The 21st Euromoney Central and Eastern European Forum was a great success, attended by over 1,000 policymakers, corporate leaders, financiers and investors in Vienna.
We were delighted to welcome – for the first time ever – as our host and opening keynote speaker His Excellency Hans-Jorg Schelling, the Finance Minister of Austria. As Herr Schelling commented, it was fitting that the Forum took place in Austria – the largest investor in the CEE economies since the fall of the iron curtain. In his speech on unfinished business in the European Union, he emphasised the success of the euro and also the challenges facing the Union, including the migrant crisis, the Greek debt situation and the need for Capital Markets Union.
He was followed by interviews with H.E. Mihaly Varga, the Economy Minister of Hungary and H.E. Anca Dragu, the Romanian Finance Minister. Minister Varga discussed the need for developments in the banking industry in his country including the government’s plans to privatise their own holdings in banks. Minister Dragu was upbeat about the outlook for the Romanian economy, and shared the Government’s plans for ongoing structural reforms.
The opening panel of the conference addressed the macro-economic situation, discussing the recent rate hike by the Fed, the contrasting monetary policy of the ECB, developments in the oil price and the extent to which these factors could derail the region’s mainly strong growth and low inflation.
This was followed by a discussion on the capital markets financing of sovereigns in the region. The borrowing plans of the governments of Lithuania, Hungary, Slovenia and Serbia were all discussed by their representatives which was followed by a discussion of the implications of the ECB’s public sector bond purchase programme and the problems of secondary market illiquidity.
The following panels offered an insight from several major international fixed income investors on their views and investment strategies in the region, and discussed the future of the asset management industry in the region including the development of pension funds in different countries and ways to stimulate retail investment in the capital markets as an alternative to bank deposits. One of the most popular discussions focussed on the financing of the real economy including corporate borrowers, small and medium sized enterprises and infrastructure projects.
After lunch there were focused workshops and interactive roundtables allowing delegates to focus on particular countries or topics of interest, including Russia, Hungary, Albania, covered bonds, the challenges and opportunities in both the equity and fixed income capital markets and the full range of financing options for mid-sized corporates – from leasing to equity capital markets.
The final panel of the first day addressed the prospects for the banking sector in the CEE region. Carlo Vivaldi of Unicredit emphasised the attractiveness of the CEE region for banks despite the risks, a point supported by Erste Bank’s Jozef Sikela who particularly highlighted the importance of legal certainty in the region. The strength of the macroeconomic backdrop was described by Peter Luet of Citi who said that it was difficult to see what could derail this in the near term, although Karl Sevelda of Raiffeisen Bank International said that he was scared of new political and tax risks every time there is an election in the region. Lazslo Wolf of OTP Bank pointed out that there are too many banks in many countries in the region.
After an informative first day, conference delegates enjoyed the generous hospitality of Raiffeisen Bank International at a drinks reception.
The second day of the conference opened with a keynote address by Ewald Nowotny, Governor of the Austrian National Bank and Austria’s representative on the ECB governing Council. Governor Nowotny discussed the challenges of meeting the ECBs 2% inflation target but emphasised the importance of core, rather than headline inflation given the one off shock caused by the falling oil price. He also discussed the ECB’s quantitative easing programme, including the difficulty that the ECB has faced achieving ABS purchase targets, the need for Capital Markets Union and the need to keep adequate liquidity in the financial system. Governor Nowotny also touched on the implications of the migrant crisis on the need for public sector investment.
The theme of monetary policy was continued with two parallel central banker panels where the governors, deputy governors and chief economists of the national banks of Albania, Croatia, the Czech Republic, Hungary, Lithuania, Macedonia, Poland, Romania, Slovakia and Turkey, discussed the challenges to monetary policy caused by, inter alia, the slow down in China, the divergence of monetary policy in the US and the Euro zone, negative interest rates, the low oil price and the effect of sanctions on Russia. Other topics discussed included the degree to which central bankers still have flexibility to set interest rates when faced with negative policy rates in the euro zone and the pressures on exchange rate policies.
The following sessions focused on the role of alternative investments in the region, the Ukraine and the Czech Republic.
The conference concluded with a wide ranging discussion of the big themes which had dominated the discussions of the previous two days. In particular there was a lively discussion of the implications of the migrant crisis on the political and economic backdrop, the forecast for the Russian economy and political environment in an era of low oil and commodity prices.
Euromoney Conferences would like to thank all our sponsors, speakers and delegates for supporting the Forum once again. We look forward to our annual visit to Vienna again in January 2017.