Kosovo: Pristina calling

Global Finance, Jun 2003 by Beasley-Murray, Benjamin

Call it frontier banking. In May, Austria-based Raiffeisen Bank said it was setting up a bank in Kosovo, the rebel Serbian province that's emerged from bitter ethnic strife. Kosovo is still racked by crime and rivalry between Serbs and ethnic Albanians bubbles beneath the surface; more than a year after the UN Mission in Kosovo (UNMIK) hoped to resolve the final status of the autonomous Balkan province, there's still no near-term solution.

With a population of under two million and an estimated 2001 nominal GDP of just euro880 per head, Kosovo doesn't yet offer rich pickings. But Raiffeisen Kosovo CEO Steven Grunerud is optimistic. At the end of February 2003 there were over euro110 million of commercial loan assets in the province's banks, he says, compared to just euro20 million at the end of 2001."I'm estimating at least 160 to 180 million of commercial loan assets in the system by the end of this year," says Grunerud.

Grunerud's immediate target is Micro Enterprise Bank, which dominates banking in the capital Pristina. RBKO has been created by the majority purchase of the American Bank of Kosovo, previously wholly owned by the US Agency for International Development (USAid).

Many Kosovans have long worked abroad in countries such as Germany, sending back between euro500 to euro700 million each year; Grunerud hopes to challenge MEB's Western Union partnership by offering alternative cash wiring services. A little further up the banking tree, Grunderud aims to issue the province's first visa debit card later this year.

The province's uncertain status "could be a problem if you really wanted it to," says Grunerud, "but one way or another Kosovo isn't going to disappear."