World’s Best Private Banks 2022: Central And Eastern Europe

Like all regions, Central and Eastern Europe (CEE) had a torrid 2020 and 2021, with Covid-19 wreaking havoc on health, confidence and incomes. Many of the countries that come under our CEE umbrella—in which Global Finance includes Turkey, Russia and the three South Caucasian countries—suffered among the world’s worst outcomes in terms of infection, hospitalization and death. Despite this, private banks across the region showed resilience and, in many cases, considerable and continuing growth.

Assets under management (AUM) in most countries have shown a marked rise, as has the number of high-net-worth individuals who use private banks, suggesting the region’s nascent middle class continues to grow alongside the much wealthier oligarchical class of ultrahigh-net-worth individuals. Capturing these new opportunities has helped drive innovation within the banks while they also prioritize sustainable investing.

Getting information from private clients about their activities is notoriously difficult and is made more so by the structure of private banking in CEE. Large Western banks—including Erste Bank, Raiffeisen Bank International (RBI), Santander, SEB Bank and UniCredit—dominate, and are often the only game in town for those in smaller markets. However, these banks do not separate their CEE private banking activities from the parent’s private banking activities or that of the whole bank. Nonetheless, the CEE market continues to grow. The latest data from the European Bank of Reconstruction and Development suggests GDP across its coverage area expanded 6.3% in the first half of 2021, which could benefit the private banks and their AUM.

The continued strength of Western European-based banks across CEE makes the success of the OTP Bank Group more remarkable. The bank started life in 1949 as Hungary’s state-owned national savings bank. It is now active in private banking across 11 CEE countries, with some 73,000 customers and approximately 15 branches. Offering a full and still expanding range of services, it is a market leader in Hungary (with a 37% share of the private banking market), Slovenia and Bulgaria; a significant player in Romania, Russia and Croatia; and an active competitor in Albania and Moldova.

All this has been shown in impressive financial results, with private banking revenue up 7.2% in 2020, the first year of the pandemic, to reach a record 19.4 billion Hungarian forints ($65.4 million) and a return on equity of 13%. In addition, the bank’s launch across the region of its new private client integration model, dubbed OTP Global Markets, should help consolidate OTP’s impressive performance.

With almost all CEE private banks looking to make sustainability a core part of their investment strategy as clients increasingly also make this a priority, UniCredit stands out from peers in its sustainability commitments, many of which the bank is now putting into practice. A core part of this is its social impact banking (SIB), which identifies projects the bank deems to have the most positive social impact and then promotes them to private bank clients. UniCredit unveiled SIB in Italy in 2017 and has rolled it out in 10 other markets across CEE, Germany and Austria. It has included additional environmental, social and governance initiatives since its launch. Among these is the bank’s 2020-2023 Long-Term Incentive Plan, which embeds sustainability key performance indicators into UniCredit’s strategy and prioritizes investment in green bonds and other low-carbon projects.

Private banks used the pandemic as an opportunity to speed innovation and digitalization in several areas to reduce the transmission risk associated with face-to-face transactions. RBI, with a network across 13 CEE countries—its Friedrich Wilhelm Raiffeisen brand in operation in seven of these markets, and Tatra Banka dominating private banking in Slovakia—had already put innovation at the heart of its private banking strategy. Among its many innovations are the introduction of metal debit cards that have a range of services attached; and its award-winning Financial Advisory Tool, which provides the latest financial advice to clients, enabling them to follow what the bank calls a holistic investment strategy.

Meanwhile, in Slovakia, Tatra Banka followed its earlier introduction of voice-based and face-based biometric capabilities with a virtual banker, chatbot Adam. Tatra’s Viamo app allows payments to a telephone number regardless of the recipient’s bank. The bank’s Elevator Lab, one of the largest fintech partnership operations of its kind, allows RBI and its partners to identify the latest and most appropriate fintech offerings that meet their clients’ current and future needs.