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CEE Banking M&A Study

Multiple factors to further boost consolidation

About the study

Leveraging on the success of our NPL study which provides an overview on non-performing loan markets in 12 countries across CEE and the Baltics, we decided to introduce a new study on banking M&A dynamics with the same geographical scope, covering Poland, Czech Republic, Slovakia, Hungary, Romania, Slovenia, Croatia, Bulgaria, Serbia as well as Estonia, Latvia and Lithuania.

Recent performance of the banking industry in the CEE and Baltics has been reassuring with stable capital adequacy-, decreasing NPL metrics and improving profitability. These positive dynamics were backed by stable economic expansion, improving labour market conditions and intense lending activity.

Besides digital transformation, another prevailing trend in the regional banking sector is the consolidation of the banking market, driven by non-core exits on the sell side and acquisitive growth on the buy side to increase economies of scale and realize synergies. Multiple banking sectors in the region are overbanked with a fragmented market structure and a number of banks with low market shares. Deloitte expects these dynamics to drive further consolidation in the CEE banking market.

CEE Banking M&A Study 2018

Key findings

  • Capital adequacy was solid in 2017 across the 12 countries, having an average capital adequacy ratio of 21%.
  • Asset quality improved considerably owing to balance sheet clean-up measures and improving financial position of households and corporations. Average NPL ratio stood at 6.1% in 2017, 1.5 percentage point lower than in 2016 and close to pre-crisis levels.
  • Profitablity remained stable in 2017, however average ROE of 10% is still below pre-crisis levels. Banking profits were supported by release of former impairment stocks in multiple countries.
  • Banking markets in most of the analysed countries are moderately concentrated, thus concentration is expected to increase further, in line with consolidation. 
  • M&A activity in CEE banking markets peaked in 2015 with 19 completed deals, and has been decreasing since then. In 2018 there were 2 completed and 6 ongoing deals as of September 2018, while 2017 saw 12 completed deals.
  • The decreasing number of transactions was a result of vivid lending activity, dismantling of non-performing exposure volumes and profitability improvements, which postponed the imminent need for mergers and acquisitions in the banking sector in the short term. However, in the mid and long term efficiency deriving from healthy economies of scale is expected to become an even more vital factor in the cut throat competition, therefore banks with 1-2% market share might not be able to compete successfully and deliver satisfying returns to shareholders. The CEE banking sector has a number of banks with such size.
  • The busiest banking M&A markets in terms of number of transactions were Poland (8 transactions), Hungary (8), Serbia (7) and Romania (6) between 2015 and September 2018.
  • The most active buyer in the region was the Hungarian OTP Bank (5 transactions), while the second most active buyer was the Polish state, having made 4 acquisitions since 2015 via PZU and Alior Bank.
  • The most active sellers were Raiffeisen (4 transactions) and the Greek banks, with Piraeus Bank, National Bank of Greece, Alpha Bank and Eurobank together selling 7 banks between 2015 and 2018 September.

For further information please visit our Transactions site

Having insight on a number of banking deals recently across CEE, we perceive banking dealmakers` willingness to do deals both on the sell and buy sides. Both sellers and buyers of recent deals have their established rationale, which motivating factors are expected to even strengthen in the years to come, resulting in a stable deal flow in CEE banking M&A.


- Balázs Bíró, Partner, Regional Financial Services Industry Leader, Financial Advisory

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