By Alain Nkontchou of Enko Capital Management
At less than 10 per cent of total domestic loans, the stock of African private sector corporate debt is still very low by any standard. If Africa is to sustain the promise of strong economic growth, lending to the private sector will need to increase substantially.
The reasons for such a low level of lending are well known. They include the lack of access to long term funding by the banks, the lack of centralised credit information, the difficulty for banks to exercise claims on collateral and, finally, the fact that most bank lending remains asset based. Read more
By Timothy Ash of Standard Bank
A new initiative by the government of Viktor Orban in Hungary appears to be “right-sizing” the country’s banking sector, boosting its efficiency and cost effectiveness as a means to kick start lending. The agenda also appears to be to promote the development of a domestically owned banking sector – 70 per cent domestic ownership is being targeted. To achieve this, state ownership is being promoted as a short term measure to help deliver on the longer term plan.
Reviewing this programme, the obvious question is, what are the Hungarian authorities trying to achieve? Read more
Investors should be extra careful about betting on South Korean banks, given the sector’s frequent internal strife and failures of risk management.
The latest case is Kookmin Bank, the country’s biggest consumer lender. The bank has come under increasing scrutiny after a series of scandals involving an internal power struggle among its top executives and allegations of leaked customer data, embezzlement and illegal loans. Read more
By Nicholas Watson of bne in Vienna
The hits on emerging Europe’s banks continue to come thick and fast as legacy problems from the 2008 crisis continue to dog the sector.
The latest example is Erste Group’s €930m loss in the first half of the year due to problems at its Romanian and Hungarian subsidiaries. Read more
Hungary’s government said on Thursday it had agreed a deal to buy MKB, one of the country’s largest commercial banks with more than 80 branches, from BayernLB, its German owner. The state will pay €55m for MKB and BayernLB will waive claims of €270m in receivables.
The deal marks what Mihaly Varga, Hungary’s economy minister, said was “the first step” in increasing Hungarian ownership of the country’s commercial banks. Viktor Orban, prime minister, has long insisted that he wants to see “at least” 50 per cent of the Hungarian banking system in domestic hands. Read more
Bulgaria’s under-fire central bank has turned to the European Central Bank to oversee the country’s financial system days after it announced that it would allow the country’s fourth-biggest lender to collapse.
Bulgaria’s banking system as a whole remains well-capitalised. But the Bulgarian National Bank’s decision to enter talks with the ECB about joining the joining the European Single Supervisory Mechanism (SSM), even though Bulgaria is not in the eurozone, is an admission of draining confidence in the country’s financial and political authorities. Read more
Bulgaria’s central bank issued a dramatically-worded statement on Friday warning of “an attempt to destabilise the state through an organised attack against Bulgarian banks” after the country saw its second bank run in a week.
While the banking sector as a whole is well-capitalised, the manner in which two major financial institutions have been hit raises serious concerns about the country and poses risks to its economy. Read more
The past five years have been a time of change for Nigeria’s banks but not all of it for the good. In a recent report on the sector, analysts at Ecobank Research, part of the pan-African banking group, say strategies being pursued by Nigerian banks are no longer sustainable and they must find a new growth story to boost thin lending margins and match the return on equity of their regional peers. Read more
By Avantika Chilkoti in Mumbai and Thomas Hale in London
Three major private banks have closed operations in India in recent months, as cultural and regulatory challenges derail groups initially drawn by growing wealth in Asia’s third largest economy.
An emerging market with a high savings rate, a collection of some of the world’s most flamboyant businessmen, and economic growth hovering around 5 per cent despite a sharp slowdown, India should be a gold mine for the private banking industry. Read more
China’s annual National People’s Congress (NPC) has started with an interesting focus on online funds.
Zhou Xiaochuan, governor of the People’s Bank of China, and two other central bank officials were cornered by Chinese journalists on the second day of the NPC after some delegates from the financial sector urged stricter supervision of the online funds. Read more
China’s traditional banking sector is leading a counter-attack against the runaway success of online funds launched by internet companies such as Alibaba.
The China Banking Association, with 362 member banks, says deposits made in the funds should not be regulated in the same way as deposits by financial institutions, as at present, but as regular deposits, Chinese media have reported. Read more
Rumours have been rife in Vilnius for months that PKO BP, Poland’s state-owned bank, the country’s biggest, is preparing an entry into Lithuania’s banking sector.
Should we take the rumours seriously? Read more
South Africa’s banks, notably its “big four” of FNB, Nedbank, Standard Bank and Absa, are some of Africa’s strongest financial institutions. But they aren’t immune to the main problems hurting the economy.
So what effect will Wednesday’s surprise interest rate hike have? Read more
You can bring a horse to water. But can you stop it from drinking (too much)? In the upcoming year of the horse, China’s leaders need to figure out exactly that, as its local governments thirst for debt threatens to derail the economy. Will they succeed?
Liu Mingkang, former chairman of China’s Banking Regulatory Commission (pictured), left no doubt about the government’s intention to stop the flood of lending: “The signal is clear cut,” he told beyondbrics in an exclusive interview. “The torrent [of local government debt] is becoming quite limited.” Read more
Something strange is happening in Kazakhstan. Over 12 per cent of consumer loans are non-performing and yet the banks are dishing out more consumer credit than ever.
Lending increased 37 per cent between July 2011 and November last year. It was over four times greater in November 2013 than at the beginning of 2006. Read more
The 12th in our series of guest posts on the outlook for 2014 is by Saurabh Mukherjea and Ritika Mankar Mukherjee of Ambit Capital
In the stockbroking profession, the norm is to view a country through the lens of economic growth and political management. So a lot of effort is currently being expended on analysing when India’s economy will recover, who will win this year’s general elections and what the victorious candidate will do for the country. While such analysis is interesting to perform and sometimes stimulating to read, its ultimate impact on share prices is tenuous at best. Read more
With Nicolás Maduro, president of Venezuela, engaged in an “economic offensive” against what he calls “capitalist parasites”, it may come as a surprise to hear that Banesco, the country’s biggest private-sector bank, has seen off some muscular competition to take control of Spain’s nationalised NCG Banco in a €1bn deal.
An encouraging sign of the vigour of Venezuela’s banking sector, perhaps? Or evidence that Venezuelan banks must hunt overseas for healthy operating environments? Read more
Africa is at the forefront of bringing financial services to the “unbanked” and new opportunities to seasoned investors. In Monday’s FT special report on Africa Banking and Finance, our correspondents examine the continent’s enormous potential and challenges, writes Justin Cash.
Africa editor Javier Blas looks at the growth of sharia-compliant investments across the continent, whilst Anousha Sakoui assesses bright new prospects for M&A activity. Read more
Slovenia is no longer the Switzerland of Eastern Europe – but perhaps not the Cyprus or Ireland, either.
Slovenia’s government is confident that it can now dodge the bullet of an international bailout, announcing on Thursday that it would be able to cover a whopping €3bn recapitalisation of its troubled banks from its own resources, despite that sum totalling nearly 10 per cent of GDP. While the announcement has been made with a palpable sense of relief in the tiny eurozone country, questions remain about implementation – and whether the absence of international pressure will allow Slovenia to stall on much-needed reforms. Read more
What keeps foreign banks in India up at night? Regulatory nightmares, at least according to a new survey out on Wednesday from consultants PwC. And while recently-appointed RBI governor Raghuram Rajan is trying to calm their nerves, there are big concerns lurking about the impact of India’s forthcoming elections too. Read more