UniCredit: Central and Eastern Promise – Andrew England

FDE: Define UniCredit’s strengths.

Andrew England: We have an in-depth presence as we operate local banks in 22 countries that are in the top five of their respective markets. This depth gives us history, knowledge, experience, coverage and access to clients.

We have strength in both commercial and retail banking, so we are strong in areas that require scale such as payments and cards where we can drive high-scale transaction business. The backbone of our cross-border business is our understanding of country and bank risk and our highly developed risk monitoring and local market understanding. We are very visible in structured export finance, particularly in the support of medium-term commitments for the likes of infrastructures with export credit agency cover.

We also blend strengths that stronger countries such as Austria, Germany and Italy can bring to the CEE with local capabilities. However, we don’t look at the CEE as a homogeneous region and apply uniform processes. Instead, we use a degree of flexibility and are always alert to new business opportunities. An example would be the way we were able to convince the Russian authorities to allow us to launch cross-border cash pooling.

Tell me more about cash pooling.

Helping treasurers to upstream cash, improve visibility and control is a central theme. Because we are in multiple markets we can link our expertise for clients. Cash pooling is a strategic product that complements our handling of cross-border business at both ends of the transaction, because we have local banks in these countries.

Poland, Russia and Turkey for instance, are big cross-border markets where clients expect deals to be supported, but which are difficult for banks that are not embedded there. Having a comprehensive network and being very targeted is a strategic strength for UniCredit. We are also leveraging the same cash pooling technology for cross-border (multi-currency) and domestic pooling.

Additionally, we are looking to deploy more standardised technologies or new products in the areas of bill presentment, receivables management and supply chain products.

Can you define UniCredit’s client base?

It is threefold. Firstly, we support parent companies, particularly in our core countries such as Austria, Italy and Germany, but increasingly in supporting emerging large companies within the CEE. Secondly, we have a strong client base. In the current recession, while we have become a little more cautious in providing traditional lines of credit, we continue to work closely with clients by supporting their working capital needs. Thirdly, we act as a financial intermediary for hundreds of international financial institutions as their quality counter-party for FX settlement and clearing, and by supporting their own clients operating in the CEE. These are three different markets that require three different approaches.

What are the opportunities in the CEE during the recession?

We anticipate that because of the downturn in normal business activity, we will need to stay closer to clients in supporting their trade-related business in assuming country and counterparty risk. In this respect, we expect to grow market shares in traditional import and export business.

We also envisage stronger fiscal stimuli coming from governmental organisations which should generate new opportunities for infrastructure projects where UniCredit already has a strong track record. We have strong relationships with public sector bodies and local municipalities in these countries and so are well-placed to influence their buying activities with exporters.