Analysts predict tougher competition

THE BANKING sector has gone through a significant reform that indicates a standard working banking sector. Behind almost all the banks (apart from Poštová banka) operating in Slovakia, there are strong foreign partners who manage and regulate the activities of the banking houses. A strategic partner has provided most banks with not only vital capital but also essential know-how, which helps the banks to further progress. Today we witness harsh competition on the market, while services that banks offer progress speedily, especially in the case of the biggest banks. Creating new products is not that difficult for the banks, because these are mostly products of their mother companies that are adapted to Slovak conditions.

Slovenská ratingová agentúra (Slovak rating agency)
Michal Džačovský, analyst

THE BANKING sector has gone through a significant reform that indicates a standard working banking sector. Behind almost all the banks (apart from Poštová banka) operating in Slovakia, there are strong foreign partners who manage and regulate the activities of the banking houses. A strategic partner has provided most banks with not only vital capital but also essential know-how, which helps the banks to further progress. Today we witness harsh competition on the market, while services that banks offer progress speedily, especially in the case of the biggest banks. Creating new products is not that difficult for the banks, because these are mostly products of their mother companies that are adapted to Slovak conditions.

However, the competition will grow even tougher once the Slovak citizens have a chance to deposit their savings abroad (it should be effective as of January 2004) and with respect to the free accession of foreign banks on the Slovak market.


M.E.S.A. 10 (think tank)
Marek Jakoby, analyst

THE BANKING sector in Slovakia is in good condition today, especially in the sense of having a significantly healthier portfolio. The fact that renowned strategic financial institutions are in banks' owner structures is positive.

On the other hand, it appears that banks have been far too cautious in active operations, including granting credit, which is the reason why the banks' finances are not accessible for business clients, even in cases in which they have prepared a number of vital projects with solid guarantees.

The result of the low loan exposure of banks is a big liquidity surplus that has to be sterilised by the central bank. The additional negative effect of the unwillingness of banks to take an acceptable business risk is that they resort to increasing transaction fees to make money. In spite of their often large profits, it is an interesting fact that banks pay a minimum corporate income tax.


Slávia Capital (financial consulting company)
Pavol Ondriska, analyst

THANKS to a massive cleaning of the bank credit portfolio, we can today consider the banking sector healthy and therefore creating one of the conditions of sustainable economic growth.

We can say that in recent years, the number of banks has decreased, but due to privatisation, their profitability and international relationships have strengthened.

After the increased competition that will be brought with the accession to the European Union, it is possible to expect a new wave of mergers as global players will buy regional banks operating in the territories of several states.

At the same time, their interconnection with different financial services, especially within insurance agencies, should become stronger. In Slovakia so far, we have missed banks that provide investment-banking services fitted to individual client needs.

After achieving better transparency in the economic and legal environment, banks will direct their attention more at small and medium-sized businesses. Households provide an example of vast growth potential, particularly in the form of mortgage loans.

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