A process of Internationalization towards Eastern Europe

The banking group’s history dates back to 1473, when Rolo Banca was created. Anyhow, the contemporary history of UniCredit begins in 1998 from a merger of nine leading Italian banks which led to the establishment of UniCredito Italiano.

With the acquisition, the following year, of the Polish Bank Pekao, the Group started its expansion into Central and Eastern Europe (CEE). Growth continued over the next few years with purchase of the Pioneer Investments group, the subsequent formation of Pioneer Global Asset Management, and then further strategic acquisitions gradually carried out in Bulgaria, Slovakia, Croatia, Romania, the Czech Republic and Turkey. Meanwhile, the subsequent integration with the German HVB Group in 2005, reinforced by its own merger in 2000 with Bank Austria Creditanstalt (strongly represented in many areas of Central and Eastern Europe), created an important basis for further strengthening its European focus. On the other hand, by merging in 2007 with Capitalia, the third-largest Italian banking group, UniCredit further consolidated its position also in Italy.

Therefore, as of today UniCredit is a leading European commercial bank with an international network spanning 50 markets, with more than 9,300 branches and over 156,000 employees. Our Group operates with local Banks in 20 European countries, thus confirming its position as a market leader in the CEE with a strong European identity, as well as extensive international presence.

Indeed, by initiating its internationalization process towards Eastern Europe more than a decade ago, UniCredit has not only greatly benefitted from the process of EU integration of the former-communist Europe, but it has also contributed and somehow accelerated it, by anticipating the process of economic and social convergence of Eastern European countries towards Western standards. On the other hand, joining the EU has brought stability and growth prospects to many of the new members of the CEE, and has certainly contributed to foreign investors’ decisions to establish a presence in those countries.

UniCredit’s results held up well in 2012 in spite of a persistently difficult global economic climate. The Group Net Profit in 2012 was equal to € 865 million; the Revenues reached € 25 billion (+0.1% Y/Y) and the Operating Costs consisted in  € 15 billion (-2.9% Y/Y). Unicredit has a very  strong capital position, with a Core Tier I ratio at 10.84 per cent, under Basel 2.5 and a CET 1 ratio of 9.2% under Basel 3, which make our Group very solid by International standards.

These positive financial statements figures, allow Unicredit to face quite optimistically the current and the coming  years, which will be likely characterized by a challenging macroeconomic environment. 

Successful management actions, in particular disciplined cost control, focused management of Risk Weighted Assets and a streamlined business organization, position Unicredit well for 2013.

We have during these years strengthened our presence spanning from the EU members of Central and Eastern Europe, to potential EU candidates in the Western Balkans, as well as to Russia and Turkey, thus becoming a valuable long term investor in this area. In this scenario we are also convinced of Azerbaijan appeal considering its remarkable growth performance over 2006-2012, its government finances and its per capita GDP increase: from $11.300 in 2008 to 13.300 in 2012 which is quite very high for a transition country. We are present in Azerbaijan through Yapi Kredi.

Yapi Kredi Azerbaijan, a commercial universal bank, was established in December 1998 (as “Kocbank Azerbaijan”). It started operations in January 2000 via 1 branch and, as of end of 2012, it has increased its presence to 12 branches, 20 ATMs, with 82,093 customers. 

Despite the international crisis, it is worth noting that sector wide total banking assets and lending in Central and Eastern Europe (CEE) increased since September 2008, even though at a milder pace than pre-crisis. Banks are placing more focus on domestic funding sources, while keeping an adequate level of capitalization. Foreign players have an important role in the CEE banking system. They are acting more on the liability side, reshaping the funding sources – increasing the level of domestic stable funding – rather than on the asset side.

Obviously, in some cases, western banks had to rationalize their investments in the CEE region and in the former-USSR countries, focusing on the more strategic countries. UniCredit, for example, has decided the disposal of the Kazakh ATF Bank and the centralization in Latvia of all the operations carried out Baltic States (Estonia, Latvia and Lithuania). But, at the same time, additional investments are planned in selected strategic markets (e.g. Russia and Turkey). As a matter of fact, Central and Eastern Europe remains a key region for the Group’s profitability and growth and one of the pillars of UniCredit’s strategy.