Central & Eastern Europe and the Financial Crisis: the

Impact on the Banking Sector and the Leasing Market

Matteo Ferrazzi, CEE Strategic Analysis, UniCredit Group

Thursday, 2 April 2009 – Istanbul, Turkey

 AGENDA

 The global financial crisis and the effects on Central

Eastern Europe

 The banking sectors in CEE

 The challenges for the leasing market

 Conclusions

2
 A global economic storm, with no safe havens

The features of the international crisis:

„ Global economic slowdown Banks write-downs at global level

(USD bn)
„ The IMF is expecting the global economic
growth in 2009 to be negative (from +3.9% in 800
742 bn
2008)
700 664 bn

„ Difficulties of the banking system

600

„ Lack of confidence in the financial industry 490 bn

500

„ Risks due to the presence of toxic assets

400 365 bn

„ Costs and availability of funding

300

„ De-leveraging 209 bn
200

„ New capital adequacy standard 100 46 bn

„ Commodity cycle 0
Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08
„ Oil and commodity price collapse

3 Source: UniCredit Group CEE Strategic Analysis, UBS Investment Bank

 The banking sector in US is the epicentre of the crisis, but no one
is immune

Acquirer Target

LLoyds TBS „ HBOS

BNP Paribas „ Fortis Benelux banking operations

Banco Santander „ Bradford & Bingley branches

„ Alliance & Leicester

M&A JP Morgan „ Bearn Stearns

(announced in March 2008, one of the first
signal of the bank crisis in US)
„ Washington Mutual

Bank of America „ Countrywide

„ Merril Lynch

Wells Fargo „ Wachovia

4
 With the governments recently active in rescuing some important
players
„ The US Government is directly participating in the rescue of:
CitiGroup
Freddy Mac

Fannie Mae

AIG

„ The German Government has bought important participations into:

Commerzbank
State Hypo Real estate
intervention
„The English Government has bought important participations into:
Northern Rock (March 2008)
Royal Bank of Scotland
Lloyds

Other governments which intervened nationalizing some banks were: Iceland (four
major banks), Ireland (Anglo Irish Bank, third major bank in the country), Latvia,
Ukraine, Kazakhstan, etc.
5
 The new international environment is posing additional challenges
for CEE countries

MACRO CEE BANKING CEE

„ Dependency on capital
„ Imported lack of
inflows (consumption
confidence in banks
and investment boom
financed through
„ Banking sector fully
The international external savings)
dependent on foreign
crisis is reflected in funding to finance lending
„ Dependency on
growth
Central Eastern international demand
„ availability of funding
European with (industrial sector part of
and cost of funding an
the international
peculiar production chain)
issue
characteristics
„ FX lending both in retail
„ Dependency on
and corporate sector
commodities in
Russia, Kazakhstan, „ Real Estate market boom
Ukraine

Paradoxically, global capital could flow back to countries where the crisis originated, out
6 from emerging markets and from some transition economies
 The impact of the financial crisis on CEE has been particularly
serious in some countries, milder in others – CEE not an
homogenous area
Repricing of risk
Country 5Y USD Credit Default Swaps
Rank 1 2 3 4 5
4184
Low macro High macro Ukraine
vulnerability vulnerability
371
Turkey

486
Russia

996
Kazakhstan

913
Latvia

399
Croatia

474
Romania

510
Bulgaria

253 Italy and

Poland
Austria
132 ~150 bps
Slovakia

222 Current
Czech Rep.
30/12/2008
460
Hungary 30/09/2008

7 Source: UniCredit Group CEE Strategic Analysis

 Macroeconomic vulnerabilities (dependency from capital inflow,
from international demand and commodities) are on the spotlight,
but EU/EMU is having a stabilising effect
CEE Macro vulnerability indicators (2008E)1
Raw material EU /
External Vulnerability Trade Real Estate
dependence EMU
Export RE price
Ext. Debt/ CA/ Reserves/ Construc./
(G&S)/ GDP, (ytd Jan-
GDP, % GDP, % ST Debt, % GDP, %
% Sep 2008)
Poland 51.4 -5.3 0.8 40 - 1.5% 6.9 EU
Czech R. 40.0 -3.4 0.8 77 - 22% 6.3 EU
Slovakia 56.0 -6.2 - 82 - 10.9% 6.0 EMU
Hungary 108.7 -6.9 1.0 81 - -11.2% 4.2 EU
Slovenia 107.1 -6.1 - 71 - - 7.0 EMU
Estonia 125.9 -10.3 0.4 75 - -1.5% 7.9 EU
Latvia 144.6 -14.5 0.4 43 - - 7.4 EU
Lithuania 76.4 -11.9 0.5 59 - - 10.0 EU
Croatia 94.6 -11.0 2.5 49 - 5.2% 6.0 -
Bulgaria 106.3 -25.0 0.9 60 - 16.6% 17.9 EU
Romania 36.9 -12.7 1.3 25 - -0.5% 10.3 EU
Serbia 67.0 -17.9 6.8 31 - - 3.6 -
Bosnia - -15.8 1.9 37 - - 4.7 -
Turkey 46.1 -5.5 1.4 19 - - 4.8 -
Ukraine 63.9 -6.9 1.3 50 high - 4.6 -
Russia 47.0 5.4 3.9 29 high - 5.1 -
Kazakhstan 72.0 6.2 2.1 58 high -17.5% 11.9 -
8 (1) Reserves/ST debt as of Q3 2008 for Croatia, Bosnia-H, Baltics, Turkey, Ukraine, Czech Republic, Hungary; Source: UniCredit Group CEE Strategic Analysis
 International commitment (from IMF, EU, ECB, EBRD, EIB, WB)
toward the regions is very high

International support
IMF Plans 2008-’09

Belarus
(USD 2.5
bn)
Latvia
(USD 2.4 bn)

Ukraine
(USD
16.5 bn)
Hungary
(USD
15.7 bn)

Turkey is expecting
to receive more than
USD 15-20 bn

Serbia
(USD 3.5 Romania
bn) (USD 26 At world level, Iceland, Pakistan and
bn) Armenia also received IMF support
(respectively for USD 2.1, 7.6, 0.5 bn)
9
 Not a supportive environment for the corporate sector - With
export demand falling off of a cliff …
German demand and CEE export

25 25

20
15 20

10
15
5

0
10
-5 YoY growth in German machinery
and equipment new orders, left axis
-10 5
CZK, HUF, PLN, RON, TRY export
-15 growth yoy (EUR), right axis*
-20 0
Jan-01

Jan-03

Jan-08
Jan-02

Jan-04

Jan-05

Jan-06

Jan-07
10
 … and FDI halving, with parent companies support clearly
reduced, investment activity in CEE will be subdue

Foreign direct investments Real Investment growth

EUR bn, 2006-’09 %, avg growth, 2005-’08 and 2009-’10
-10.0 -6.0 -2.0 2.0 6.0 10.0 14.0 18.0

120 Central Europe avg 2005-'08

avg 2009-'10

100
Baltics

80
SEE

60

Turkey
40

20 Ukraine

0
Russia
2006 2007 2008 2009
Central Europe SEE & Baltics Broader Europe
11
Source: National Central banks, UniCredit Research
 On lower profitability, credit squeeze and possible repatriation of
profit, corporate liquidity is drying up and this trend is already
clearly visible on deposits
Corporations in CEE Corporate1 deposits
% variation

Poland
Lower export and lower ~€ 965 bn of
export and €117 Czech
FDI from abroad bn of FDI in 2008
Slovakia
Hungary
Profitability sensibly Self-financing
represent from 50 Slovenia 2008 yoy
eroded => corporate self-
to 80% of total Sept- Dec 08
financing under pressure Croatia
financing in CEE
Serbia

Intra-company loans will Bosnia

be sensibly lower Romania

€ 1030 bn of
Bulgaria
deposits’ pool (of
€ 700 bn of Estonia which €366 bn
Banks more selective => corporate loans in corporate)
reduced availability of Latvia
2008 (+€87 bn
banks’ credit vis-à-vis 2007, Lithuania
+14%)
Turkey
Russia
Repatriation of profits
could increase Ukraine
Kazakhstan

-15% -5% 5% 15% 25% 35%

12 (1) Corporate: including SME and public enterprises, excluding govt, municipalities and non monetary financial institutions;
 The manufacturing sector in CEE: a stronger industry
after the crisis or the end of a successful story?

CEE became in the last decade the manufacturing arm of “Old

Europe”. But the financial crisis is affecting significantly CEE
countries:

„ Is the end of the “successful story” in producing in CEE or will the

crisis create a further incentive to move production towards more
efficient locations in Eastern Europe (creating even a stronger
industry in CEE in the long run)?
Some considerations:

„ Incentives for some industries in Western Europe (for cars and durable
goods) could favor Western factories, even if protectionism risks will not
materialize;

„ Labor flexibility is higher in some CEE countries (it’s easier to cut production
in CEE rather than in Western Europe)

„ Pressures on labor cost in CEE will be lower than before (CEE is even more
an efficient location)

„ Competitive pressures intensifies, ie. stronger incentive to look for efficiency

13
 A difficult international environment and weaker corporate
activity: which are the effects for the banking sector and for the
leasing market?

Channels of transmission of Possible impact

the crisis

Weaker economic
growth – corporate CORPORATE PROFITABILITY
MACRO

activity subdue AND WILLINGNESS TO

INVEST

Re-pricing of risk
BANKING SECTOR
BANKING SECTOR

Availability of
funding

Future problems in
LEASING MARKET
terms of credit
quality

14
 AGENDA

 The global financial crisis and the effects on Central

Eastern Europe

 The banking sectors in CEE

 The challenges for the leasing market

 Conclusions

15
 Banking System Vulnerabilities – sound structural indicators, but
high dependency from international funding, some FX issues for
the clients and coming out from a credit boom
CEE Banking vulnerability indicators (2008*)
Credit
Stability Indicators Penetration Crunch FX
Equity/ For. State Loans / Delta Loans Loans /
Assets, % ow n., % Relev., %** GDP, % / GDP, % 3y Depos, % FX loans, %
Poland 11.7 66.9 13.6 48.2 6 107 24.6
Czech R. 9.1 97 - 52.5 4.6 76 8.4
Slovakia 9.1 96.5 - 44.8 2.9 77 21.6
Hungary 8.3 67.5 20.4 67.9 5.2 141 56.3
Slovenia 7.7 29.5 46.1 85.5 9.5 155 7.5
Estonia 7.5 98 - 99.1 9.6 199 83.5
Latvia 8.3 55.9 18.8 95.8 9 247 87.7
Lithuania 8 87.6 - 63.2 7.1 196 62.3
Croatia 17.1 90.4 4.2 80.4 4.5 120 62.3
Bulgaria 10.2 75.3 - 73.4 10.3 123 53.6
Romania 10.1 88.6 4 39.7 6.2 132 51.9
Serbia 28.9 75.5 9.4 42.1 3.5 136 8.4
Bosnia 13.3 91 - 59.6 5.1 121 74.9
Turkey 13.5 29.9 29.1 37.5 4.6 85 26.5
Ukraine 11.7 32.5 15.9 74 13.8 204 49.4
Russia 12.9 12.1 44.9 37.5 4 134 21.2
Kazakh. 18.4 5.4 72.3 49.6 4.6 175 0.4
* Equity/ Assets as of June 2008; Foreign Ownership as of 2007; State relevance calculated on current state ownership based on Dec.2007 market
share; Penetration indicators as of Nov.08; Loan/Deposit ratio as of Dec.08 (but RO, RU,TK as of Nov.08); FX exposure as of June 2008.
**Calculated out of top 10 banks
16
Source: UniCredit Group CEE Strategic Analysis
 Macro and banking in summary: quite different group of countries
– ranging from those mostly influenced by a cyclical downturn, to
those stressed on the macro and on the banking side
CEE Macroeconomic vulnerability vs Banking vulnerability

UA

Baltics
KZ
Macro
vulnerability
BG RU
TK
HU
RO

Macro Vulnerability considers: HR

SRB
ƒ Dependency on external funding BH
and refinancing needs
ƒ Dependency on international
CZ
PL
demand SI

ƒ Dependency on Commodities
ƒ EU/EMU anchor
SK

Banking sector vulnerability

Banking Sector Vulnerability considers: Banking revenues in

ƒ Capitalisation, Credit Quality, Foreign and State Influence
2008E

ƒ Dependency on External Funding and Credit Crunch

ƒ FX Lending, Consumer Credit Relevance, Real Estate Lending

17
Source: UniCredit Group CEE Strategic Analysis
 But policy actions are in place: actions taken at the local level are
mostly addressing market sentiment, with coordinated plans where
foreign banks ownership is less relevant (KAZ, UK, RU, SLO, HU)
EMU
„ Poland €24bn to support the economy
EU countries

.
ep
„ Czech R. €2.5bn to support the economy

a
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ia

ry

ria
R

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a
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ga

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ga
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„ Hungary €8.8bn to government support

un

th
ze

ul
Po

Es

La
Sl

Sl

Li
H

R
investment activity and €2.4bn available for
Economic Stimulus banks, after a support of €20bn from
Support of key industries IMF/EU/WB
Households’ protection „ Slovenia €12bn available for banks and
Government spending/ ~€0.8bn to support the economy
Taxes/ Infrastructural
„ Romania €13bn in infrastructure, liquidity for
Projects
banks and support to low income classes,
discussion with IMF/EU for more support
Banking intervention
Market confidence
„ Latvia take over of Parex Bank and
additional measures, €7.5bn IMF and EU
Liquidity
members
Guarantees and Capital

Take-over, Recapitalisation

Candidate/Potential EU „ Serbia possible €1bn package for the economy and

Non EU countries €0.6bn of state guarantees on bank loans to local

n
ta
hs
industry, ~€3.5bn from IMF

ne
ia

a
ey

a
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ak
ni

si
at

ai
rb
rk

os

us

az
ro

kr
Se
Tu
C

K
Economic Stimulus
„ Russia anti-crisis package, more than $200bn (12% of GDP),
Support of key industries (incl. refinancing of banks’ foreign debt, support to single
Households’ protection banks and acquisition of s/m banks) plus further $40bn to
Government spending/
specifically support local banks
Taxes/ Infrastructural „ Ukraine package to reassess banking stability in accordance
Projects
with IMF(€11.7bn) plus ad hoc support to single banks
($10bn of NBU support, $5bn budgeted by government in
Banking intervention
2009 for recapitalization)
Market confidence
„ Kazakhstan some initiatives (worth as a whole $15 bn),
Liquidity including entry in the capital of the 4 major banks, support to
Guarantees and Capital banks’ liquidity, deposit guarantee, support to the mortgage
Take-over, Recapitalisation
market and other measures
18
 Banks are adapting their medium strategies – focus on the long
term potential of CEE

Key constrains for the

Long term potential
banking sector:
(Financial deepening process, % of GDP and
PPS in dollar terms)
„ The region will remain dependent
on external funding - Good access to
external funding remains a clear 800 Western Europe
competitive advantage

Total banking assets

600
„ Loans / Deposit ratio is now a key
constraint
400
„ Banking penetration will continue
to increase CEE
200

„ Substantial change in the competitive

framework (state and new foreign 0
entrants) 5,000 15,000 25,000 35,000 45,000

„Advantage for the systemic / retail GDP per capita

banks, able to attract deposits

19
 Funding is a key issue - The region will remain dependent on
external funding …

Banking sector Assets Breakdown Banking sector Liabilities Breakdown

Dec. 2008* Dec. 2008*
Loans to MFIs Deposits from MFIs
Loans to customers Deposits from customers
Holdings of securities and shares Debt securities issued
External assets External liabilities
Other liabilities
Other assets (fixed + remaining assets)
Capital and reserves

6% 2% 6%
10% 7%
19%

52%
52% 53%
54% 62%

65%
0%
4% 3%
26%
16% 21% 20%
13%
6% 5%
11% 4% 11% 8%
7% 14% 14%
8% 5% 7% 10%

Central Europe South Eastern Broader Europe Central Europe South Eastern Europe Broader Europe
Europe

20 Note: CE includes Poland, Czech R., Slovakia, Hungary, Slovenia; SEE includes Croatia, Bosnia, Serbia, Romania, Bulgaria; Braoder Europe includes Turkey, Russia,
Kazakhstan and Ukraine (for UCG, Ukraine is Ukrsotsbank). *For Turkey, Russia and Romania, data as of Sept.08.
Source: UniCredit Group CEE Strategic Analysis
 … with some markets under pressure from this point of view –
again, CEE not an homogenous area

Country risk and banking sector “leverage”

USD 5 Years CDS and loans/deposit ratio
Bps

1400 Ukraine
(2;4180)
Country Risk CDS 5Y

1200

Kazakhstan
1000 Latvia

800
Estonia
Bosnia Serbia
Lithuania
600 Russia
Bulgaria Romania
Hungary
400 Turkey Croatia

200 Czech Poland

Slovakia
0
0.5 1.0 1.5 2.0 2.5
Loans / deposit ratio

21 Source: UniCredit Group CEE Strategic Analysis; NOTE: L/D ratios would be sensibly lower for the Baltic states if including non-residents
 Credit quality - ratings actions in CEE have already been numerous
in recent months and credit quality is an issue – CEE not an
homogenous area

S&P's 1 y prob. of
default
AAA 0.0
AA+ 0.00
AA Slovenia 0.0 ƒ Only considering
AA- 0.03 S&P’s, the agency
A+ Slovakia 0.04 downgraded in the
A Czech Estonia 0.1 last 5 months:
A- Poland 0.12
BBB+ 0.17 9 by 3 notches
BBB Croatia Lituania Bulgaria Russia 0.2 Latvia and Ukraine;
BBB- Kazakhstan Hungary 0.5
BB+ Romania Latvia sub-investment 0.7
9by 2 notches
Hungary;
BB 1.0
BB- Serbia Turkey 2.2
B+ Bosnia 3.4
9by 1 notch
Romania and
B 4.6
Bulgaria, Lithuania,
B- 11.6
Russia;
CCC+ Ukraine 18.6
CCC 25.6
CCC- 27.6

22 NOTE: 1y prob. Default is the S&P’s long term probability of default (corporate) for each rating category (in %, one
year)
 AGENDA

 The global financial crisis and the effects on Central

Eastern Europe

 The banking sectors in CEE

 The challenges for the leasing market

 Conclusions

23
 The leasing market experienced a relevant growth in the last
years, but activity is slowing down significantly

Outstanding leasing (% of GDP, 2008) Outstanding Leasing, total CEE

(EUR bn, excl. Romania and Bosnia-H.)
Estonia 16.3%
Without 130.9
Russia:
+41.7%
Slovenia 10.8%
+53.9%
92.4
Latvia 10.7%
+99%
Slovakia 10.0% 2008
46.4 2007
Lithuania 10.0%
2006
Hungary 9.8%

Croatia 9.5%
New Business Leasing (EUR bn)
Bulgaria 8.7% CEE (excl. Romania, Bosnia-H.)
73.7
W ithout
Czech Rep. 6.5% Russia: -9% 66.9
+41.6%
Russia 5.0%
+70%
Italy and 43.6
Poland 3.8%
Austria around 2007
2008
Ukraine 3.1%
8% of GDP
2006

Turkey 1.5%

24 Notes: CEE in new business leasing is excluding Ukraine and Latvia; CEE in outstanding is excluding Bosnia and Romania
Sources: UniCredit CEE Strategic Analysis
 The growth of the leasing business surpassed corporate loans
growth in most of the countries – leasing can continue to bridge
the gap between investments and banks’ long term loans

Outstanding Leasing and corporate loans

Avg % 2007-’08 growth

80%

70%
Corporate loans avg
60% Growth 2007-2008

50%
Leasing Outstanding
Avg Growth 2007-2008
40%

30%

20%

10%

0%
a

r ia

ia

ne
ia

th a

ey

EE
nd

Es a
Sl c h

ni
i

ni

si
i

at
ak

en

tv

ai
rk
ga
la

ze

C
ua

us
to

ro
La

kr
ov

ov

Tu
Po

ul
C

R
C

U
Sl

B
Li

Growth of leasing business in EMU

25 Source: UniCredit CEE Strategic analysis area was around 9% nominally
during the last decade
 Russia and Poland are the largest markets

Outstanding Leasing Outstanding Leasing

2008, % on total CEE (excl. Bosnia, Serbia) 2008, Contributions to growth (EUR bn)

Russia 41% Poland 15%

Russia 60

Poland 14

Hungary 8% Hungary 10

Czech 10

Turkey 7
Czech 7%

Slovakia 7

Slovakia 4% Slovenia 4

Slovenia 3% Croatia 4

Ukraine 2% Latvia 2% Ukraine 4

Bulgaria 3%
Turkey 6%
Croatia 4% Lithuania 3% Lithuania 3
Estonia 2%

but not 100% of Bulgaria 3

the potential
market can be Estonia 3
reached!
Latvia 2

26
Source: UniCredit CEE Strategic Analysis
 New business leasing in CEE boomed in 2007 and it slowed down
significantly in 2008; further reduction is envisaged

New Business Leasing New Business Leasing

EUR Bn (exc. Serbia) 2008, % on total CEE (excl. Bosnia, Serbia)

Poland 11%
70
Russia 46%
Others
Hungary 8%
60
SEE

CE
50
Baltics Czech 7%

40
Slovakia 5%

30
Slovenia 3%

Lithuania 3%
Latvia 2%
20
Estonia 2%

Bulgaria 2%
Ukraine 3% Turkey 6% Croatia 3%
10

0
2006 2007 2008

27 Others: Slovakia, Estonia, Lithuania, Romania, Slovenia, Bosnia-H.; Source: UniCredit CEE Economic
Research Network
 Usual drivers for the leasing market will continue to hold, but
they are not immune from a slowdown

Weaker Repricing Funding Credit

growth of risk problems Quality

Impact on:

INVESTMENT ACTIVITY Investment growth is highly cyclical will be sensibly

reduced.

Durable goods such as cars are traditionally those

VEHICLE MARKET suffering the most during weak economic cycles; in
some countries (CZ, HU, SI) leasing substitute for
Households financing

Households Leasing

REAL ESTATE The real estate market is one of the most affected by
the international crisis and the credit squeeze
28
 Still, there is room for increasing penetration of different products
(loans, leasing, factoring, etc..)

Investment financing by non-financial corporations

(Survey data, % on total)
100%

Other (family,
friends, credit cards,
money lenders,
80%
government, equity
etc.)

Leasing
60%

Trade credit
40%

20% Loans

0%
a y . a nia kia . nia r ia n e
tv i ar y
ep ke ati nia -H i nia nd rb ia s ia Companies Internal
La u ng h R Tur Cr o thua lova sto sn ia love ulga k ra o ma Pola Se Ru s funds
H ec Li S E S B U R
Bo
Cz

29 Source: EBRD BEEPS Survey (2006)

 Saturation in terms of leasing business is still low, on average

Outstanding Leasing
(in % of GDP )

50%
2008
2007
Corporate Loans/GDP
40%

30%

20%

10%

0%
.

ia
ia

a
ne

ry

a
a
d

a
ria

ia
ey

ep

ni
si

ki

ni
an

on
at

tv
ga
ai

ga
rk

va
us

ua

ve
ro

La
ol
kr

st
un
Tu

ul
ch

lo
R

lo
th
P

E
U

S
Li
ze
C

30
Source: UniCredit CEE Strategy
 AGENDA

 The global financial crisis and the effects on Central

Eastern Europe

 The banking sectors in CEE

 The challenges for the leasing market

 Conclusions

31
 The crisis will hit hard all emerging markets, but in CEE structural
strengths can cope with cyclical headwinds

STRENGTHS Cyclical Structural

CEE long term convergence prospects are strong 9

Strong EU/EMU anchor with a strong bank regulatory environment 9

International support 9 9

Strong commitment of non residents banks 9

Long-term potential for banking and leasing products 9

WEAKNESSES Cyclical Structural

Imported lack of confidence 9

Sharp economic slowdown 9

Weak corporate activity; lower export, lower FDI 9

High external financing requirements 9

Relatively high FX leverage ratios 9 9

32
 Executive Summary – A crisis is a terrible thing to waste

ƒ The financial crisis is re-shaping the banking sectors around the world

ƒ The new environment is posing additional challenges on CEE but

structural strengths are helpful
ƒ CEE countries are feeling the impact of the crisis, as they are dependent
on capital inflows and external demand
ƒ CEE is not an homogenous area – most of the countries are solid

ƒ The banking sector in CEE

ƒThe region’s banking sectors will remain partially dependent on external
funding and the competitive framework is changing

ƒ Leasing business
ƒ Weaker economic growth and corporate activity, availability of funding,
concern on credit quality will weight on leasing business;
ƒ Usual drivers for the leasing market will continue to hold, but they are not
immune from a relevant slowdown
ƒ The potential of the leasing business is still there, given the low
penetration: 1) leasing can bridge the gap between demand for investments
and insufficient offer of long term financing; 2) in period of deterioration of
credit quality, leasing can provide a better protection for the lender; 3)
33 funding is an issue for some players but an advantage for others
 UniCredit Leasing: # 1 Leasing Company in Europe, with top 3
position in 9 countries out of 17 in 2007

Italy* Croatia Germany Hungary European Leasing Companies

Locat 14,9% 1 UCL 20.9% 2 HVB L 2.8% 10 UCL 4% 6
– 2007 Ranking
Austria Russia Slovenia Latvia (Baltics) Unicredit Group 14.889
UCL 11.8% 1 IMB L 1.3% 10 UCL 5% 6
Locat
UCL 7.4% 4
BNP Paribas Lease Group 12.614

Czech Rep. Slovakia Serbia Bosnia & H. SG Equipment Finance 10.053

UCL 11.1% 2 UCL 16.8% 1 UCL 8.5% 4 UCL 10.2% 3
Fortis Lease Group 8.976

Romania Ukraine ING Lease Holding 8.898

UCL 10.2% 1 UCL 3,7% 8
Lombard 8.641
Poland
BPH Turkey Deutsche Leasing 7.795
Pekao L 6.6% 5 EE Yapı Kredi Leasing
19% 1 LeasInt 6.804
LV
Bulgaria RU De Lage Landen 6.522

UCL 15.5% 2
DE PL Volkswagen Leasing 6.386

SK UA Banca Italease 5.873

CZ
AT HU
Market share Credit Agricole Leasing 5.039
SIHR RO
> 10% IT BA RS
5-10% BG New Business, Mln € (2007)

<5%
TR

Market share on New

34 Business volumes ‘07
Rank in country on New Source: Local Leasing Associations, UCI-HVB local entities; Unicredit Analysis
Business volumes ‘07 LeaseEurope 2007 Ranking
* Fineco Leasing not included
Thank you for your attention!

Matteo.ferrazzi@unicreditgroup.eu
 UniCredit Group is present in 22 Countries throughout Europe

„ Employees: ~180,000
„ Customers: ~ 40 million
„ Branches: ~ 10,200 UniCredit Group Focus
„ Banking operations in 22 countries Areas:
„ International network in ~50
countries „ Italy (rank # 2)
„ Germany (rank # 3)
„ Austria (rank # 1)
„ CEE (rank # 1)

In CEE, UniCredit is the first banking player in CEE in terms of revenues:

„ it’s the largest bank in Poland, Croatia, Bosnia-H. and Bulgaria
„ it’s among the top5 in Ukraine, Turkey, Czech Republic and Kazakhstan
„ it’s among the top10 in Romania, Baltics, Russia, Slovenia, Hungary and Serbia
36
 UniCredit position in the CEE region is diversified, so the effect of
the crisis on the Group is minimized

% Group Weight
Tangible
Revenues(1)
book (2)

EU members 13.7% 13.2%

Poland 8.3% 5.8%
Romania 1.1% 0.5%
Czech rep. 1.3% 2.5%
Slovakia 0.6% 1.1%
Slovenia 0.2% 0.4%
Hungary 0.9% 1.4%
Bulgaria 1.1% 1.3%
Baltics 0.1% 0.2%

Candidate/potential EU 6.3% 8.5%

Turkey 3.5% 3.8%
„ UniCredit presence goes from EU members of Bosnia – H. 0.4% 0.4%
Central Europe to Central Asia Croatia 2.1% 3.6%
Serbia 0.3% 0.6%
„ Group exposure in the countries more affected
by the crisis (Ukraine, the Baltics) is sensibly NON EU 4.6% 6.0%
limited Russia 2.2% 3.1%
Ukraine 1.3% 1.3%
37 (1) Revenues as of 9M08 Kazakhstan 1.0% 1.6%
(2) Data as of 3Q08, tangible book = equity-goodwill