British banks conspicuously absent from local market

Given the size of the British banking industry, its less-than-modest presence in Romania is at least surprising. Whereas London is the headquarters of many international operations in this particular field, Bucharest has so far attracted noticeably few players from the UK.

Following the EU accession, dozens of British banking industries have notified the NBR (Romanian Central Bank) on their plans to provide services on the local market. However, the unfavourable international context and the relative sedimentation of the Romanian market might stand in the way of a British "descent", at least for the following period.

Perhaps because of the market's lack of maturity and, probably, also because of the current international trends, banks from the United Kingdom have looked for expansion opportunities beyond Central and Eastern Europe. Their interests mainly lie in the Middle East and the Far East, especially in India and China, countries to which they are historically connected.

In the meantime, the CEE market has considerably grown, due to Austrian, Greek, Italian and French investors. In the following period, however, transactions between banking giants may revolve around supremacy in the region, with direct effects in Romania, as well.

"The Romanian market is slightly saturated, which means that the arrival of British banks will be the result of acquisitions, rather than direct actions," feels Mihai Radoi, managing director with Anglo-Romanian Bank Limited, a British entity entirely held by BCR / Erste.
International circumstances support this hypothesis.

Last October, a consortium led by Royal Bank of Scotland bought Dutch group ABN Amro for the historic amount of 101 billion US dollars. Among other consequences, the deal triggered the entrance of the British bank on the Romanian market, as it will take over the operations of ABN Amro Romania in the first half of the year.
In its turn, HSBC, Europe's largest bank in terms of assets, might be interested in the Eastern European operations of Société Générale.

In early February, analysts from Merrill Lynch and Citigroup suggested that the British group might be an interesting candidate for SocGen. (After the record fraud that befell the French group early this year, a possible sale has been speculated upon).However, transactions may be selective in the following period, following the hits taken by the financial sector in the past few months.

"The lack of confidence generated by the so-called credit crunch in the United States is making things rather difficult," says Mihai Radoi. "The Fed's panic regarding monetary policy, scandals such as SocGen, the unprofessional way in which the Bank of England and the British Government have handled the Northern Rock episode, which still drags on, and especially what is happening on the London interbank market - which has upset many banks and cast a shadow upon London as a top financial centre - all of these factors push any investment in Romania further down the list of priorities for the time being."

Last year, almost 30 players from Great Britain and Ireland notified the NBR on plans to provide products and services in Romania. The list includes names such as JP Morgan International Bank, JP Morgan Europe, Citibank International, Royal Bank of Scotland, Rathbone Investment Management, Goldman Sachs International Bank, ICICI Bank UK, Credit Suisse International, Firepay UK, UBS Limited, Newcastle Building Society, Morgan Stanley Bank, Bank of London, Anglo Irishbank, Rabobank Ireland, The Bank and Company of Bank of Scotland.

"There are many things that a British bank could bring to Romania," Radoi feels. "I don't know whether the local market is ready for these things, as it is almost entirely focused on lending. There are not many mergers and acquisitions, bond issues or other instruments. Personal banking and corporate finance are not widely used yet."
But all of these will develop in time, believes Radoi, and then the expertise of London-based banks (not necessarily British) can be essential. Moreover, there are many young Romanian bankers learning the trade in London.

"They will have so much to bring back here. If they come back, and many probably will because remuneration packages are competitive, they will bring expertise and experience."
And Rădoi is not only speaking about professional know-how.

"More importantly, they can bring attitudes, mind frames from the general educational area. It's the common sense, things that often are not learned, but 'sensed' after years of exposure to another culture and other methods of education and perception of the collective mind and of the financial-banking side."

City of London - the historical centre that is the core of the British capital. Today it is considered a city within a city, as it has its own regulations (including its own police corps) and a population of 7,000. It is also known as the Square Mile, as it spans on an area of exactly one square mile (2,6 square kilometres). For a long time, the City was the financial heart of the United Kingdom. Today, more than 300,000 people work here. The City is home to the London Stock Exchange and the Bank of England.

Canary Wharf - London's alternative financial centre, which was developed in the eastern area of the city (Docklands) in the '80s. It is home to the Financial Services Authority and to many financial institutions (Barclays Bank, Bank of America, Citigroup, HSBC, etc.).

Cumulatively, the City and Canary Wharf include more than 500 banks, most of the offices coordinating international operations at the highest level.

Anglo-Romanian Bank - part of the BCR group, the bank was registered in London in 1973 and has a capital of 105 million euros. Its annual net income revolves around ten million euros and the balance amounts to some 500 million euros. With subsidiaries in Frankfurt, Bucharest, Timosoara, Sibiu and Constanta, the bank mainly works with corporate clients.

articol scris de Ana-Maria GAVRILA -