Erste Bank, the majority shareholder of BCR, considers Societe Generale, the majority shareholder of BRD, the second biggest bank domestically, meant to challenge it through its aggressive expansion in 2006 and through its comments on competition in 2007.
"Societe Generale must be planning to challenge our leading position on the Romanian banking market. We are glad to be facing such a challenge because we love competition, we are also fighting in the Czech Republic and Societe Generale is a great rival," states Andreas Treichl, Erste Bank CEO.
BRD last year reached 600 branches, opening 274 new branches, while BCR added 101 branches to its network, for a total of 473.
Last month, while presenting the financial results of BRD-SocGen, the bank's chairman, Patrick Gelin, stated, "the main player on the market, BCR, will be probably undergoing dramatic restructuring in 2007," a reason why competition is not expected to get tighter this year.
"It was a smart move on the part of BRD to say this was a good time to take advantage of to gain market share from BCR, as we would be busy with our own problems. However, we had decided, as early as the end of last year, to step up the expansion of our territorial network, inclusively by boosting the number of new branches to be opened," stated Treichl during a meeting with analysts and investors discussing the Austrian group's 2006 financial results. Treichl considers BCR and BRD are by far the main players on the retail segment. At the end of 2006, according to the data sent to the NBR, BCR had a market share of 26.2% in terms of assets, half a percentage point higher than in 2005, while BRD managed to gain 1.3% of the market, achieving a share of 16.3%. BCR enjoys an overall comfortable lead, but competition on certain segments may put the leader at a disadvantage.
As a reaction to BRD's expansion, BCR will focus on cities with a population of 50,000-200,000 inhabitants, while further vying for the market of Bucharest and of the biggest cities. Treichl's personal priority list includes the modification of BCR employee remuneration-motivation system, so that they would be better motivated to sell. "We have no weak points compared with our competitors. We have products and services. It all depends on the ability of the managers to focus on two fronts in parallel - BCR integration and sales growth."
In a bid to strengthen its position on the retail segment, BCR is currently repositioning its fees and interests, with the process to end in 3-6 months. On the corporate segment, Treichl wants stable relationships with major clients, based on complex financial services.
BCR vs. BRD
BCR added 101 branches to its network, to 473 last year, while BRD reached 600 branches, opening 274 new branches
BCR held a market share of 26.2% in terms of assets at the end of last year, up half a percentage point against 2005, while BRD managed to add 1.3% to its market share, to 16.3%
BCR puts restructuring, modernisation and expansion costs at some 200m euros in 2007
BRD expects overall costs to rise this year as the branches opened in 2006 may become profitable in 2008
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