11

Competitive Business CaseCompetitive Business Case

MBA – March 2004MBA – March 2004Delta Bank vs Panonska Bank

22

IndexIndexHistoryBasis of BanksParametars of WorkOverview of Banking Sectors in SerbiaNomber of Banks in SerbiaPlayersRangMarketActivitesBalance Sheet Structure of Banks in SerbiaComparation with Banking Sector in EuropePotencial and ForecasteNear futureBanks’ fokusSWOTConclusionSourcesAuthors

33

HistoryHistory

– 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 State’s stake is 83% of the Bank’s share capital.

– The nomber of the Bank’s shareholders is 1 337.

44

Basis of Basis of DeltaDelta Bank Bank

MISMISSSIONIONMISMISSSIONION

VISIONVISION

StrategyStrategy

ActivityActivity

ImputsImputs

Potential clientsPotential 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: Increasing 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: Delta Banka is aiming to be a leader on the banking market in Serbia, applying the highest world standards in banking services. 

55

Basis of Panonska BankBasis of Panonska BankBusiness policyBusiness 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 targetsBusiness 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 Bank’s market share, – Increasing number of clients and users of domestic payment operations services with the

promotion of efficient Gold basesGold bases– from 1997, gold is ground for savings

ISO 9001ISO 9001– attested from RWTÜV

66

Parametars of workParametars of workDeltaDelta BBankank Panonska BankPanonska Bank

balance sheetbalance 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 issubalance issu– total profit is near 300 mil.

dinars (4.25 mil. €)– costs are 430 mil. dinars

(more then 6 mil €)

STATEMENT OF INCOMESTATEMENT OF INCOME  

Year Ended December 31, 2003  

(Thousands of dinars)  

INCOME FROM ORDINARY OPERATIONS 1,695,832

  

BALANCE SHEETBALANCE SHEET  

 As of December 31, 2003  

(Thousands of dinars)  

Property and equipment 2,843,163

Total Assets 43,937,82

4

LIABILITIES AND SHAREHOLDERS' EQUITY  

Total Liabilities 37,298,66

5

Shareholders’ Equity  

Total Shareholders’ Equity 6,639,159

Total Liabilities and Shareholders’ Equity43,937,82

4

77

Point of Start for CIPoint 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 State’s banks has been closed

88

Overview of Banking SectorOverview of Banking Sector inin

Serbia 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

PrivatizationPrivatization “Get real” Change structure Pre-privatization

2001 - 2002 2003 - 20042002 - 2003

99

Criteria

• Financial standing

• Liquidity

• Systematic importance

• Political importance (number of employees, regional importance)

• Rehabilitation costs

• Capability of making profit

Banks under enhanced supervision

83 83 Banks in Banks in SerbiaSerbia

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 4848

Number of banks today*

New licenses issued in

2001

==

Number of banks in Serbia since 2001Number of banks in Serbia since 2001

*Excluding Kosovo

1010

PlayersPlayersVOJVOĐANSKA BANKA

Privredna banka Beograd AD

 

        

1111

MarketMarket• 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.    

1212

MarketMarket• Headquarters of Panonska Bank is in Novi Sad

• The Bank has 21 branches end 19 offices in Vojvodina (nord Serbia and Belgrade)

1313

RangRangBilance in mill. dinars

44.2 43.939.8

31.7

15.4 12.7 12.4 12.2 9.8 8.9 8.3 8.3 8 7.8 7.7

0

10

20

30

40

50

• 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%

1414

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 don’t have diversification in activites

Activites of PlayersActivites of Players

1515

Activites of PlayersActivites of PlayersService 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 depositsCredit-debit card

– still in early phase

Loans– mainly overdrafts and consumer loans, some car loans, mainly short term corporate

loansTrade related activities:

– mainly L/C and guaranteesno customer segmentationmainly one channel of communicationsimple products

– To comewider penetration of all the servicestanding ordersmedium and long term loans based on FFCS* as wellforeign transfersLeasingmortgage loans

1616

Activites of Activites of DeltaDelta Bank Bank

 Retail banking– Consumers Loans– Payment Cards– Savings– Domestic & Foreign Currency– Safe Boxes

Corporate banking– Payment Operation – Short-Term Loans – Long-Term Loans – Car Loans – Domestic Partners – Partners Abroad

1717

Activites of Activites of DeltaDelta Bank BankCONSUMER'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 ActivitiesCurrent Accounts Giro-accounts of citizens and undertakers

SAFE-BOXES OF DELTA BANKA

1818

Activites of Panonska BankActivites of Panonska BankPanonska Bank deals with deposits, credits, and other banking activities in the country and abroadThe 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

1919

Activites of Panonska BankActivites of Panonska BankThe Bank also performs the following services: – Brokerage activities – Crediting and debiting operations – Pay cards

Visa Classic Visa Electron Dina cardin arrangement

– VISA GOLD, – VISA BUSINESS SILVER

– Other financial services – Keeping of objects made of gold and other precious

metals, jewellery and other valuables.

2020

Corporate banking of Corporate banking of Panonska BankPanonska Bank

Short-term loans for:Short-term loans for:– Export financing   Export financing   – Preparation of goods for export   Preparation of goods for export   – Working assets Working assets – Buybacks and stocks of finished products and Buybacks and stocks of finished products and

goods  goods  – Current liquidityCurrent liquidityMedium-term and long–term loans for:Medium-term and long–term loans for:– Fixed assets   Fixed assets   – Permanent working assets  Permanent working assets  – Housing loans and etc.Housing loans and etc.

2121

13.6%6.7% 12.0%

37.5%

19.2%

54.8%

21.4%

47.7%

26.5%22.9%24.0%

4.7%2.5% 6.6%

9.8%

24.9%

40.4%11.1%

12.0%

18.9%44.7% 14.8%

11.2%

23.0%

24.1%

8.7%

8.3%9.9%

2.8%15.8% 19.5%

А 2000 А 2001* A2002 L 2000 L 2001* L2002

TThe he BBalance Sheet Structurealance Sheet Structure of Serbian Banksof Serbian Banks

€10.9 bn € 4.8 bn

Fixed assets

Claims of FRY for FC savings

Long term placements

Short-term placements

Cash

CapitalCapital

Long-term Long-term provisionsprovisions

Liabilities for Liabilities for frozen FC frozen FC savingssavings

Long-term Long-term fundsfunds

Short-term Short-term fundsfunds

Sight-depositsSight-deposits

ASSETSASSETS LIABILITIESLIABILITIES€10.9 bn € 4.8 bn€ 5.3bn € 5.3bn

*Excluding the 4 largest banks closed on January 3, 2002

2222

-47.6

20.7

11.1

5.6

11.4

7.1

10.6

6.6

3.1

Comparation with Banking Sector in Comparation with Banking Sector in EuropeEurope

0.6

3.7

3.8

4.5

5.6

17.4

25.8

29.0

69.2

80.2

Banking assets per capita, 2001, in € ‘000

Banking assets, 2001

In € bn

42

73

78

88

130

146

156

253

266

348

Serbia

Poland

Hungary

Croatia

Czech Republic

Greece

Spain

Portugal

Austria

Belgium

Banks' assets CAGR, 1997-2001

2323

Expected PExpected Potentialotential

1,397

976

1,424

1,925

2,404

1999 2000 2001 2002 2003e

GDP per capita in USD

20 32 60200

550

1,850

1999 2000 2001 2002 2003e 2004e

Number of credit cards in 000 of customers

Consumer loans per capita in €

0.00 0.00

15.89

3.72

5.724.95

1999 2000 2001 2002 2003e 2004eSource:NBS

2424

ForecastForecast

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

2525

Near futureNear future

DeltaDelta Bank 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 BankPanonska 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 Bank’s market share,

– Increasing number of clients and users of domestic payment operations services with the promotion of efficient

2626

Banks’ FocusBanks’ FocusPanonskaPanonska

increase of year

capital %

lode potential %

foreign currency savings %

credit portfolio %

card traffic %

2003/2002 153 123 152 269 1102004/2003 130 125 145 180 1302005/2004 120 125 140 150 1502006/2005 115 130 140 100 175

DeltaDeltaincrease of

yearcapital

%lode potential

%foreign currency savings %

credit portfolio %

card traffic %

2003/2002 150 200 200 150 -2004/2003 125 175 175 150 1202005/2004 115 150 150 140 1502006/2005 110 125 130 135 170

2727

S W O TS W O TDeltaDelta Bank Bank Panonska BankPanonska Bank

StrengthsStrengths

Part of Delta Holding – group of developed companies

Big network of offices correspondent relationships

with more of 300 foreign banks Internet bankingPermanent education of

employees

for savings longer then 1 year, gold is ground

WeaknessesWeaknesses

Brend depend of strengths of companies from Astra (BK) Group

Small No of offices on marketDoesn’t have business in abroadName link only for small area

OpportunitiesOpportunities

Less big & strong states banksOne of leaders domestic bank –

our people believe to leaderslevel of compulsory reserves

with National Bank of Serbia

Good relationship with leading political structure

ThreatsThreats Entry of strong foreign banksToo large too manage

Entry of strong foreign banksRecruitment of private banks

2828

ConclusionConclusion

Panonska Bank is one of tipical bank from socialism Panonska Bank is one of tipical bank from socialism period. Today, this bank is still in good relationship period. Today, this bank is still in good relationship with current political structur. During leading politics, with current political structur. During leading politics, the Bank will have good business, but can not say the Bank will have good business, but can not say that has good future.that has good future.Delta Bank is part of strong group of known Delta Bank is part of strong group of known companies. Has good image and can expected nice companies. Has good image and can expected nice future.future.For presentation, we chose two For presentation, we chose two of more important of more important domestic domestic banks because we’d like to show totaly banks because we’d like to show totaly diferent approach to business.diferent approach to business.

2929

SourcesSourcesPersonal contact with managers of banksPersonal contact with managers of banksSites:Sites:– www.panban.co.yuwww.panban.co.yu– www.gov.yuwww.gov.yu– www.ssinf.sv.gov.yuwww.ssinf.sv.gov.yu– www.mfa.gov.yuwww.mfa.gov.yu– www.srbija.sr.gov.yuwww.srbija.sr.gov.yu– www.mier.sr.gov.yuwww.mier.sr.gov.yu– www.mfin.sr.gov.yuwww.mfin.sr.gov.yu– www.mpriv.sr.gov.yuwww.mpriv.sr.gov.yu– www.belex.co.yuwww.belex.co.yu– www.bra.gov.yuwww.bra.gov.yu– www.priv.yuwww.priv.yu– www.nbs.yuwww.nbs.yu– www.pks.sv.gov.yuwww.pks.sv.gov.yu– www.finnet.co.yu/ubj/ubj.htmwww.finnet.co.yu/ubj/ubj.htm– www.thebanker.comwww.thebanker.com

3030

AuthorsAuthorsZlatko Mitic, Zlatko Mitic, R&D Manager, Sintelon R&C - floor

coverings producer

Velibor Raicevic,Velibor Raicevic,Menager of publicly municipal

enterprise

Milica Radoicic, Milica Radoicic, Proxy of manager in publicly

municipal enterprise

Vladimir Bjelovic, Vladimir Bjelovic, Manager of gas distribution

enterprise

Darko Medjedovic, Darko Medjedovic, Manager of local electro

distribution

Zoran SkubanZoran SkubanManager in Vital, food producer