The New Year brought a change in the order in the banking sector with the formal completion of the takeover of Komercijalna Banka by the Slovenian NLB Group.
The largest bank in Serbia in terms of balance sheet assets remained Intesa with a share of 15.2 percent (according to the balance sheets at the end of the third quarter of 2020), while now the second group is controlled by the Hungarian OTP Bank, which consists of OTP Bank (former Societe Generale) and Vojvodjanska banka with a share of about 13.5 percent.
With the acquisition worth 394.7 million euros for 83.23 percent of state shares, the NLB group came in third, within which NLB Belgrade and NLB Komercijalna banka operate with a market share of 12 percent.
Unicredit Bank dropped from second to fourth place with a share of 11.3 percent.
As of September 30, 2020, Komercijalna banka had assets of almost 3.9 billion euros, and its buyer NLB banka Beograd around 715 million euros.
Komercijalna’s results in 2020 are slightly weaker than in the previous year, so in the first nine months, net operating income amounted to 105 million euros compared to 132 million euros from the same period in 2019, and profit before taxes 37 million euros compared to 59 million euros in 2019.
In any case, 2020 was marked by the corona pandemic and the recession that followed it, which certainly affected the banks as well.
In 2019, the bank recorded a historically record profit of 75 million euros.
That Komercijalna banka is a capital acquisition for NLB is also shown by the fact that the total net profit of the entire NLB group amounted to 193.6 million euros last year, of which about 83 million were subsidiaries from the countries of the former Yugoslavia.
This is also shown by the fact that the group, including the head office and six subsidiaries of banks, had 1.8 million clients and 318 branches, while Komercijalna banka brings 800,000 retail clients and a network of 203 branches into the group.
The bank also operates in Bosnia and Herzegovina and Montenegro.
Perhaps the most valuable thing that NLB received with Komercijalna is a 3.3 billion euro deposit.
The takeover of Komercijalna Banka will mean major changes for the state bank so far, with all the burden of efficiency that such a status carries.
Although there are no explicit announcements of rationalization, the statement of Blaz Brodnjak, President of the Executive Board of the NLB Group and now a member of the Management Board of NLB Komercijalna Banka, speaks in that direction.
“We are committed to creating a modern, digitalized and efficient bank and to becoming the leading bank on the Serbian market by 2025.”
It is to be expected that 2,744 employees, as many as Komercijalna had at the end of 2019, will not remain in the digitalized and efficient bank.
At the moment, there are 26 banks operating on the market, but soon that number will be reduced to 24 when OTP and Vojvodjanska and NLB and Komercijalna banka are fully integrated.
However, that is probably not the end of consolidation in the banking sector either.
Record low interest rates on the one hand and strong competition on the other will, according to experts, contribute to further enlargement.
Veroljub Dugalic, professor at the Faculty of Economics in Kragujevac and former general secretary of the Association of Serbian Banks, points out that the process of concentration is inevitable and that new acquisitions and mergers await us.
“It is a process imposed by competition and it brings concentration of capital. These larger banks have the power to introduce new technologies and new products and are more resilient to crises and shocks. That is good for clients because of new technologies, but the negative side is the narrowing of the space for competition,” notes Dugalic.
For the clients of Komercijalna banka, at least in the beginning, nothing changes. The obligations they had remain, and their deposits are equally protected as when Komercijalna was a state bank.
“If they get new services, greater professionalism and efficiency, then the takeover made sense,” Dugalic estimates.
At the end of last year, state-owned banks had a share in the banking sector of 16.8 percent, and that mainly referred to Komercijalna.
Now, about six percent of the market share remains in the hands of the state, primarily through the Postal Savings Bank and the negligibly small Srpska and Mts banks.
Dugalic points out that the state’s exit from the banking sector is a good thing in principle.
“In principle, private owners are more efficient and successful. Reducing state participation can contribute to a better banking sector,” Dugalic points out, reminding that at the time of the banking sector reform in the early 2000s, the state was oriented towards the privatization of banks while keeping one or two banks in state hands.
“At that time, we thought that Komercijalna should be bought by some of the leading European banks, we hoped that it could be the American City Bank, although they said that we were a small market for them,” our interlocutor reminds.
As for the state, it did what it promised, sold the largest bank in its ownership and contributed 395 million euros to the budget.
However, previously in 2019, it paid 260.8 million euros for 40.13 percent of shares that belonged to the EBRD, IFC, Swedenfund and DEG funds.
At the price that NLB paid for Komercijalna, the state received 190 million euros for that 40 percent, which means that the loss based on the transaction with the funds that entered Komercijalna in 2009 amounted to around 70 million euros, Danas reports.
