Hungary has plenty of potential for further development in its corporate banking market, and while that provides some challenges, it also makes for opportunities, according to Klaus Windheuser, the new CEO of Commerzbank Zrt.
In an interview with the Budapest Business Journal, Windheuser, who took over as CEO at Commerzbank on November 1, spoke about the bankʼs possibilities here.
“My first impression is that Hungary after its opening in the late ʼ80s developed tremendously – though there is still room for development,” says Windheuser. “That will work out; in the financial industry that was also the case for years between the most advanced financial markets in the U.S. and the U.K. and other Western countries like, for example, Germany. That gives us – an international bank with a comprehensive knowledge of corporate business – a lot of potential. We see a kind of waterfall-development effect, starting in the U.K. and U.S., coming via the more developed Western countries into the CEE,” Windheuser explains. “Soon, not next year but certainly within the next five years, we will start to see more structured products, and a broader variety of financing products, that will be tailored to the customers’ value chain and needs.”
The Düsseldorf native chose Hungary from a number of options, he says. He had been looking to get further experience abroad for a number of years “but my career path took me in other directions”, he explains: International, but based in Germany. Previous posts with Commerzbank AG, the German parent, include global head of financial engineering, a catchall title that covers structured finance, acquisition finance, syndicated loans, trade and commodity finance, mezzanine finance, private equity, and restructuring, among other things. Prior to that, he was global head of cash management and international business.
“But then there was a group wide reorganization of the business in corporate banking, and that gave me the opportunity to become CEO of an international subsidiary,” he recalls. “I liked Hungary because the setup of the bank and the potential was very interesting. Additionally I really like the country, which I know from my former global responsibilities. I was responsible for Hungary from 2010-13 as global head of cash management, so I had an idea of the country, I had a very good idea of the team, and the business opportunities.”
The staff are motivated and talented, he says, and also young. The average age in the Hungarian business is 36 – barely out of baby grows in banking terms but already quite experienced; the average age in the German business is 42.5. “Seven years doesn’t sound like a lot, but you really feel that youthful excitement here,” Windheuser says.
This early into his role, he is cautious when it comes to talking about the Hungarian banking market as a whole, though he does see some “very first observation” differences based on sectors. “There are banks that have made their decision to leave the market, and banks that are discussing what their strategic position should be, and that makes customers feel more unsecure. That will lead into more consolidation. But when talking about corporate banking in the mid- and large-sized brackets, there is intensive competition, and I do not expect even one corporate bank to disappear from the market.”
The CEO says he was sent to Budapest with clear expectations from Frankfurt: “Avoid loan loss, grow to the maximum possible amount, but in a prudent and compliant way.” Oddly, Windheuser says Commerzbank does not know its exact market share, because there is no such statistical information for the relevant corporate banking sector bracket. Commerzbank’s strategy is to focus on clients with annual revenues of more than €12 million, and based on publicly disclosed figures from its competitors in Hungary, he estimates his market share to be around 6%, stressing: “That’s a rule of thumb figure, far from exact.”
Even so, it gives a working base from which he believes the bank can – prudently – grow. “I think we have a fantastic and comprehensive range of products and solutions for corporate businesses, and some USPs from our international coverage of more countries than our competitors, especially when you leave the CEE region. There are many Central European banks, not so many Western European. We obviously have strong connectivity to Germany, and Hungary’s strongest, most important connectivity is also with Germany. Our European connectivity and also to Asia and the U.S. are also well established. So why not grow to 10%?”
The CEO insists the bank’s outlook has altered. “We were more cautious in the last couple of years; we rather maintained our position. That has changed, and we want to grow, but grow prudently. That means organically, and always on a case by case basis with, from a management perspective, a portfolio view.” He says there is no credible corporate company the bank would not consider taking on as a customer, regardless of type of business.
Perhaps equally importantly, there are no capital restrictions, he insists. “We have none, and talking to the CEOs of other banks active in corporate banking in Hungary, they have none either. I can’t talk about SMEs because that is not our focus, but in corporate banking – starting at revenues of €12 mln – there is absolutely no credit crunch. Credit is available to credible businesses that seek it.”
And, since October of 2015, credit – or, at least, accounts – has been available in Chinese renminbi (CNY). While the first customers are already using the service, take up has been slow, but Windheuser says that is to be expected. In the initial stages, it is all about explaining the advantages of a CNY account with Commerzbank in Hungary to clients who, in turn, have to negotiate with their suppliers or customers. Those advantages include a bank network with a couple of branches in China and the other relevant markets in Asia.
“I see great potential, but it takes time. We see CNY as one of the core currencies in the world in a few years, and so we decided to be one of the first adaptors; we want to offer these products. The key here is patience.”
So if the business looks promising, what about personal life? “Budapest is a wonderful place to live,” he says, as we take in the views of the Danube from his Széchenyi rakpart office in District V. “I feel at home here, we have a house, my family is here. My son is in the German kindergarten and he is happy. And when the child is happy, the mother is happy, and that means the father is happy, too. This is important: We see it in Commerzbank, how difficult things can be if a partner is not happy in a new posting.”