In Israel, Leumi is one of the biggest groups, but on the Romanian market it chose to acquire a small bank. Now, the Israeli bank is injecting large amounts of money in its domestic subsidiary, whose name it changed into Bank Leumi Romania as early as last year. By yearend, another 30m-dollar capital increase operation will be carried out, so the bank's capital will be around 250m RON (75m euros) in December.
"The growth driver will be retail and SMEs, a segment that generates the best profitability," explained Manfred Rauchwerger, senior deputy general manager of the bank, in an interview with ZF.
In the first year after it took over Eurom, Leumi reorganised its processes and refurbished its subsidiaries to bring them in line with Leumi's corporate image.
In 2007, five branches are scheduled to be opened, so that the network should reach 40 branches by December. Another 18 branches will be opened next year. Network reorganisation also included the sale of some buildings, considered too large, and the relocation of branches to smaller spaces.
The sale of retail space will free up significant resources to be used to finance the bank's growth, besides resources obtained from customers and capital injections by the group.
"Our strategy envisages 150 branches by 2012," says Rauchwerger. The Israeli bank relies on experience and service quality to stand out on the market. As a matter of fact, most bankers speak about the need to improve services as interest rates have fallen so low that standing out through prices has become difficult.
Still, Leumi is also banking on price policy to gain more customers.
Bank Leumi in mid-2007 had assets worth 718m RON (229m euros) and loans worth 135m euros. "We are doubling our assets in 2007. In 2008, we're hoping for even bigger growth, considering we're starting from a low base. In five years, we see ourselves much bigger, we want to become a player that would bother major players," says Rauchwerger.
Israeli customers hold an important weight in the bank's portfolio, but this is set to decrease, says Rauchwerger. On the medium term, SMEs should come to generate 40% of Leumi's turnover, with 30% to come from individual customers. Real estate financing will generate 20% of turnover, while major companies and the Israeli customer desk will have a smaller contribution.
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