Best Trade Bank in Central and Eastern Europe: RZB

Runner-up: Deutsche Bank
Commended: Garanti Bankasi
2007 Winner: UniCredit

Austrian co-operative bank Raiffeisen Zentralbank (RZB), the third biggest bank in Austria and a key part of the Raiffeisen Banking Group, has always featured highly in this category, winning in 2005 and 2006, and reflecting its strategic focus in recent years on the emerging markets of Central and Eastern Europe, rather than rushing west.

In the process, it has rolled out offerings such as lease financing to customers in such places as Ukraine and Kazakhstan – being among the first to bring European Union-standard banking to many parts of Eastern Europe. Its strong presence in some of Europe’s backwaters, including Albania, Bulgaria, Romania, Serbia and Slovakia, also marks it out from the crowd.

In commodity trade, RZB specialises in three main areas: energy, metals and mining, and soft commodities. Energy, metals and mining have been cornerstones of the bank’s activities (and earnings) in the region in recent years while, with impeccable timing, driving into soft commodities in 2007.

“Our commodity and structured trade finance team is organised as a customer relationship department, servicing all customers of the industry with all the banking products they need. The relationship manager is, therefore, always the first and main point of contact irrespective of whether the deal is a bilateral short-term commodity-backed transaction or a jumbo syndicated transaction with a pre-export structure or export credit agency-backing,” says Thomas Schirmer, Head of Commodity and Structured Trade Finance at RZB.

Like many investment banks over the past year, business has been brisk for RZB, with the bank involved in 15 transactions at mandated lead arranger-level involving a record loan amount of approximately $6.3bn. This has been supported by a doubling of staff during the last five years, with the intention to add more

“We are not only accompanying our customers in their home territories (predominantly Central and Eastern Europe and the CIS), but also supporting their global expansion. Their aim in various commodity segments is often to increase the level of vertical integration of their production, thereby benefitting at full-scale from the high price levels,” says Schirmer.

Significant deals for RZB in the past year include a $235m medium-term loan facility for KAP Montenegro, an aluminium processing plant in Montenegro that is ultimately controlled by Rusal, and a $155m deal with Russia’s United Metallurgical Company (OMK), one of the first, according to Schirmer, with purely Russian-based off-take agreements.

And there will be many more such deals to come, he promises, with the credit crunch and high commodity prices stimulating business in RZB’s key geographic areas. “Most of our customers have been doing very well,” he says. Meanwhile, the weakening of the capital markets has pushed the syndicated loan sector almost to overload, with club deals in which the relationship aspect plays a substantial role.

“Together with high-flying commodity prices, the demand for bank lending in the commodity-related areas should therefore remain strong, which should also support margin and fee levels,” says Schirmer, adding that banks themselves are also facing higher funding costs, too.

Smaller companies, however, may have trouble accessing the finance they need to continue growing, while larger organisations may have to consider suspending some planned investment if funding costs remain high.

“It will be difficult for smaller players in the various industries, due to the more difficult access to capital. Medium-sized/large players have not suffered so much from funding at higher cost. But this might influence the implementation of large-scale projects if the trend on financial markets continues,” warns Schirmer.

“We are not only accompanying our customers in their home territories (predominantly Central and Eastern Europe and the CIS), but also supporting their global expansion.”

Thomas Schirmer, RZB