL, TK ,RU, HR, BG, CZ, HU, RO, SK3.Sample of banks including UCG and CommerzbankSOURCE: UniCredit Group CEE Strategic Analysis
Banking penetration and profitability drivers Financial penetration (2010e, % GDP)(1)
As of 2009
Funding costs of banks vs large corporations
Mortgageloans(2)
Corporateloans
Poland(3)
Consumerloans(2)
0
50
100
150
200
250
300
O-0
8
D-0
8
F-0
9
A-0
9
J-0
9
A-0
9
O-0
9
D-0
9
F-1
0
A-1
0
J-1
0
A-1
0
O-1
0
Banks
Telekomunikacija Polska SA
Netin
tere
stin
com
e+
Netfe
eand
com
mis
sio
nin
com
e(%
ofavg
volu
mes)
1
2
3
4
5
6
7
0 50 100 150 200 250 300 350 400
FR
FI
ES
DEBE
AT
SK
CZHU
PL
SRB
BG
HR
RO
SI
EE
KZ
LT
LV
TKUA
RU
Financial penetration (loans+deposits, % GDP)
IT
IE
GR
PT
NL
40
8
EMUCEE
78
EMUCEE
52
26
CEE EMU
9
Ukraine
DE
AT
Bosnia-H.
Slovenia
Latvia
Estonia
Lithuania
Hungary
Slovakia
IT
Romania
Poland Serbia
Czech R.
Kazakhstan
Turkey
Bulgaria
Russia
Croatia
0
20
40
60
80
100
0.0 0.5 1.0 1.5 2.0 2.5
9
In a medium to long term view, banking systems in the region differ, interms of risk/return opportunities
1. Market Attractiveness is an index ranked between 0 (low attractiveness) and 100 (high attractiveness). It is obtained by considering growthpotential (50% weight) and profitability (50% weight). Growth potential is measured in terms of volumes growth, while profitability in terms of ROA.2. Long Term Volatility of Banking Sector Profitability means the standard deviation of banking system ROA.SOURCE: UniCredit Group CEE Strategic Analysis
Market Attractiveness (1)
Long term market attractiveness, risk and size of CEE Profit pool
Long Term Volatility of Banking Sector Profitability (2)
Banking system NetProfit (bn €, 2015F)
101010
AGENDA
CEE economic outlook: convergence model vs short term risks
CEE banking: an opportunity, with some rebalancing
2011 the year of (moderate) recovery
Changing competitive environment and regulatory risk
UniCredit in CEE
Conclusions
11
-15%
-10%
-5%
0%
5%
10%
15%
20%
2009
2010E
2011F
2009
2010E
2011F
2009
2010E
2011F
2009
2010E
2011F
Central Europe Baltics SEE Other
Provisions/avg gross loans
OPEX/avg gross loans
Revenues/avg gross loansProfits bef. Taxes and extr.items/avg gross loans
11
2011 is the year of the recovery, but the recovery path is going to bemoderate
1. Central Europe: PL, HU, SK, CZ, SI; SEE: BG, BiH, HR, RO, SRB; Other: RU, KZ, UA, TKSOURCE: UniCredit Group CEE Strategic Analysis
CEE banking profitability, revenues generation capacity and cost of risk (in %)(1)
-35%
30%
Kazakhstan - Profitsbef. taxes and extr.items (% avg loans)
1212
Out from a clear credit crunch – mostly demand driven
1. CE: CZ, HU, PL, SK, SI; SEE: BG, BiH, HR, RO, SRB;Other: TK, UA, RU, KZ
SOURCE: UniCredit Group CEE Strategic Analysis
Lending activity gradually restarting
(yoy % growth, not adjusted for FX movements)
Develeraging not any more a must
A demand driven credit crunch
Banks’ loans-to-deposits ratio (%)(1)
(Correlation between corporate loans and industrial production, %)
RU
UATK
HR
SK
SI
ROPLHU
LT
LV EE
CZ
BG
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
-10% -5% 0% 5% 10% 15% 20% 25%
Corporate loans, YTD growth (Sep 2010, adj for FX movements)
Industr
ialP
roduction
(Sep
2010
vs
Dec
2008)
0
Sep-10
Jun-10
Mar-10
Dec-09
Sep-09
Jun-09
Mar-09
Dec-08
Sep-08
Jun-08
-10
-20
10
20
30
40
50
60
Mar-08
Dec-07
Corporate Loans
Retail Loans
Total Loans
50
60
70
80
90
100
110
120
130
0
50
100
150
200
250
Sep-10
Jun-10
Mar-10
Dec-09
Sep-09
Jun-09
Mar-09
Dec-08
Sep-08
Other
SEE
Baltics - RS
CE
1313
Peak for non performing loans expected for end 2010/1H 2011with cost of risk already decelerating
Forecast
Year of the peak in Cost of Risk:
2009: PL,TK,RU,HU,SK,SRB,UA,KZ,BALTICS
2010: HR,BG,RO,BH,SI
CEE Cost of Risk and Non performing loans ratio (bps)
Year of the peak in NPL ratio:
2009: TK,LT
4Q10/1H 2011: Rest of CEE
SOURCE: UniCredit Group CEE Strategic Analysis
134146167177206238
509
251136
9481,0091,123
1,2101,355
1,485
1,281
775
561
20082007 2009 201520142013201220112010
NPL
Cost of Risk
14141.CEE including BG, CZ, EE, LT, LV, HU, PL, RO, SK, SI, TK2.EU as of 2009SOURCE: UniCredit Group CEE Strategic Analysis
Efficiency is a must, but so are investment for future growth
CEE Inflation (% yoy) and OPEX (% yoy)(1)
During the crisis, banks in CEE strongly focused on cost efficiency measures
Cost control will remain a focus in the medium-term in the context of a dynamic business
environment
While efficiency remains an important driver for future profitability, it is clear that those players
who want to experience the region’s upside, need to restart some investment activities
Cost-to-income ratio (2010e)(2)
3
UASK LV EUSRB LTKZ EERO BH SI
18
26
25 23
2723
26
33
4
24
23
27
23
19
24
23
31
28
39
19
27
2826
28
25
RU BG HUPL TK HR CZ
18
3130
24
26
42
28
27
29
32
non HR
HR
-15
-10
-5
0
5
10
15
20
25
30
0
1
2
3
4
5
6
7
8
9
Sep-10
Jun-10
Mar-10
Dec-09
Sep-09
Jun-09
Mar-09
Dec-08
Sep-08
Jun-08
Mar-08
CPI avg - RS
OPEX
151515
AGENDA
CEE economic outlook: convergence model vs short term risks
CEE banking: an opportunity, with some rebalancing
2011 the year of (moderate) recovery
Changing competitive environment and regulatory risk
UniCredit in CEE
Conclusions
16
Number ofBranches
2,959
2,158
1,225
2,653
1,599
1,507
3,854
Countries ofpresence (2)
19
7
12
20
11
9
19
UniCredit with the best franchise network in CEE, also benefitingfrom Group diversification
1. 100% of total assets for controlled companies (stake > 50%) and pro rata for non- controlled companies (stake < 50%), except for OTP and RaiffeisenInternational (Group reported data). 2. Including direct and indirect presence in the 25 CEE countries, excluding representative offices. 3. excludingsubsidiaries in Russia, Serbia and Slovenia, except in countries of presence. 4. Data as of FY09, apart from total assets in CZ, RO, SRB, BG and AL.Excluding Rusfinance in RussiaSOURCE: UniCredit CEE Strategic Analysis
OTP
KBC
Raiffeisen
Erste
UniCredit
IntesaSP
SocGen
1H10 Data
(4)
(3)
Total Assets (1)
EUR bn
78
83
66
66
36
41
12423
38
79
36
16
100
12
CEE, % share inGroup Revenues
1717
Possibility to leverage on a solid funding and capital base, as well as goodpositioning will increasingly become key competitive factors
SOURCE: UniCredit Group CEE Strategic Analysis
CEE funding gap vs. Group Core Tier 1 ratio(June.10)
Presence in attractive countries(June.10)(2)
6
5
24
15
25
0
50
OTP
ISP
SocGen
KBC
RZB
Erste
UCG
1. Group relevance of CEE funding gap is the total CEE funding gap (when L>D) in % of group total assets2. % of assets in Russia, Turkey and Poland
0
1
2
3
4
5
6
7
8
9
10.07.5 11.09.08.57.0
OTP
10.59.56.5
ISP
8.0
Group Core Tier 1 ratio
SocGen
11.5
KBC
RZB
Erste
UCG
Group Relevance of CEE Funding gap(1)
Size of thebubble: fundinggap (bn €) inbanks when L>D
18
Regulatory developments to be closely monitored – the risk is to penalisethe cross-border banking model, which was the base for CEE economicand financial convergence
FX lendingregulation
Impact on CEE banking
Basle III
In the context of lack of long term funding in local currency and Euro convergence, FX lendingwas the driver of economic and financial convergence in the region
Development of local capital markets and long term local funding is a pre-condition for a fullswitch to local currency lending
No fix ban - but development of constructive solutions to strengthen local currency markets,based on countries specificities
Regulatory Initiatives
Tax on Banks
The introduction of a leverage ratio is also most probably not binding
The impact from new liquidity standards should instead be stronger:
for short-term liquidity requirement, few countries, namely BG, RO, SRB and SK,should be significantly impacted in case of serious financial distress due to therelatively shorter-term liability base
for LT structural liquidity standard, the impact looks milder supported by thegenerally high capital base. Few countries could be more affected, namely RO,BG and HU, due to particularly low availability of LT funding and shorter termloan maturity structure
Still, the CEE region might end up being indirectly affected in case of shortfall or toobinding constraints in terms of capital and funding (including limitations on optimal intra-group allocation) affecting international players active in CEE
European bank levy and coordination issue with local initiatives
Purpose of the tax, size of the tax and possible double taxation are sensitive matters
Hungarian case
The direct impact on CEE from Basel III to be clearly perceivable but ‘not a game changer’:
On the quality and level of capital not a dramatic impact:
CEE banks benefit from a stable oriented retail deposit base, low complexity of theasset structure in the context of high capital ratios and unused capital
relevance of preferred shares and hybrid instruments is limited
191919
AGENDA
CEE economic outlook: convergence model vs short term risks
CEE banking: an opportunity, with some rebalancing
2011 the year of (moderate) recovery
Changing competitive environment and regulatory risk
UniCredit in CEE
Conclusions
20
UniCredit is the Leading Player thanks to its Unique Franchise with aFull Coverage
The leading player in the region, #1 by assets, branches and net profit
Strong market positioning:
6.4% market share in total assets, 6.1% in revenues as of Sep10
Leadership in AUM (~12 bn), Credit Cards (~8 mln), and leasing (~2 bn new business in 2009)
(1) Ranking by total assets as of Sep10 (CZ, RO and Baltics as of Dec09); Branches and FTEs at 100% as of Sep10; Deposits market share as ofSeptember 10 (Poland as of June 10)
Serbia, #6813 employees72 branches
Presence also in:Kyrgyzstan & Azerbaijan
Czech Rep., #41,626 employees69 branches
Hungary, #71,982 employees135 branches
Slovenia, #4505 employees25 branches
Croatia, #14,789 employees146 branches
Slovakia, #51,286 employees87 branches
Bosnia, #21,869 employees148 branches
Baltics, #7- #10200 employees7 branches
Russia, #83,634 employees123 branches
Ukraine, #57,964 employees506 branches
Romania, #62,967 employees253 branches
Bulgaria, #13,835 employees243 branches
Kazakhstan, #54,340employees146 branches
Turkey, #616,441 employees889 branches
Poland’s Markets, #220,270 employees1,030 branches
5.7%
6.9%
25.8%
3.2%
22.1%
5.2%
12.5%
5.2%
0.8%- 1.5%
1.7%
5.6%
4.0%
15.0%
8.3%
7.1%
Serbia, #6813 employees72 branches
Presence also in:Kyrgyzstan & Azerbaijan
Czech Rep., #41,626 employees69 branches
Hungary, #71,982 employees135 branches
Slovenia, #4505 employees25 branches
Croatia, #14,789 employees146 branches
Slovakia, #51,286 employees87 branches
Bosnia, #21,869 employees148 branches
Baltics, #7- #10200 employees7 branches
Russia, #83,634 employees123 branches
Ukraine, #57,964 employees506 branches
Romania, #62,967 employees253 branches
Bulgaria, #13,835 employees243 branches
Kazakhstan, #54,340employees146 branches
Turkey, #616,441 employees889 branches
Poland’s Markets, #220,270 employees1,030 branches# 1 Franchise in CEE
~76 bn depositsfrom customers
~3,860 branches
~72,000 employees
Within top 5 in 11Countries(1)
Serbia, #4865 employees73 branches
Presence also in:Kyrgyzstan & Azerbaijan
Czech Rep., #41,718 employees68 branches
Hungary, #71,951 employees135 branches
Slovenia, #5527 employees25 branches
Croatia, #14,778 employees143 branches
Slovakia, #51,252 employees85 branches
Bosnia, #11,838 employees140 branches
Baltics, #7-#10204 employees7 branches
Russia, #93,632 employees115 branches
Ukraine(2), #57,540 employees499 branches
Romania, #63,030 employees246 branches
Bulgaria, #13,784 employees225 branches
Kazakhstan, #53,848 employees167 branches
Turkey(3), #516,500 employees915 branches
Poland’, #219,863 employees1,018 branches
5.9%
6.8%
25.4%
2.5%
23.1%
4.9%
13.7%
6.4%
0.8%- 1.5%0.8%- 1.5%
1.4%
5.0%
4.1%
14.7%
8.8%
7.8%
% Deposits mkt share
(3) Including 41 branches in Kyrgyzstan
(2) Including 7 branches in Azerbaijan
Overview
Ranking, Employees and Branches by Country(1)
21
Revenues(Eur 4.8 bn)
Profit before Tax(1)
(Eur 1.4 bn)Deposits from Customers &Securities in issue (Eur 78.9 bn)
Revenues and PBT Loans and Deposits
Loans to Customers(Eur 83.2 bn)
(CEE as % of Total UniCredit – 9M10)
CEE is a key pillar of UniCredit’s diversified and balanced business model
~25% of revenues, ~15% of loans to customers, ~13% of deposits from customers
Strong contribution to UniCredit profitability
Balanced loans / deposits structure: Loans/Deposits ratio at ~1.1x as of Sep10
23%
51%
CEE is a Key Driver for Group Profitability
(1) Poland included at 100%; excluding minorities would be 52%. In calculating the ratio, corporate centers cost are not rebated over CEE countries
24%
56%
15% 13%
Overview
(CEE as % of Total UniCredit – 9M10)
22
CEE Strategy: Key Messages
Higher Capital Allocation in the Region
Country portfolio managed to Capture Higher Growth Opportunities
Room to growth in Retail, leveraging on branch expansion andmultichannel
CIB/CEE cooperation to maximize business opportunities
23
More Capital Allocation to Exploit UniCredit Engine for Growth
(1) Italy, Germany, Austria(2) Excluding Kazakhstan
2010 2015
UniCredit Profitability Ratio
51%
Group RWAs - CEE as % of Total UniCredit
UniCredit’s commitment to the region fully confirmed
Even under the current environment, CEE risk/return in 2010 (bottom of the cycle) is stillabove Western Europe in 2007 (top of the cycle)
CEE weight to be gradually increased to exploit growth opportunities
5.0%
1.7%
0.9%
6.9%
2.3%
1.5%
REV/RWAs PBT/RWAs NOPAT/RWAs
WE 2007 CEE 2010(1) (2)
CEE CEE
24
Lead
ing
Low market attractiveness High market attractivenessMedium market attractiveness
Mid
-siz
ed
Su
b-s
cale
UC
GC
OM
PE
TIT
IVE
PO
SIT
ION
ING
Mapping UniCredit presence in high growth markets(1)
Banking sector gross profit 2015ESize € 2bn
POLAND
TURKEY
RUSSIA
CROATIABULGARIA
CZECHREPUBLIC
HUNGARY
ROMANIA
SLOVAKIA
BOSNIA
SERBIA
SLOVENIA
UKRAINE
ESTONIA
LATVIA
LITHUANIA
KAZAKHSTAN
Country Portfolio Managed to Capture Higher Growth Opportunities
(1) Market Attractiveness is an index ranked between 0 (low) and 100 (high), obtained by considering volumes growth (50% weight) andrisk-adj revenues over volumes (50% weight).Competitive positioning based on UniCredit raking by total assets as of Sept10. Leading: ranking #1-4; mid-sized: ranking #5-8; sub-scale: ranking #<8
Source: UniCredit CEE Strategic Analysis
25
300 300
120
180
Turkey Romania Hungary OtherCountries
Retail: Branch Expansion and Multi-channel Banking
Loans and Deposits/GDP, 2009
70.2%
44.3%
EMU - 16 CEE - 17
Number of branches per 1 mln inhabitants(3)
569
236
508482
Italy Germany Austria CEE
New opening: ~900 branches(1 ) mainly in
Countries where we have a proven track
record in branch opening
Source: UniCredit CEE Strategic Analysis(1) Not included the optimization network process of ~ 100 branches in overlap or misplaced(2) Mainly Russia, Bulgaria and Serbia(3) 2008 figures for Italy, Germany and Austria; 2009 figures for CEE (2008 Slovenia, 1H09 Croatia)
Banking Penetration: Still room for growth Network Development Plan
Retail
Corporate
117.6%
45.1%
In combination with physical Network widening
Reduce cost to serve
Increase customer satisfaction/retention
Reach a widespread coverage
Multi-channel Banking
(2)
26
Corporate & Investment Banking: Leveraging on Group’sProduct Lines Product Capabilities
CIB Product Lines
Financing &Advisory
Markets
GlobalTransaction
Banking
Leasing
Selected Recent Achievements
UniCredit’s Product Factories Will Enable to Fully Capture BusinessOpportunities in the CEE Region
Best Overall Bank for Cash Management in CEE 2010 (Global Finance)
Best Trade Bank in Eastern Europe (Trade Finance)
Best Sub-Custodian Bank in CEE 2010 (Global Finance)
Best Equity House CEE 2010
Best Overall EMEA Research 2009
Best Investment Bank CEE 2009
M&A CEE (excl. Russia and Turkey):
#1 by Volume of deals (2005-1H 2010) (Dialogic)
Top 3 positions in 11 CEE countries(1)
“Best Banking & Finance Online Application - Czech Republic,2010” Internet Effectiveness Awards (IEA)
(1) Austria, Bosnia & Herzegovina, Bulgaria, Croatia, Czech Republic, Hungary, Italy, Latvia, Romania, Serbia, Slovakia, Turkey and Ukraine
27
Two Landmark Transactions Emphasize the Potential of theCooperation CEE/CIB
Lukoil
USD 2,380,000,000Structured Equity
Transaction
ArrangerRussia – Sep 2010
Lukoil
USD 2,380,000,000Structured Equity
Transaction
ArrangerRussia – Sep 2010
High profile transaction, showing our ability to develop strong
cooperation among central CIB product expertise and CEE
local coverage, in order to perfectly meet customer’s needs
Clearly one of the most important Strategic Equity
transactions globally this year …
… proving UniCredit’s superior skills in those transactions
especially when they require coordination and effectiveness
amongst different offices
UniCredit’s played the Role of Coordinator and Mandated
Lead Arranger
Strong knowledge and long lasting relationship with the
client were key drivers of the success of the deal
Excellent coordination between Syndication, Corporate
Structured Finance and local teams enabled a timely closing
Agrokor
EUR 352.000.000
Syndicated TermLoanLoan
Croatia - July 2010
282828
AGENDA
CEE economic outlook: convergence model vs short term risks
CEE banking: an opportunity, with some rebalancing
2011 the year of recovery
Changing competitive environment and regulatory risk
UniCredit in CEE
Conclusions
29
CONCLUSIONS
The CEE convergence model holds
CEE banking holds as an opportunity, based on remaining financial convergence
potential. A new and more balanced banking model is emerging
2011 is the year of recovery of banking activities, but this is a pattern of moderate
recovery, with still focus on efficiency and risk control
The competitive environment is changing, with opening opportunities for re-
positioning and some newcomers. Regulatory risk is increasing, with the main
threat being limitations to the cross-border banking model which was the base of
financial convergence so far
UniCredit strongly committed to CEE, which remains the market for growth.
UniCredit is well positioned to take the upside, having enough capital, liquidity, risk
appetite and good franchise