Hard times ahead for smaller banks

Smaller banks on the local market have begun experiencing difficulties, due to more expensive financing from international markets, with significant impact on their profitability.

Analysts expect consolidation on this segment, as some shareholders will prefer to exit the Romanian market, or lenders to focus on clear niches.

"On a market such as Romania's, one has to have a reasonable share to cover for costs and be successful. Certain banks on the second and third market segments [Ed. n. small and medium-sized banks] start to experience difficulties, because the market becomes consolidated, and large banks have better abilities and faster growth than small banks," McKinsey Romania's Managing Partner, Andrei Caramitru, told Business Standard. McKinsey is the top global player on the strategic consulting market.

It is not likely that very large foreign banks will come to Romania, he added, because of high investments and significant risks. "Naturally, we should see a consolidation, especially on the third segment of the market. However, many of the small banks are owned by foreign lenders with very high aspirations on the market," Caramitru added.

Business Standard