Best OVERALL Bank
OTP
For the bigger non-resident players trying to ramp up their market share in central and eastern European banking, Hungary's OTP is a force to be reckoned with. One of the few remaining domestically-owned financial institutions in the region, it emerges as a final bastion against the all but total domination by foreign banks.
OTP dominates Hungary's retail market and deploys some of the most advanced information technology services on offer. Three out of every four electronic banking transactions in Hungary will pass through OTP, the first bank in Hungary to offer internet banking services.
The bank also has bold plans for international expansion. With total assets of $16.7 billion, OTP is by far Hungary's biggest bank, accounting for a quarter of the country's banking system. The bank's share price has shot up 500% since privatization, and it now holds about 36% of Hungary's retail deposits.
OTP also retains top spot in the municipal lending market and has a strong position in corporate lending. The group is expanding its asset management, household finance and SME lending activities, with a special focus on residential mortgage lending, in which it boasts a majority share of the Hungarian market. Its project and trade finance teams also rank among the best in the region. OTP hopes to maintain and to improve its efficiency cost-to-income ratio through continued strong income growth.
Chairman: Sandor Csanyi
Total assets: $16,664 million
Return on equity: 31.08%
Credit ratings: A2 (Moody's)
BEST INVESTMENT BANK
MDM Financial Group
Investment banking is one of MDM Financial Group's core activities. The bank is a market leader in domestic underwriting, and its strengths in corporate finance and capital markets services for its clients continue to place it ahead of its peers, as it
pursues its strategy of targeting the mid-cap corporate market.
Last year the group was reshuffled to place more emphasis on fee-earning investment banking activities, even as its fixed income and equity research divisions continued expanding. Total gains on fixed income and equity securities came to $154.3 million in the first half of last year.
The bank has maintained its lead in domestic bond underwriting and has enjoyed phenomenal success in the international bond markets. Last year, it opted for a $75 million re-opening of its debut eurobond issue, making it, at $200 million, the largest outstanding issue for a privately owned Russian banking group.
Then the group launched its short-term debt issuance programme with a $50 million, one-year issue, so becoming Russia's first bank to place paper under a programme since 1998. MDM followed up this landmark programme with the completion of a successful $50 million syndicated loan.
Overall, the bank is very well capitalized, with the ratio of shareholder's equity to total assets at 16.7%, and a tier one capital ratio of 18.4% – desirable ratios, according to Moody's, especially in light of Russia's potentially volatile operating environment.
Chairman: Andrey Saveliev
Total assets: $3,590 million
Return on equity: 46.6%
Credit ratings: Ba2 (Moody's); B+ (Fitch)
Best TRADE FINANCE BANK
Kazkommertsbank
Kazkommertsbank (KKB) is the largest privately owned bank in central Asia as well as one of the region's best. Its strength in trade finance lies with commodities, including oil and agricultural goods.
Its most impressive deal of the past year was an $85 million pre-export finance for Kazakhstan's Food Contract Corporation (FCC). The lead-arrangers of the loan were KKB and France's Societe Generale Corporate and Investment Bank. The FCC loan represented a milestone in Kazakh economic history, as it was the largest ever loan to the country's agricultural sector.
In addition to breaking new ground in the trade finance arena, KKB leads the way in providing banking services to large and medium-sized corporations in all sectors of the Kazakh economy. Its commercial banking business primarily consists of corporate banking, trade and project finance, personal banking, debit and credit card services, and foreign currency trading. It is also a leading participant in the securities market and the foreign currency market in the country.
Intense international operations have brought Kazkommertsbank in line with international standards of transparency and efficiency and have made it the most profitable financial institution in the country. Its net profit under international accounting standards exceeded $50 million in 2002, contributing some 26% of the profit made by the entire banking sector.
The Kazakh economy is growing by about 10% a year, which has helped the republic's largest bank grow its asset base and its profitability.
KKB is expanding into the retail market, once the province of the old state savings bank but now a fiercely competitive arena. The bank is also stepping off home turf for the first time, most significantly by setting up Moskommertsbank in Moscow.
Chairman: Nina Zhussupova
Total assets: $3,011 million
Return on equity: 18.2%
Credit ratings: Ba1 (Moody's); BB- (S&P); BB (Fitch)
Best PROJECT FINANCE BANK
OTP
When it comes to project finance, OTP boasts expertise and capacity that place it in a rank above its regional peers. The figures speak for themselves: the overall value of its project finance and special deals has risen immensely over the past two years – at growth rates of well over 50% a year.
Much of its business comes from infrastructure projects, such as transport and
electricity, although it has also backed construction and other projects. The volume of signed contracts jumped to Ft188.9 billion ($919 million) from Ft112.7 billion.
Infrastructure financing with private sector funds in Hungary has been a notoriously fraught enterprise, after the country experienced one of Europe's most disastrous toll-road financings several years ago. But OTP has helped shatter this image. The bank recently co-arranged and lead managed the E205 million refinancing of the M5 toll road.
The bank's main strength lies in the power sector. Last year, OTP came in as lead arranger on the TVK project and raised debt of E40 million on the back of strong corporate backing from the contractors, a consortium comprising Alstom Power (Sweden) and Transelektro. The deal featured an
additional E1 million revolving working
capital facility.
The bank also lead arranged last year's E33 million financing for the Pecs Power plant in south-western Hungary. It will be the largest biomass power-generating block in the country.
Chairman: Sandor Csanyi
Total assets: $16,664 million
Return on equity: 31.08%
Credit ratings: A2 (Moody's)