0 Competitive Business Case MBA – March 2004 Delta Bank vs Panonska Bank
1 Index History Basis of Banks Parametars of Work Overview of Banking Sectors in Serbia Nomber of Banks in Serbia Players Rang Market Activites Balance Sheet Structure of Banks in Serbia Comparation with Banking Sector in Europe Potencial and Forecaste Near future Banks fokus SWOT Conclusion Sources Authors
2 History – –The Bank is part of Delta Holding and was established in 16/10/1991. – –Delta Bank is private bank –was established in 1974 year by state. Ownership of the Bank was socialistic social. –Since 1995, it has been operating as a joint-stock bank. –Now, the States stake is 83% of the Banks share capital. –The nomber of the Banks shareholders is 1 337.
3 Basis of Delta Bank MISSION VISION Strategy Activity Imputs Potential clients Vision: Basic directions will be development of retail banking, spreading of the net of branches, increasing clients both in domestic and foreign currency businesses, as well as, continuing the co-operation with leading European banks. Special attention was given to the developing of e-banking, as the basic of banking in the future. Imputs come from needs of 200 000 clients Strategy: I ncreasing of trust of clients in the long-term stability of the Bank by making public accurate information on its financial balance, especially on its solvency, liquidity and risk management. Activity: all banking transaction expected and wonted from clients Mission: D elta Banka is aiming to be a leader on the banking market in Serbia, applying the highest world standards in banking services.
4 Basis of Panonska Bank Business policy – –Achieve positive financial results by preserving the interests of shareholders and adequate provisions for risky loans – –Improve permanently market options – –Increase operational profitability, primarily by increasing efficiency and rational utilization of internal resources Business targets – –Increasing total and particularly dinar balance sheet real potentials, providing high quality (stable and reliable) deposits-savings sources for financing with the emphasis on the dynamic growth of deposits of SMEs, entrepreneurs and citizens, as well as of fixed long term deposits, – –Promoting credit activities particularly for financing SMEs and citizens, – –Improving the existing and introducing new banking products and services, – –Expanding business network and the Banks market share, – –Increasing number of clients and users of domestic payment operations services with the promotion of efficient Gold bases – –from 1997, gold is ground for savings ISO 9001 – –attested from RWTÜV
5 Parametars of work Delta Bank Panonska Bank balance sheet –dinars assets is more then 2.5 bill. dinars (36 mil. ) –assets in is 4.4 mil. –dinars liability is more then 3.5 bill. dinars (50 mil. ) –liability in is 3.4 mil. balance issu –total profit is near 300 mil. dinars (4.25 mil. ) –costs are 430 mil. dinars (more then 6 mil ) STATEMENT OF INCOME Year Ended December 31, 2003 (Thousands of dinars) INCOME FROM ORDINARY OPERATIONS1,695,832 BALANCE SHEET As of December 31, 2003 (Thousands of dinars) Property and equipment2,843,163 Total Assets43,937,824 LIABILITIES AND SHAREHOLDERS' EQUITY Total Liabilities37,298,665 Shareholders Equity Total Shareholders Equity6,639,159 Total Liabilities and Shareholders Equity43,937,824
6 Point of Start for CI Independent of history any bank, new age in Serbian economy and banking has started since political change on beginig of new millennium. It means that no one bank has a lot of advantages from self expeirance on new market environment. Many big States banks has been closed
7 Overview of Banking SectorinSerbia Overview of Banking Sector in Serbia Detailed analyses of the banks by NBS and 3 other advisors Classification of banks in 4 categories Enforcement of regulation Getting full control of majority state owned banks Imposing strict measures to preserve value Appointment of privatization advisors for selected banks Preparing work-out mechanism Liquidation of 19 smaller and 4 large banks Granting 5 Greenfield licenses Amendment of laws and related decisions Carrying out debt- equity swap Privatization Get real Change structure Pre-privatization 2001 - 20022003 - 2004 2002 - 2003
8 Criteria Financial standing Liquidity Systematic importance Political importance (number of employees, regional importance) Rehabilitation costs Capability of making profit Banks under enhanced supervision 83 Banks in Serbia Rehabilitation Liquidation / Bankruptcy Solvent banks Insolvent banks Number of banks as of Dec 31, 2000 No action Banks in administration NBS BRA 28 9 1 3 23 Mergers & Acquisitions 18 83 + 7 48 Number of banks today* New licenses issued in 2001 = Number of banks in Serbia since 2001 *Excluding Kosovo
9 Players VOJVOĐANSKA BANKA Privredna banka Beograd AD
10 Market Delta Banka is an universal commercial bank with Head Office in Belgrade and 160 branch offices in more than 100 towns from all Serbia. There is swiftness and amount of foreign currency payment operations, Delta Banka has made a fruitful cooperation with over 200.000 clients. Delta Banka has a well-developed co- operation with world leading banks. It has correspondent relations with 196 world banks, and in 35 it has Nostro accounts. Delta Banka has TENFORE real-time and on-line dealing system with Germany. The Bank is very active on the foreign currency inter-banking market (MTD) and it became a member of ACI - The Financial Market Association.
11 Market Headquarters of Panonska Bank is in Novi Sad The Bank has 21 branches end 19 offices in Vojvodina (nord Serbia and Belgrade)
12 Rang Participation of State: Komercijalna – 29.08% Vojvodjanska – 98.65% Ju-Bank – 76.49% Novosadska – 67.27% PB Agro Bank – 15.00% Panonska Bank – 82.91%
13 Foreign banks are still mainly focusing on their traditional business segment – –Collection of substantial deposits based on outstanding credibility – –Focus on selected majority foreign owned companies which entered – –The country via Greenfield investment or privatization deals – –Advisory services to the Privatization Agency – –Organic growth of business activities – –Trade related activities with only local financing Both, domestic and foreign banks dont have diversification in activites Activites of Players
14 Activites of Players Service range offered by the banks for the time being is a plain vanilla one… – –Currently Current and savings account related services: payments/transfers, short term deposits Credit-debit card – –still in early phase Loans – –mainly overdrafts and consumer loans, some car loans, mainly short term corporate loans Trade related activities: – –mainly L/C and guarantees no customer segmentation mainly one channel of communication simple products – –To come wider penetration of all the service standing orders medium and long term loans based on FFCS* as well foreign transfers Leasing mortgage loans
16 Activites of Delta Bank CONSUMER'S LOANS – –STUDENT'S LOANS FOR SCHOLARSHIP PAYMENT – –ARRANGEMENT CREDITS BASED ON THE CONTRACT ON BUSINESS CO-OPERATION Payment Cards – –Maestro – –Standard – –Gold – –Business – –Visa Electron – –Visa Classic – –Visa Gold – –ATM TERMINALS OF DELTA BANKA SAVINGS – –Domestic Currency Savings – –Foreign Currency Savings DOMESTIC & FOREIGN CURRENCY ACTIVITIES – –DOMESTIC & FOREIGN CURRENCY ACTIVITIES Cashing foreign cheques and international P/O International P/O – –Domestic Currency Activities Current Accounts Giro-accounts of citizens and undertakers SAFE-BOXES OF DELTA BANKA
17 Activites of Panonska Bank Panonska Bank deals with deposits, credits, and other banking activities in the country and abroad The scope of services offered by the Bank includes the following: – –All types of money deposits – –Loans and credits – –Foreign exchange transactions – –Issuing of shares and bonds and credit cards – –Money savings and transactions with securities – –Buying and selling of securities – –Issuing of certificates, guaranties, and avals – –Payment operations in the country and abroad – –Foreign loans
18 Activites of Panonska Bank The Bank also performs the following services: – –Brokerage activities – –Crediting and debiting operations – –Pay cards Visa Classic Visa Electron Dina card in arrangement – –VISA GOLD, – –VISA BUSINESS SILVER – –Other financial services – –Keeping of objects made of gold and other precious metals, jewellery and other valuables.
19 Corporate banking of Panonska Bank Short-term loans for: –Export financing –Export financing –Preparation of goods for export –Preparation of goods for export –Working assets –Buybacks and stocks of finished products and goods –Buybacks and stocks of finished products and goods –Current liquidity Medium-term and long–term loans for: –Fixed assets –Fixed assets –Permanent working assets –Permanent working assets –Housing loans and etc.
20 The Balance Sheet Structure of Serbian Banks 10.9 bn 4.8 bn Fixed assets Claims of FRY for FC savings Long term placements Short-term placements Cash Capital Long-term provisions Liabilities for frozen FC savings Long-term funds Short-term funds Sight-deposits ASSETSLIABILITIES 10.9 bn 4.8 bn 5.3bn *Excluding the 4 largest banks closed on January 3, 2002
21 Comparation with Banking Sector in Europe Banking assets per capita, 2001, in 000 Banking assets, 2001 In bn Banks' assets CAGR, 1997-2001
22 Expected Potential GDP per capita in USD Number of credit cards in 000 of customers Consumer loans per capita in Source:NBS
23Forecast Refering provisinal information, posible to see that Serbian banking is on good way, but still far awey from Europian and not near to banking of neighbourhood countries. Direction of development will be in substantial improvement of banking services: – –ATMs, – –POS, – –E-banking, – –credit/debt cards, – –consumer loans... But, the first job have to be privatisation
24 Near future Delta Bank – –Delta Bank is aiming to be a leader on the banking market in Serbia, applying the highest world standards in banking services. Basic directions of development include development of retail banking, further spreading of the net of branches, increasing the circle of depositors and clients both in domestic and foreign currency businesses, as well as, continuing the co-operation with leading European and world banks. Special attention was given to the developing of e-banking, as the basic of banking in the future. Panonska Bank –Increasing total and particularly dinar balance sheet real potentials, –The emphasis on the dynamic growth of deposits of small and middle enterprises, entrepreneurs and citizens, as well as of fixed long term deposits, –Promoting credit activities particularly for financing small and middle enterprises and citizens, –Improving the existing and introducing new banking products and services, –Expanding business network and the Banks market share, –Increasing number of clients and users of domestic payment operations services with the promotion of efficient
25 Banks Focus Panonska increase of year capital % lode potential % foreign currency savings % credit portfolio % card traffic % 2003/ 2002 153123152269110 2004/ 2003 130125145180130 2005/ 2004 120125140150 2006/ 2005 115130140100175 Delta increase of year capital % lode potential % foreign currency savings % credit portfolio % card traffic % 2003/ 2002 150200 150- 2004/ 2003 125175 150120 2005/ 2004 115150 140150 2006/ 2005 110125130135170
26 S W O T Delta Bank Panonska Bank Strengths Part of Delta Holding – group of developed companies Big network of offices correspondent relationships with more of 300 foreign banks Internet banking Permanent education of employees for savings longer then 1 year, gold is ground Weaknesses Brend depend of strengths of companies from Astra (BK) Group Small No of offices on market Doesnt have business in abroad Name link only for small area Opportunities Less big & strong states banks One of leaders domestic bank – our people believe to leaders level of compulsory reserves with National Bank of Serbia Good relationship with leading political structure Threats Entry of strong foreign banks Too large too manage Entry of strong foreign banks Recruitment of private banks
27 Conclusion Panonska Bank is one of tipical bank from socialism period. Today, this bank is still in good relationship with current political structur. During leading politics, the Bank will have good business, but can not say that has good future. Delta Bank is part of strong group of known companies. Has good image and can expected nice future. For presentation, we chose two of more important domestic banks because wed like to show totaly diferent approach to business.
29 Authors Zlatko Mitic, R&D Manager, Sintelon R&C - floor coverings producer Velibor Raicevic, Menager of publicly municipal enterprise Milica Radoicic, Proxy of manager in publicly municipal enterprise Vladimir Bjelovic, Manager of gas distribution enterprise Darko Medjedovic, Manager of local electro distribution Zoran Skuban Manager in Vital, food producer