World’s Best Banks 2012: Europe

By Thomas Clouse, Jonathan Gregson, Antonio Guerrero & Gordon Platt


Europe’s banks are being pulled in two directions. Governments want them to lend more, especially to small- and medium-size enterprises, while European and national regulators require them to strengthen their capital ratios so as to be more resilient to both current market volatility and future shocks. Banks have generally responded to these challenges by putting aside more of their operational income, reining in their loan book or selling off noncore business lines.

It is not just the regulators that are focusing on banks’ balance sheets, and particularly key capital and liquidity ratios that have to be met as part of the transition to Basel III. Investors are swift to applaud banks that take a prudent approach to provisioning and writing down bad loans, while those mainly state-owned or regional banks that have been slow to mark down impaired loans and investments have soon found their own stock, in turn, marked down.

While the European Central Bank succeeded in averting a credit crunch last fall by offering banks cheap long-term funding, interbank lending is still weak, and trust in counterparties a rare commodity.

Then there is the interaction between periodic eurozone sovereign debt crises and the mainly domestic banks that hold so much of what were once thought to be risk-free assets. Part of the ECB’s reasoning for flooding the market with liquidity was that banks that took it up, they presumed, would then buy the bonds of the troubled peripherals, thereby pushing down yields to more sustainable levels.

But, insofar as banks have heeded that call, the purchases they have made could be creating problems for the future. So, given the eurozone’s ongoing crises, it is no surprise that all of this year’s regional winners are either focused on non-eurozone Europe or draw much of their revenues from yet farther afield. The criterion for choosing the World’s Best Banks has shifted from operational success, though that still underpins future growth, to capital strength. For, although growth is undoubtedly good, in the new environment it is safety that comes first.



In difficult times it helps to be a global player, especially if historically you are a European bank. With more than half of its revenues coming from Latin America and a good portion from non-eurozone countries like the United Kingdom and Poland, Santander is able to bolster required regulatory ratios through a combination of retained earnings from abroad and asset sales in more buoyant European markets.

On that basis it plans not only to meet the European Banking Authority’s minimum 9% core Tier 1 capital ratio but also to exceed it by nearly 1%. And despite an adverse economic scenario across most of Europe, Santander is still making strategic acquisitions in its 10 core markets—witness its 2011 purchases of SEB’s retail banking business in Germany and Poland’s Bank Zachodni WBK—while more recently it raised its stake to 76% in the merger of Zachodni and Kredyt Bank. The overall group 2011 operating profit came to €24.4 billion ($32.5 billion).

“The challenges facing banks in mature markets are well known: low demand for loans, economies under pressure, low-interest-rate environments and high cost of liquidity. We believe, however, that the leading banks in these markets have a great opportunity to create value in the medium term”

– Alfredo Sáenz, Santander

Net interest income was up 5.5%, net fee income rose 7.6%, and net operating income (before provisions) was 2.2% higher. “This reflects the good commercial performance of our businesses, our geographic diversification and also underlines our strong potential to generate future results,” Alfredo Sáenz, CEO of Santander, says.

“The challenges facing banks in mature markets—and for Banco Santander that means mainly Western Europe and the United Kingdom—are well known: low demand for loans, economies under pressure, low-interest-rate environments and high cost of liquidity,” he says. “We believe, however, that the leading banks in these markets have a great opportunity to create value in the medium term: to recover attractive profitability, gain market share and become large generators of capital.”

Alfredo Sáenz, CEO /



RZB/Raiffeisen Bank International

RZB produced pre-tax profits of €877 million for the first half of 2011, representing a 60.5% improvement year-on-year. This was the first time that the Austrian bank, which is squarely focused on large corporate clients, has reported under the new group structure that shifted operational responsibilities to Raiffeisen Bank International.

“We have been putting great emphasis on providing innovative and highly customer-focused products to Austria’s top 1,000 companies for years,” says Karl Sevelda, deputy chairman of RBI’s managing board responsible for corporate banking, RBI. “And that focus has allowed our activities in Austria to again make a significant contribution to RBI’s overall solid results in 2011.”

The domestic bank’s operating income rose slightly to €1.2 billion in spite of the negative impact of the Austrian government bringing in financial levies on the country’s banks, and it was able to reduce its provisioning for loan impairment by 32% to €411 million.

Management continued to work through nonperforming loans, bringing the total down to below €668 million, resulting in a modest improvement in the bank’s NPL ratio to 84%. RZB’s CEO, Walther Rothensteiner, stated that the bank had “excellent strategic orientation, with strong capital providing a solid base,” adding that the new group structure is working out well and supporting its business activities in Austria as well as Central and Eastern Europe.

Walther Rothensteiner, CEO /




Not only is KBC one of Belgium’s leading banks—strongly focused on providing bancassurance products and services to its retail customers and SMEs—it is also a pan-European banking group with a particularly strong presence in Central Europe. So while its core banking activities generally performed well earlier on in 2011, financial instability and further economic slowdown later on meant that it was obliged to cram a series of loan loss provisions into the final quarter. These included an initial haircut on its holdings in Greek sovereign bonds, a loan loss provision of €228 million on its Irish operations and a one-off charge relating to Hungary’s financial difficulties. As a result, underlying profits of €1.1 billion were reduced to a net result pre-tax of €13 million.

And yet behind those stark figures there is a sound operational performance. Net interest income was sustained by a higher loan volume in Belgium. Cost control improved. And having loaded on the provisions for losses, including those involved in cutting back on its exposure to Southern European peripherals by 30% in just three months, the bank’s core Tier 1 capital adequacy ended the year at a respectable 12.3%.

Jan Vanhevel, group CEO /



Bank Of Cyprus

The Bank of Cyprus met its profitability targets for 2011, excluding the impairment of Greek government bonds, despite the continuing negative macroeconomic environment in its main markets, and with no clarity on when those conditions might change.

“The Bank of Cyprus is committed to its strategic priorities of maintaining organic profitability and healthy liquidity, of strengthening its capital and of effectively managing its risks”

– Yiannis Kyprio, Bank of Cyprus

Pre-tax profits before provisions and the impairment charges came in at €805 million, an increase of 11% on 2010’s figures. In response to higher regulatory capital requirements, the banking group is implementing a capital strengthening plan which, upon completion, should reveal a pro-forma core Tier 1 capital ratio of 9.1% and Tier 1 ratio of 10.5%, while its conservative and well-diversified business model is helping it to meet customer and shareholder expectations.

“The Bank of Cyprus is committed,” says deputy group CEO Yiannis Kyprio, “to its strategic priorities of maintaining organic profitability and healthy liquidity, of strengthening its capital and of effectively managing its risks. As result, it is in a strong position to face the challenges in the main European markets in which it operates and to continue to deliver value to its stakeholders.”

Andreas Eliades group CEO /



Confédération Nationale du Crédit Mutuel

Given that France’s biggest three banks are widely considered to have some of the highest exposures to peripheral European debt, Crédit Mutuel is seen as a safe option by its clients. And since its ownership is essentially that of a mutual bank, nearly three-quarters of them also have a financial stake in its success.

In terms of safety, the bank maintained a core Tier 1 capital ratio of 11.2% at year-end 2011 while its nonperforming loans dropped by 2.1%, compared with the preceding quarter. Most of its revenues are generated by comparatively low-risk retail operations and loans to small businesses and start-ups, and the bank continues to grow that business with loan volumes up 4.8% overall. Total assets grew by 2.3%, but the combination of lower interest margins and a prudent increase in provisions hit the bank’s bottom line with pre-tax profits down by 20% in the final quarter.

Chairman Michael Lucas stated that “in today’s uncertain environment, the group has continued to work alongside its retail, professional and business customers. Thanks to robust commercial development, it has consolidated its position across all networks, in France and abroad, helping to drive the real economy.”

Michael Lucas, chairman /



Deutsche Bank

It’s all change at the top in Deutsche Bank, with CEO Josef Ackermann leaving after a decade of trying to transform it from being a domestic lender, run along traditional consensus lines, to becoming a global banking group. He succeeded: Two-thirds of revenues now come from outside Germany, and investment banking contributes to profits in most of those markets.

That change is likely to accelerate after he is replaced by co-CEOs Anshu Jain and Jürgen Fitschen in June, though this raises the question of whether this is the right time to expand higher-risk-weighted investment activities, especially given the tougher line being taken by regulators. Deutsche continues to build up its dependable retail businesses to provide a solid revenue stream that can counterbalance potentially more profitable investment banking.

It also loaded a host of write-downs and impairment charges into the final quarter, resulting in a €351 million loss but leaving a cleaner slate for the incoming management team. Pre-tax profits for the year 2011 were €5.4 billion, generating sharply lower ROE of 9.8%; total assets expanded to €2.2 trillion, and the impaired-loan-coverage ratio was 44% against 53% in 2010.

Josef Ackermann, CEO /



Alpha Bank

These are testing times for all Greek banks. The latest financial support package may have staved off a disorderly sovereign default, but Greek banks that are major bondholders have logged massive impairments, as a result of which Alpha Bank’s board is recommending a pullout from its proposed merger with Eurobank EFG, which, it says, is “affected disproportionately.”

But CEO Demetrios Mantzounis notes that despite a tough economic environment, Alpha Bank’s operating performance “remained intact in 2011 with our franchise continuing to deliver solid revenues from core banking activities.”

The bank materially improved its cost efficiency, with the cost-to-income ratio down by 240bps year-on-year to 48.1%, largely through cost reduction programs, operational reengineering and new projects to enhance efficiency and upgrade IT infrastructure. Continued deleveraging resulted in a near-stable core Tier 1 capital adequacy ratio of 10%. Alpha Bank has stayed afloat through a hurricane, but the seas remain stormy.

Demetrios Mantzounis, managing director and CEO /



Bank of Ireland

It will be a long haul for Ireland’s bailed-out banks, but the only one still in majority private ownership, Bank of Ireland, is in workout mode. And just as the Irish people have made greater progress in beginning to work their way out of austerity than other imperiled peripherals, so too has the Bank of Ireland.

Required capital adequacy ratios for 2011 were met, with most of the new funding coming from private investors. Divestments are well ahead of schedule. Wholesale funding was reduced by €19 billion, or 27%, and €4.2 billion of secured term funding raised. Overall costs were slashed by 8%. Pre-tax losses were trimmed to €190 million, compared with €950 million for 2010, while the underlying loss before tax in 2011 came in at €1.5 billion, compared with €3.5 billion for 2010.

Bank of Ireland is not out of the woods yet. Operating income has been reduced significantly as a result of lower interest rates, wholesale funding costs remain high, and there is intense competition for deposits in the Irish market. Impairment charges have peaked but remain elevated because of weak economic recovery, and there is still illiquidity and value uncertainty in Irish property markets.

Nonetheless, the bank has attracted €8 billion of deposits since last July, helping to reduce its loan-to-deposit ratio from 175% over the past year.

Richie Boucher, CEO /



Intesa Sanpaolo

Last autumn it seemed that Italy’s public debt was unsustainable and that it would need a bailout. The threat of contagion has now receded; Italian banks have been strengthening their capital bases, and none more so than the conservatively minded Intesa Sanpaolo, which raised its core Tier 1 ratio to 10.1%, even after maintaining its dividend.

Despite difficult conditions, the bank continued growing its business while cutting its cost base, resulting in a 5.9% improvement in operating margins. While operating income rose by 1.5%, pre-tax profit after conservative provisions came in at €2 billion, or nearly half of comparable figures for 2010.

The bank also decided to set aside a highly prudent €10.2 billion for goodwill impairment, though this does not impact on cash flow, liquidity or future profitability—in which improvements are being implemented through more-efficient liquidity allocation, higher value-added lending and strengthening risk management.

Enrico Cucchiani, CEO /



Banque et Caisse d’Epargne de l’Etat

With its 150-year-old pedigree and 70% local market penetration, BCEE is considered more of a national institution than an ordinary bank by Luxembourgers. Its strong capitalization and conservative approach to risk management have earned it high credit ratings.

“We are especially proud that BCEE passed the last two stress tests without the slightest problem, and that it could keep its solvency ratios at very high levels during the recent difficult times for the financial environment”

– Jean-Claude Finck, Banque et Caisse d’Epargne de l’Etat

“We are especially proud that BCEE passed the last two European stress tests without the slightest problem,” says CEO Jean-Claude Finck, “and that it could keep its solvency ratios at very high levels during the recent difficult times for the financial environment.” The bank’s loans to customers rose by 9.6%, banking income was up by 6.5%, and the net interest margin expanded by 11%, thanks to growth in loan volumes and the application of asset and liability management suited to prevailing money market conditions. Compared with 2010, net profit was slightly down at €112 million. The bank posted a higher return-on-equity.

Jean-Claude Finck, president and CEO /




The Netherlands’ economy has proved resilient through the ongoing eurozone crisis and has underpinned another strong performance by Rabobank. Net profits were broadly stable at €2.63 billion, deposit inflows increased faster than loan volumes, and at year-end the bank’s Tier 1 capital adequacy ratio had risen to 17.0% from 15.7% in 2010.

Group chairman Piet Moerland notes: “We managed to maintain or even expand our leading position in most of our key markets, and customer satisfaction ratings remained high. Our efforts to become the leading wholesale bank in the Netherlands paid off again in the form of an improved market position.”

Outside the Netherlands, Rabobank International continued to expand its retail branch network, while the share of food and agribusiness in its portfolio grew further. The sale of its 46% equity interest in the Swiss private bank Sarasin will, Moerland says, “leave Rabobank better positioned to focus on its strategic core business.”

Piet Moerland, group chairman /



Banco Santander Totta

The combination of mandatory austerity and deepening recession has not made life easy for either Portugal or for the country’s banking sector, which is going through a restructuring in order to meet European authorities’ targets on capital, liquidity and deleveraging.

The priority at Banco Santander Totta in 2011 was therefore to strengthen the balance sheet, and on this it has done well enough to remain ahead of other Portuguese banks in terms of solvency and credit quality. It raised its Tier 1 capital ratio to 11%.

Lending rose by 3.6% and the bank was able to attract 2.6% more deposits. The bank’s nonperforming-loan ratio was at 3.9%, well below the industry’s average. In retail banking it managed to gain market share by meeting customers’ savings needs in Portugal’s harsh new economic environment.

António José Sacadura Vieira Monteiro, CEO /




With the Spanish economy at best flatlining, more austerity on the way and the government wanting to increase banks’ coverage of dubious property loans to 50%, these are difficult times for the country’s banks. Santander set aside €3.2 billion of provisions in 2011, mainly to boost coverage of bad property loans, which now account for 5.5% of its domestic loan book as opposed to 4.2% in 2010.

The bank is actively shrinking its loan book in anticipation of worse to come. But over the medium term, CEO Alfredo Sáenz views the crisis as “offering the most solid banks opportunities to gain market share and improve their competitive position. We have a unique situation to gain an edge in Spain and Portugal, and we are going to exploit it.

“Management priorities are to adapt prices to the new environment, maintain firm control on costs and gain profitable market share from competitors immersed in processes of integration and restructuring,” he says. “Our objective in Spain and Portugal is to recover in the medium-term the level of profits we had in 2008.”

Alfredo Sáenz, CEO /



Credit Suisse

Credit Suisse is cutting back hard so as to meet regulatory requirements and changing market conditions. As CEO Brady Dougan put it: “In mid-2011 we decided to aggressively reduce risks and costs. This decision was rooted in our belief that the market and regulatory environment is undergoing fundamental change, and that by embracing these developments and proactively adjusting our business model, we can position Credit Suisse to succeed in the new environment.”

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“The market and regulatory environ-ment is undergoing fundamental change, and…by embracing these developments and proactively adjusting our business model, we can position Credit Suisse to succeed in the new environment”

– Brady Dougan, Credit Suisse


The bank is accelerating its CHF2 billion ($2.2 billion) risk reduction plan, and exiting businesses that are no longer expected to deliver attractive returns. Higher charges arising from implementing cost reduction programs resulted in a pre-tax loss of CHF981 million in the fourth quarter. For the whole of 2011, pre-tax income was down 60% at CHF 2.75 billion, while net revenue shrank by 16%, producing an underlying return on equity of 7.3%. The bank’s core Tier 1 ratio improved slightly to 10.7%. Dougan argues that taking the hit early will enable the bank “to reduce risk and deploy our balance sheet to our client-focused growth businesses, which offer attractive returns in the new environment.”

And the medicine seems to be working. “We are encouraged that our business is off to a good start,” Dougan adds, “with year-to-date underlying ROE consistent with our target level of 15%, including the benefit from our risk- and cost-reduction plans.” Indeed, the accelerated reduction of risk-weighted assets should hit year-end 2012 targets by the end of the first quarter. Credit Suisse is set to emerge from this mega-workout leaner and fitter.

Brady Dougan, CEO /




HSBC’s sheer size and its presence in so many geographically diverse markets have allowed it to plough through the financial crisis with greater ease than most. And although Asia and other high-growth markets now generate close to 75% of group profit, the bank remains UK-based at present.

Although its European operations saw a sharp drop in profitability in 2011, the UK bank was an exception with pre-tax profits up from £1.32 million ($2.1 million) to nearly £1.55 million. It did well to increase both customer accounts and volumes of loans advanced in a difficult market. Loan impairment charges and other credit risk provisions rose by 14% to $12.1 billion.

As with other parts of the bank there is further room for cost cutting, and the new group chief executive, Stuart Gulliver, is taking this in hand. Given that HSBC’s core Tier 1 capital adequacy ratio weakened from 10.5% to 10.1% over the year, further reduction of risk-weighted assets worldwide above the $50 billion of disposals already announced are in the cards.


Stuart Gulliver, group CEO /



Although it is a universal bank providing a full range of corporate and individual client services, SEB remains very much a merchant banking operation—both through its culture and its strong relationship focus on larger Scandinavian corporates.

During 2011 the bank’s merchant banking profile served it well, as did continuing economic progress across the Nordic region. Indeed, Scandinavian countries as a whole proved resilient to shocks emanating from Southern Europe, in that Norway and especially Sweden became considered safe havens by international investors, resulting in significant net inflows of capital.

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” During 2012 we will focus on maintaining our resilience and increasing cost efficiency, while continuing to work closely with our customers”

– Annika Falkengren, SEB


This in turn benefited regional banks, and none more so than SEB, whose regional operations posted markedly improved results against 2010. The group also undertook an important structural reorganization, with direct ownership of investment banking arms in Baltic countries transferred to the parent company so as to integrate all investment banking services within a single merchant banking division.

Commenting on the increased activity of business clients and improving asset quality, president and CEO Annika Falkengren said: “During 2012 we will focus on maintaining our resilience and increasing cost efficiency, while continuing to work closely with our customers.”

Annika Falkengren, president and CEO /



Danske Bank

Despite strong headwinds Danske Bank posted pre-tax profit of DKr4.2 billion ($0.8 billion) on total income of DKr43.4 billion, slightly lower than in 2010. Net interest income, lending levels and deposits remained broadly stable, but net profit came in below expectations. Loan impairment charges fell by 5%, and the bank raised its Tier 1 capital ratio from 14.8% to 16%, making it one of the EU’s best-capitalized banks. “The second half of 2011 was characterized by considerable financial turbulence and economic downturn,” said Peter Straarup, the recently retired chairman of the executive board. “Our results are therefore lower than expected at the beginning of the year. But we are pleased to see that groupwide measurements show that our customers are increasingly satisfied with our services.” Eivind Kolding has replaced Straarup as chairman.

Eivind Kolding, chairman /




Faced with volatile markets and regulatory challenges, Nordea maintained its upward trajectory in 2011 mainly through improved risk, liquidity and capital management. From total income growth of 6% the bank managed to increase operating profits by 28%, which is back to pre-crisis levels.

Total assets grew from €286 billion to close to €400 billion, though nearly half of these are held in derivatives. Thanks to active management, net loan losses were sharply down on previous years, while the bank’s resilience to any future shocks is attested by a Tier 1 capital ratio of 12.8%. Despite continuing to invest in cards and cash management technology, lower IT procurement and maintenance allowed the bank’s cost/income ratio to improve further.

In servicing its corporate clients, Nordea expanded on its traditional strengths in trade finance and foreign exchange into more-complex risk management products. And while improving its liquidity, the bank was nonetheless able to provide shareholders with a significantly higher return on equity of 9.6%, up from 7.7% the previous year.

Christian Clausen, president and CEO /




“2011 was a year of solid profits for DnB, with sound performance in our largest business areas,” observes group CEO Rune Bjerke. With steady growth recorded in pre-tax profits, deposits, loan volumes and total assets, he has some reason for satisfaction, although net interest margins were squeezed in a competitive market. The group reduced its cost/income ratio to 45.9%. Already a well-capitalized bank, DnB NOR further increased its Tier I capital ratio last year to 11.4%. “Both capital adequacy and the ratio of deposits to lending were strengthened throughout the year,” Bjerke observes, adding that “we achieved positive financial results while improving our customer satisfaction levels and corporate reputation.”

Rune Bjerke, group CEO /




With its 150-year tradition of being a “relationship bank,” SEB is about as blue-blooded as they come in Scandinavia. Although its retail and small business network serves some 4 million customers, it is really a wholesale bank, and what gives it an edge is its investment banking skills. It is market leader in foreign exchange for Scandinavian currencies, in prime brokerage and equity-related derivatives, as well as being a force in asset management and private banking. And more recently it has focused on providing risk management, financing and advisory services, including arranging bond issues, to corporate clients. All of which was reflected in its figures for 2011. Pre-tax profits were up 35%, and net profit by nearly twice that on assets and revenue growth of 8% and 2.5%, respectively. The bank reduced its cost/income ratio and managed to increase its return on assets by 67%, while investors saw return-on-equity rise to 11.89 from 8.89 in 2010. An improved core Tier 1 capital ratio of 11.25%, high asset quality and low levels of credit loss led to a credit rating upgrade to A+ by Standard & Poor’s during December. SEB’s combination of old-style relationship banking and investment-banking expertize seem to be a winning formula up North.

Annika Falkengren, CEO /


Raiffeisen Bank International

Raiffeisen Bank International has built up a strategic presence in no less than 15 CEE countries. Because it so focused on CEE markets, it was less exposed to problems elsewhere in Europe. As chief executive officer Herbert Stepic points out: “On account of our traditionally low level of engagement in the eurozone peripheral countries, our results were not directly impacted by developments in these markets.”

And while it had to make write-downs on its operations in Kazakhstan and Ukraine, elsewhere RBI banks performed well, with the volume of loans to customers up by nearly 8% to €82 billion while deposits rose by more than 15% to €67 billion. “These increased volumes show that we have an important role in extending loans to the economies in Austria and Central and Eastern Europe and provide proof that depositors focus on trust during times of crisis,” observes Stepic.

RBI was able to reduce its provisioning for impairment losses by nearly 11% while maintaining a core Tier 1 capital ratio of 9.3% at year-end.

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“The quality of our risk policies is underlined by the more than 10% decline in net provisioning for impairment losses”

– Herbert Stepic, RBI


“Thanks to the very good performance of some of our subsidiary banks,” says Stepic, “we were able to more than mitigate the poor business development of our bank in Hungary. The quality of our risk policies is underlined by the more than 10% decline in net provisioning for impairment losses.”

The fact that Raiffeisen Bank International posted a 6.7% increase in pre-tax profit, to €1.37 billion, and an 11% improvement in consolidated profit—after minority stakeholdings are taken into account—is testament, says Stepic, “to our group’s very solid performance in a challenging market environment and the sustainably high earning power of our broadly diversified business model.”

Herbert Stepic, CEO /



Raiffeisen Bank sh.a

Despite poor performance in Albania in terms of macroeconomics and the complicated political situation, Raiffeisen Bank sh.a had a good year in 2011, with a particularly strong performance in the corporate sector. It was the country’s overall market leader with 27.5% market share in terms of assets at the end of the third quarter, while gross income was the highest since Raiffeisen Bank International took over formerly state-owned Savings Bank in 2004. Outstanding assets grew by 16% in 2011. The bank attained market leadership in the credit card sector, with the number of credit cards in use increasing by 369%. CEO Christian Canacaris is optimistic about the future, saying “we had a great year in 2011, and I strongly believe that despite the varying challenges, our staff will help make 2012 a successful one as well. We will continue to be pioneers and to play a leading role in further improving Albania’s banking standards.”

Christian Canacaris, CEO /




Chief executive officer Sergey Kostyuchenko points out that “despite economic difficulties that the Belarusian economy faced in 2011 as the leading non-state-owned bank, Priorbank remained a profitable financial institution.” Although the banking sector in Belarus suffered during 2011 as a result of high inflation and a devaluation of the ruble, Priorbank was able to increase its capital by 75.9%—to BYR1673 billion ($202 million).

The bank focused on sound performance in its underlying businesses, including attracting more small and medium-size enterprises and microbusinesses through its unique asset protection scheme and a recently introduced preferential low-cost lending program which was extended in 2011 to further regions. SME lending increased by 31%.

Sergey Kostyuchenko, CEO and chairman of the management board /



Intesa Sanpaolo banka

Sanpaolo banka succeeded in putting in “a good performance despite the consequences of the financial crisis,” says CEO Almir KrkaliĆ. “The bank looks to increase its market share of credit financing and maintained strong control upon the worsening of its nonperforming portfolio.” The bank saw net income rise by half in the first 9 months of 2011 over the same period in 2010. Aiming to build on its market share of around 25%, KrkaliĆ pointed to “the further expansion and modernization of our ATM network and the installation of 554 new POS devices in 2011.”

Almir KrkaliĆ, CEO /



UniCredit Bulbank

Although its retail presence is not the largest in Bulgaria, UniCredit Bulbank’s sharp focus on corporate and investment banking, together with its leading position in private banking, have resulted in its being the largest bank by assets and by deposits. This performance, combined with improved risk and liquidity management, boosted 2011 pre-tax profits BGN251 million ($168 million)—up from BGN176 million in 2010. The bank’s rollout of new technologies continued with the introduction of mobile banking.

Levon Hampartzoumian, CEO /



Zagrebačka banka

Zagrebačka banka turned in a solid financial performance in 2011, with post-tax profit up 2.7% and operating revenues rising by 3.3%, compared with the previous year. ROE reached 8.85%, compared with a sector average of 6.7%, and assets increased by 8.2% compared with 2010.

Despite the complex macroeconomic environment and higher financing costs, the bank managed to retain its competitiveness, resulting in 7.9% loan growth. The bank’s cost-to-income ratio improved to 42.2%, and capital adequacy to 20.94% compared with 18.48% last year.

Its improved performance, says CEO Franjo Luković, “was the result of increased revenues from lending to corporate and public sectors, improved cost ratios and enhanced processes within the bank, while at the same time provisions for loans to both corporate and individual customers were increased due to current macroeconomic conditions in Croatia.”

Franjo Luković, CEO /



Československá Obchodní Banka

CSOB has proved its resilience amid global volatilities and produced another good performance, as the Czech economy emerged from the slowdown brought about by the financial crisis. During 2011 it increased its loan portfolio by 10%, gaining market share in its core sectors of corporate financing, leasing, mortgages and consumer finance. Pavel Kavánek, chief executive officer, points out that CSOB “is predominantly a retail bank for financing housing needs and investment products, with a traditionally strong position in SMEs and corporates.”

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“The impact of Greece aside, CSOB remains very liquid and enjoys a strong capital position with the consolidated capital adequacy ratio at 15.6%”

– Pavel Kavánek, CSOB


Among the bank’s key strengths, Kavánek says, are having the country’s widest distribution network, a multibrand approach tailored to different client segments and best-in-class risk management. In 2011 the bank generated the highest underlying profit in its history, but write-downs on Greek sovereign bonds resulted in a 17% contraction in net profit.

Nonetheless, the bank was able to halve its credit/cost ratio to 36 bps, the lowest among its peers. “The impact of Greece aside,” says Kavánek, “CSOB remains very liquid and enjoys a strong capital position with the consolidated capital adequacy ratio at 15.6%.”

Pavel Kavánek, CEO and chairman /




In 2011 the Estonian economy continued on a recovery course from its sharp post-crisis contraction, and Swedbank has clearly benefited from this. Pre-tax profits jumped to €189.5 million—more than double the previous year—and ROE hit 12.2%.

Enhanced risk and liquidity management helped bring the bank’s credit impairment rate down, largely due to the improving quality of the loan portfolio and clawbacks on some previous provisions. The bank trimmed its loan book by 7% and simultaneously strengthened its capital base.

Swedbank in Estonia also netted a return-on-allocated-equity of 28.8%. “We have fulfilled all the expectations for Swedbank as a universal bank,” says chief executive officer Priit Perens, “and made conscious steps in maintaining strong capitalization and efficiency.”

Priit Perens, CEO /



OTP Bank

Given that Hungary’s banks have had to cope with a weak economy, exchange rate volatility and extraordinary taxes on the financial sector, it is hardly surprising that OTP Bank continues to focus on strengthening its capital base. At the end of 2011 its capital adequacy ratio under Basel II had fallen to 17.2% and its core Tier 1 ratio, to 12.0%, while the stand-alone CAR of OTP Bank Hungary under Hungarian Accounting Standards is 17.9%, still well above the 8% regulatory minimum.

The bank has strengthened its liquidity buffer and managed an 8% reduction in its loan-to-deposit ratio. Group post-tax profit, when adjusted, came in at HUF161.4 billion ($700 million). However, after taking out the negative impacts of Hungary’s special tax on financial institutions and after taking into account losses accruing from the withdrawal of the Hungarian early repayment scheme and goodwill write-downs, it came to HUF83.8 billion. The contribution to group profits by OTP banks outside Hungary increased threefold.

Sándor Csányi, CEO /



ProCredit Bank Kosovo

Describing itself a “development-oriented, full-service bank,” ProCredit Bank has focused its lending policy on very small, small and medium-size businesses. The bank believes that these types of organization create the largest number of jobs within Kosovo, thereby boosting the country’s economy, which has held up comparatively well during the economic crisis. ProCredit’s approach is not to promote consumer loans but instead to create a savings culture and build long-term relationships with their customers through high standards of service.

As the first bank in post-war Kosovo, ProCredit has had good results on a regular basis since 2000. More recently, the bank says it accounts for 90% of all banking profits in the country and has managed to maintain a below-sector-average nonperforming loan ratio. One of its current areas of emphasis is on improvements in e-banking, and to that end it is in investing in advanced technology.

Philip Sigwart, CEO /



SEB Latvia

Since 2009, Latvia’s economy has recovered faster than anticipated, due in part to Latvian companies seeking new business opportunities outside the country’s traditional export markets, a trend that has benefited domestic manufacturing. As CEO Ainārs Ozols noted: “This positive development has had a direct effect on the results of SEB Group in Latvia.”

With the demand for loans increasing during the second half of the year, SEB continued to act as one of the country’s most important corporate lenders by issuing 28% more new loans, of which 90% were granted to companies and the remaining 10% to households. Ozols notes that demand was accelerating in the final quarter of 2011.

Over the year, SEB Group’s total loan portfolio grew by 11%, while clients’ deposits increased by a steady 2% over the year, and its dominant position in long-term savings held up well. The bank shaved 7% off its expenses, which played its part in a sharp rise of 11% in the group’s pre-tax profits. At year-end the bank’s liquidity ratio stood at nearly 47%. That statistic, together with a capital adequacy ratio that is just shy of 19%, underpins SEB’s reputation of solidity. This reputation has served it well in the Serbian market, and elsewhere.

Ainārs Ozols, CEO /



SEB Bankas

SEB Bankas Group managed to go from a net loss of €5.2 million in 2010 to a net profit of €136 million in 2011. Chief executive officer Raimondas Kvedaras attributes this improvement partly to the recovery of the Lithuanian economy and the stronger financial standing of its primarily corporate customers.

“By taking a responsible attitude in assessing business risk,” Kvedaras says, “SEB financed new business projects, issued loans to private individuals and offered new banking services that met up-to-date needs.” It made improvements to its delivery channels—upgrading mobile and Internet banking services and expanding its ATM network.

“By taking a responsible attitude in assessing business risk, SEB financed new business projects, issued loans to private individuals and offered new banking services that met up-to-date needs”

– Raimondas Kvedaras, SEB Bankas

For SEB a positive trend in net interest was the main driver of income growth, while higher customer activity boosted its commission income. Greater efficiencies combined with improvements in its loan portfolio, allowing a further drop in provisions for impaired loans, had the most impact on the bank’s operating result.

Raimondas Kvedaras, CEO /



Komercijalna Banka AD Skopje

Until the financial crisis Macedonia had benefited economically from its proximity to Greece. Many of its banks are Greek-owned. But these days it is severely affected by its neighbors’ problems, and some banks are struggli