By Georgi Georgiev
Q: How did market developments in your core markets in 2010 affect the pace and format of restructuring at the group?
A: The whole banking sector and the economy in general faced tough market conditions in Southeast Europe (SEE). In the banking sector, a shortage of liquidity and a significant increase in risk provisions have been only two of several indicators. Despite this difficult environment in our core markets Slovenia, Croatia, Serbia, Bosnia and Herzegovina and Montenegro, our group managed to increase its customer base and deposits. Adapting to the new challenges, Hypo Alpe Adria continues to work on the permanent improvement of its products, services and processes. The new management which took over in April 2010 is implementing a new strategy to transform Hypo into a smaller, more efficient and even more customeroriented bank. We are in a good shape to reach our ambitious goals but of course this is a continuous process.
Q: Could you provide an update on your intentions to start the sale process for your domestic and Italian units in 2011 and on plans to follow those up with the disposal of the group’s business in former Yugoslavia?
A: We started a formal sale process for our businesses in Italy and Austria by inviting expressions of interest. The sale is part of our new strategy which will restructure Hypo as a network bank for SEE with a holding in Klagenfurt. Our current owner, the Republic of Austria, is only a temporary owner and it is obliged under EU law to re-privatise the bank within the next few years. The strategy, which is currently also being discussed with the European Commission, is based on four pillars: sale of the units in Austria and Italy, strengthening of the SEE network and shut-down of all non-core units and activities. A combined SEE network will have clear advantages, for instance, in areas such as funding, procurement and IT over the separate units.
Q: Earlier this year, the group said it expects to break even in 2011. Are you sticking to this forecast and what is the role of your units in SEE in hitting this target?
A: By implementing our new strategy and strengthening our customer-centric efforts, we see good chances to break even in 2011 and to record sound profits in 2012. This would depend not only on our hard work, but also on the wider macroeconomic environment. However, despite considerable challenges we have encouraging signals from our banks that we will be able to meet our targets.
Q: How is the turnaround story unfolding in your SEE markets this year? Are you seeing any pockets of strong recovery and, conversely, countries where return to growth is still uneven?
A: We do see a slight recovery in all our SEE countries after a severe slump in 2009 and 2010 following the global financial crisis. Despite this difficult environment we were able to increase the number of our customers to 1.1 million and we also increased significantly retail deposits in all our countries and also in the business sectors corporate and public finance. Also in the leasing business, developments have been encouraging. However, the recovery remains fragile and uneven throughout the region. For Croatia we expect a boost from the coming EU accession as the preparations will lead to additional investment and also increase the country’s attractiveness to foreign investors.
Q: In what shape is the capital base of your SEE units? Do you expect any of them to be recapitalised over the near to medium term?
A: Our holding in Klagenfurt ensures that all entities fulfil the regulatory capital and liquidity requirements.
Q: What product categories do you expect to set the pace for your revenue growth in the SEE region in 2011 and over the medium term?
A: It is our strategy to strengthen our retail business in all countries by offering best-in-class products and conditions to our customers. We will also further develop our products and services in corporate and public finance as well as in the leasing sector. Another important goal is to use our cross-selling potential and to become a “life-cycle service provider” for our customers.