Money Buzz! Europa

Tag: cee

  • Romania is well positioned to attract industrial capacities from Asia

    Romania is well positioned to attract industrial capacities from Asia

    The Central and Eastern European Region (CEE) may attract new production capacity as the global economy undergoes major changes in the pandemic context, according to a Colliers International report on the regional industrial market.

    Romania is very competitive in terms of costs, and industrial production has increased significantly in recent years, qualities that can turn the country into a magnet for investments in the production area.

    The global economy is undergoing a period of intense changes in the context of the pandemic, and the relationship between Europe and China is expected to shift significantly in the future. More and more specialists are talking about a relocation of important production capacities operated in Asia by European companies, eager to better control the supply chain.

    A major impediment, however, would have been, until recently, the significantly higher production costs in Central and Eastern Europe compared to China. As wages in China have advanced enormously in the last 10 years, this change is becoming more and more possible, especially in the context of a pandemic that has put huge pressure on the supply chain.

    The Central and Eastern European area has seen one of the highest rates of economic growth in the last decade, and industrial production has kept the pace. Probably the biggest advantage that countries in this region have is the labor market, with wages several times lower than in Western Europe and, in recent years, surprisingly similar to those in China, according to Colliers International’s report.

    Labour cost in CEE saw an increase

    Specifically, the Czech Republic, Hungary, Poland, Slovakia saw an increase in labor costs of 1.6 to 2.6 times from 2004 to 2018, while Bulgaria and Romania recorded increases of just over 3 times in the same period.

    For comparison, labor costs in the German production sector are about 3 times higher than in the Czech Republic and Slovakia, about 4 times higher than in Hungary and Poland, almost 6 times higher than in Romania and almost 8 times higher than in Bulgaria.

    The pace of productivity growth has remained above the pace of cost advances, and, in all Central and Eastern European countries, the gap between value added per employee and labor costs has widened significantly between 2004 and 2018.

    It is worth noting that in Romania, the gap between value added per employee and labor costs is slightly below that of China, with neighboring countries also following, with small differences.

  • Banks across CEE suffered a slump in profits over the first quarter of 2020

    Banks across CEE suffered a slump in profits over the first quarter of 2020

    Banks across Central and Eastern Europe (CEE) suffered a slump in profits over the first quarter of 2020 as the banks set aside provisions for the impact of the coronavirus crisis on loan quality, says latest Moody’s report.

    Hungary’s OTP Bank, reported a small quarterly loss. High provisioning charges and interest rates cuts will compress net interest income, in the coming quarters.

    Profitability pressure will be particularly acute for Czech and Polish banks due to aggressive rate cuts by their central banks. Efficiency will suffer as lower revenues meet banks’ rigid cost base

    Loan quality is stable so far

    The banks have not automatically classified loans benefiting from payment moratoriums as Stage 2 (riskier) loans under IFRS 9 accounting standards.

    Nevertheless, these riskier loans have increased at some banks. Moody’s expect further loan quality deterioration once the moratoriums expire.

    Hungarian banks will be hit hard by the government’s blanket payment moratoriums on all loans, meaning borrowers must opt out to be excluded. Hungary’s central bank MNB expects an opt-out ratio of around 30%

    Capital buffers show a mixed picture

    Czech banks’ risk-adjusted capital position improved in the first quarter, although capital to total assets declined. The remaining banks reported broadly stable capital ratios.

    CEE regulators have granted greater flexibility in capital management by reducing regulatory minimum capital requirements

    Funding and liquidity are stable

    Banks across all systems have ample access to liquidity through their central banks. Hungary, Poland and Romania have launched government bond purchasing schemes to support bond prices and reduced the regulatory reserve requirements, thereby increasing banks’ liquidity.

    In the Czech Republic the government has amended the law to allow for quantitative easing by the central bank, although no use has yet been made of the tool

  • Which are the best CEE universities in QS World University Ranking

    Which are the best CEE universities in QS World University Ranking

    Politecnico di Milano, ranking 137, with 37.226 students registered is the first university in CEE, followed by University of Vienna, 45.623 students, ranked 150, latest QS World University Ranking shows.

    The latest QS World University Ranking includes around 1,000 universities.

    Massachusetts Institute of Technology (MIT) is the first ranked university in the world and University of Oxford is the first European university (ranked 5 in the world).

    Other 36 universities from Italy in top 1000

    Top 500 include the following universities from Italy, Alma Mater Studiorum – University of Bologna (160), Sapienza University of Rome (171), Università di Padova (216), University of Milan (301), Politecnico di Torino (308), University of Pisa (383), University of Naples – Federico II (392), Università Vita-Salute San Raffaele Milano (392), University of Trento (403), University of Florence (432), Università Cattolica del Sacro Cuore Milano, University of Rome “Tor Vergata” (511-520), University of Turin, University of Milano-Bicocca (521-530).

    Other Italian institutions in top 1000 are Free University Bozen, Bolzano, Università degli Studi di Pavia (601-650), University of Genoa, University of Siena (651-700), University of Trieste (701-750), Politecnico di Bari, Ca’ Foscari University of Venice, University of Modena and Reggio Emilia, Università degli Studi di Perugia, University of Brescia (751-800), Catania University, Universita’ degli Studi di Ferrara, University of Salerno, Università degli Studi di Udine, Università degli studi Roma Tre, University of Calabria, Universita’ Politecnica delle Marche, Ancona, University of Palermo, University of Bari, University of Parma, Verona University (801-1000).

    7 other Austrian universities in the top

    Austria has other universities in top: Vienna University of Technology (191), Universität Innsbruck (265), Graz University of Technology (275), Johannes Kepler University Linz (362), University of Klagenfurt (511-520), Karl-Franzens-Universitaet Graz (581-590), Paris Lodron University of Salzburg (751-800).

    Czechia has 8 universities in Top 1000

    Charles University Prague, 48,623 students, ranked 260, is the first Czech university in QS World University Ranking, followed by University of Chemistry and Technology, Prague (342), Masaryk University Brno (531-540), Brno University of Technology, Mendel University in Brno (701-750), Technical University of Liberec (751-800), Czech University of Life Sciences in Prague, University of Pardubice (801-1000).

    First university in the Baltic States is ranked no 285

    University of Tartu (Estonia), ranked 285, is the best university in the
    Baltic States, followed by Vilnius University (Lithuania), ranked 423 and Riga
    Technical University (Latvia), ranked 701-750.

    Other two Estonian universities are in Top 1000, Tallinn University of
    Technology (TalTech) is ranked 651-700 and Tallinn University is no 801-1000.

    Lithuania has three more universities in Top 1000, Vilnius Gediminas
    Technical University (651-700), Kaunas University of Technology and Vytautas
    Magnus University, Kaunas (801-1000).

    Other two universities in Latvia are present in QS World University Ranking,
    Riga Stradins University and University of Latvia, Riga (801-1000).

    Poland has 15 universities in the first 1000

    According to the latest QS World University Ranking, University of Warsaw (321) is the first Polish institution ranked.

    Other Polish universities included in the ranking are Jagiellonian University (326), Warsaw University of Technology (511-520), Adam Mickiewicz University, Poznań, AGH University of Science and Technology, Krakow, Cracow University of Technology (Politechnika Krakowska), Gdansk University of Technology, Lodz University of Technology, Nicolaus Copernicus University, Poznań University of Technology, Silesian University of Technology, Gliwice, University of Gdansk, University of Lodz, University of Wroclaw, Wroclaw University of Science and Technology (WRUST) (801-1000).

    First Greek university is ranked no 477

    National Technical University of Athens, ranked 477, is the first Greece university in QS World University Ranking, followed by Aristotle University of Thessaloniki (571-580), National and Kapodistrian University of Athens (651-700), Athens University of Economics and Business, University of Crete (801-1000).

    University of Szeged, the first in Hungary

    First Hungarian institution in the QS World University Ranking is University of Szeged (ranked 501-510), followed by University of Debrecen (521-530), Eötvös Loránd University (601-650), University of Pecs (651-700), Budapest University of Technology and Economics, Corvinus University of Budapest, Szent Istvan University, University of Miskolc, (801-1000).

    Bulgarian and Slovenian universities, at the same level

    Sofia University “St. Kliment Ohridski”, home for 19.086 students, is the only Bulgarian University in the top, ranking 601-650.

    First ranked Slovenian University is University of Ljubljana (601-650), followed by University of Maribor (801-1000).

    Slovakia has 4 universities in QS World University Ranking

    Pavol Jozef Šafárik University in Košice is the first university from Slovakia in the QS World University Ranking and is ranked 651-700, followed by Comenius University in Bratislava (701-750), Slovak University of Technology in Bratislava, Technical University of Kosice, (801-1000).

    Romania and Croatia are at the bottom

    Romania and Croatia are the worst ranked countries from CEE region with Babes-Bolyai University Cluj-Napoca and University of Bucharest (Romania) and University of Rijeka or University of Zagreb ranking 801-1000.

  • Remote employees miss social interaction and the instant share of ideas

    Remote employees miss social interaction and the instant share of ideas

    Remote work is challenging for most Romanians who have worked from home in the current epidemiological context. Only 13% of them say they have a dedicated workspace at home, half compared to employees in Central and Eastern European (CEE), according to a study conducted by Colliers International among countries in the region, including Romania.

    In this context, most feel isolated and miss meetings with colleagues, even if work from home has meant a better work-life balance for some.

    In absence of an office or a dedicated workspace at home, 45% of Romanians say that the living room is the main area where they carry out their work activities, as is the case for half of respondents from Central and Eastern Europe. As a result, 40% of respondents say that they have difficulties working remote and feel that sometimes they have low concentration because they carry out professional activities in the same space where their children carry out school or fun activities.

    From home, half of the Romanian respondents to the Colliers International study admit that they feel isolated from their colleagues and only 27% still feel connected to the team. In contrast, in Central and Eastern European countries the situation is exactly the opposite – 62% of respondents say they are equally connected to the team even when working remote and only 29% feel isolated.

    Spontaneous meetings with colleagues are what lack most to employees working remote from the region (68%). In Romania, however, 75% of respondents lack especially the physical interaction with colleagues during a working day.

    For 67%, the lack of clear separation between their professional and personal life is most challenging and only 42% indicate spontaneous meetings with colleagues among the aspects they lack the most when working from home.

    The work-life balance has improved

    Even so, Romanians continued to work efficiently. Most respondents (CEE – 51%, Romania – 54%) consider that they remained equally productive during the remote working period, and for 21% of the respondents from CEE and 23% of those from Romania productivity even increased. At the same time, 44% of Romanian respondents say their work-life balances improved since their home became their workplace, a higher percentage than that recorded in Central and Eastern European countries.

    Most companies that are now focusing on remote work have already implemented the “work from home” concept in the pre-pandemic period. Specifically, both in Central and Eastern Europe and in Romania, over 60% of respondents were occasionally working from home before the current context, while 31% of those interviewed in Romania and 23% in countries in the region say they didn’t work at all remotely before.

    The study was conducted in March-April in 25 countries where Collies International operates, by collecting data online among nearly 4,400 respondents, including about a quarter of Central and Eastern European countries.

  • The M&A market in CEE recorded 726 deals in 2019

    The M&A market in CEE recorded 726 deals in 2019

    The M&A market in Central and Eastern Europe including Russia (CEE) recorded 726 deals in 2019, the same number as in 2018, according to a new report published by Mazars in association with Mergermarket.

    Of the 726 M&A deals in CEE last year, 40% were inbound deals from outside the CEE region – a figure on par with the past four years. This highlights the continued attractiveness of the region to international investors, in spite of a global downturn.

    In contrast, to deal volume, the total public deal value for CEE fell 12% in 2019 to €42.3 billion. This may indicate fewer big-ticket deals, but it is worth noting that the headline figure does not include transactions with publicly undisclosed values, including two investments in a liquified natural gas (LNG) project in the Russian arctic, which are likely to have been substantial.

    Further key findings from the report

    • As the most populous market and largest economy in the region, Russia once again leads the way for regional dealmaking, even with sanctions still in place. The deal value remained steady at €21.5 billion across 167 deals – up from 159 the previous year. Four of the top ten deals in the region and three of the top five took place in Russia, including the year’s largest transaction, which saw Japan Arctic LNG take a 10% stake in the Arctic LNG 2 project for €2.6 billion.
    • In terms of inbound activity, Poland rose to the number one leading destination in 2019. The country saw 65 bids, up from 51 in 2018. This was accompanied by a rise in deal value which increased more than twofold, from €1.9 billion to €4.6 billion.
    • CEE’s strong industrials sector continued to attract the most inbound deals at 56. However, these were mostly small and mid-sized transactions, totaling €1.1 billion, down from €5.5 billion the year before. Energy and utilities remained the top sector for value, with a total inbound deal value of just under €7.6 billion, up from €7.4 billion in 2018, reflective of the large ticket sizes of transactions in this sector.
    • Both international and regional private equity firms are attracted to the region – at a time of slow growth and low yields in many developed countries, CEE offers much-sought-after value as businesses reach maturity or consolidate. Private equity activity continues to grow, with a total of 69 buyouts in the region in 2019, two more than 2018.

    The M&A landscape in Romania

    After a difficult transition to a free-market economy, in recent years the country has become one of the region’s success stories, with buoyant growth and diversifying economy. One of the biggest markets in ECE, natural resources including oil and offshore gas, and a strategic location are all competitive advantages.

    Romania’s M&A volume rose 61% in 2019 to 50 deals, from 31 deals in 2018. Value also increased, by 45% to €815 million.

  • The modern office stock in 15 CEE countries will reach 30 mil sqm by 2021

    The largest supply of modern office space in 15 CEE countries was recorded in Warsaw, Budapest and in Prague, while the biggest increase of new supply in H1 2019 was noted in Bucharest (185,000 sqm), according to the newest report by real estate consultancy company, Colliers International.

    On a per capita basis, Bucharest’s office surface is around one third below Warsaw’s, which is also significantly below other Western European markets, so there might be room to grow.

    The Coliers report analyzes office markets in 15 CEE countries: Albania, Belarus, Bulgaria, Croatia, Czechia, Estonia, Hungary, Latvia, Lithuania, Montenegro, Poland, Romania, Serbia, Slovakia and Ukraine.

    Most modern office projects are located in the capitals of the countries, although the office market is also developing in regional cities. In the first half of 2019 in all capitals of the 15 analyzed countries tenants leased over 1.5 million sqm of modern office space.

    More and more office buildings boast of prestigious certificates, modern technological and ecological solutions and innovatively designed space. The most active tenant sectors are IT, professional services, banking and BPO/SSC.

    „Total modern office stock in 15 CEE countries in H1 2019 reached almost 27 million sqm. At that time, developers completed 707,000 sqm and 3.7 million sqm is currently under construction. The largest supply of modern office space was recorded in Warsaw, Budapest and in Prague, while the biggest increase of new supply in H1 2019 was noted in Bucharest. Second place in terms of the amount of new office space completed in the same time took Sofia, followed by Warsaw,” says Dominika Jędrak, Director of Research and Consultancy Services, Colliers International.

    Central Europe – renovation of industrial properties into modern office space is one of the market trends

    In Czechia and Slovakia in the first half of 2019, over 130,000 sqm of modern office space was commissioned in Prague and Bratislava. There is also a current market trend towards renovation of old industrial properties into modern and vibrant office spaces. One example of that can be a mixed-use project Pradiareň 1900, involving the refurbishment of the former Bratislava Thread Factory.

    Bucharest has turned into one of the most dynamic economies in the CEE region. This is closely related to the labor force, which offers a nice mix of good language skills as well as much lower costs than in Western Europe. Romania and Bucharest do have a couple of things that set it apart from other peers and even other more developed markets in Europe: a very strong IT&C community.

    „While vacancy is expected to be on the rise over the next couple of years, there are some silver linings. Bucharest still has quite a lot of stock built about a decade ago and part of it would not meet today’s qualitative/technical standards. Vacancy tends to vary quite a lot from submarket to submarket and even between projects in the same submarket. Furthermore, on a relative (per capita) basis, Bucharest’s office surface is still around one third below Warsaw’s, which is also significantly below other Western European markets, so there might still be quite a lot of room to grow”, Sebastian Dragomir, Director Office Advisory at Colliers International Romania, said.

    Warsaw is also developing very quickly, there are approximately 40 office buildings under construction with a total area of over 830,000 sqm, which will gradually fill the supply gap in the next 24 months. The largest projects include The Warsaw HUB, Mennica Legacy Tower and Varso Place – the highest building in European Union. 

    At the end of H1 2019, the total office stock in Budapest exceeded the 3.6 million sqm. The market remained landlord driven in 2019. The largest deals are usually closed by tenants active in the IT, financial and pharmaceutical sectors and by state related occupiers. The speculative office pipeline under construction till 2021 accounts to 404,000 sqm, out of which 95,000 sqm office space is expected to be handed over by the end of 2019.

  • Situation of insolvencies in Central and Eastern Europe remains positive

    The Central and Eastern European region has experienced unparalleled growth in the European Union. However, a slowdown is expected in the coming years. The region has seen an improvement in economic activity in recent years. In 2017 and 2018, GDP growth in the region rose to 4.6% and 4.3%, respectively, the highest rates since 2008.

    This acceleration in the CEE economy was mainly due to the increase in domestic demand, in particular thanks to the significant fall in unemployment that benefited households. At the same time, households also benefited from strong wage growth, which had a direct impact on consumption. Beyond households’ consumption, growth was supported by an increase in public and private investment.

    The aforementioned period of favourable macroeconomic environment brought effects on solvency of companies in the CEE region. GDP weighted average insolvencies dropped by 4.2% in 2018, contrary to an increase of proceedings recorded a year prior.

    Global economic conditions, particularly in Europe are becoming more tense and will have an impact on insolvencies

    Despite these positive developments, CEE companies also experienced difficulties. The low unemployment rate has led to labour shortages, which have become the main obstacle for businesses, both in their daily activities and in their potential expansion.

    Supply-side constraints – including labour shortages, high capacity utilization rates, rising input costs and the impact of the external slowdown (direct and indirect) – are of concern to companies operating in the CEE region. Household consumption is expected to remain the main driver of growth, although the limited acceleration of investment in fixed assets and lower exports will dampen GDP growth.

    In addition, the slowdown in the euro zone, the escalation of the trade war between the United States and China and the unclear process of the United Kingdom’s withdrawal from the European Union are causing exporters concern because of the potential impact on their companies and economies. Indeed, the expected slowdown in growth in the Central and Eastern European region will be mainly due to the direct and indirect effects of a slowdown in external demand. Average growth in the CEE is expected to reach 3.6% in 2019 and 3.2% in 2020.

    As CEE economies are mostly highly open to external markets, weaker foreign demand will manifest not only in growth rates, but also gradually via insolvency statistics. In this regard, sectors that are strongly exposed to foreign markets will suffer, such as the automotive industry and the ones supplying it with parts and components, namely chemicals and metals sectors.

  • Private equity fundraising for CEE reaches decade high of €1.8 billion

    Private equity fundraising for Central and Eastern Europe (CEE) hit the highest annual level in a decade in 2018 with €1.8 billion, according to new data from Invest Europe.

    Buyout funds in CEE raised €1.1 billion, while the region’s venture capital funds attracted over €500 million for the second year in a row, reveals Invest Europe’s 2018 Central and Eastern Europe Private Equity Statistics report, released today.

    Private equity investment into companies across CEE reached €2.7 billion in 2018, the second-highest amount ever achieved, following 2017’s record €3.5 billion. The number of companies backed increased by 50% year-on-year to almost 400, also the second-highest level on record. This was driven by a sharp increase in CEE companies supported by venture capital.

    The number of private equity and venture capital-backed exits in CEE reached an all-time high of 128 companies divested in 2018. This represented a total value of over €1 billion for the fifth year running, measured at historical investment cost. Poland accounted for over half of this total exit value with €575 million. 

    “The strong levels of private equity fundraising, investment and exit activity in Central and Eastern Europe in 2018 demonstrate that the region continues to develop as an attractive investment destination,” said Robert Manz, Chair of Invest Europe’s Central and Eastern Europe Task Force. “Global investors see that private equity and venture capital investment is one of the best ways to access the region’s robust markets and high-growth companies.”

    All countries in the CEE region covered by Invest Europe’s report surpassed the European Union’s 2.1% GDP growth rate in 2018, according to data from the International Monetary Fund (IMF). Eight of the countries achieved annual growth above 4%, with Poland, Hungary and Latvia experiencing particularly high growth rates, reaching 5.1%, 4.9% and 4.8% respectively.

    Poland saw CEE’s highest amount of private equity investment with its companies receiving €850 million in total last year. The Czech Republic was close behind with €767 million invested into its companies via private equity and venture capital funds. Hungary had the highest number of companies receiving investment with over 190 backed last year, almost half of the regional total.

    The biotech and healthcare sector took the highest share of CEE’s private equity investment with 32% of the total value in 2018, while consumer goods and services companies received 27% of funding. The region also has strong technology start-up credentials, including Czech cyber-security group Avast which was 2018’s largest tech initial public offering (IPO) on the London Stock Exchange at a valuation of £2.4 billion.

    Meanwhile, Romania’s robotic process automation firm UiPath achieved a $7 billion valuation during a funding round earlier this year, making it one of the world’s most valuable artificial intelligence companies.

    Invest Europe is the non-profit association representing European private equity, venture capital and their global investors. Its research database is the most robust and authoritative in the industry.