Markets for life, disability and health insurance products are growing quickly in Central and Eastern Europe, as more responsibility for social welfare is transferred into private hands.
Accession to the EU of eight eastern and central European countries has contributed to the removal of the political, regulatory and cultural obstacles to cross border mergers in the financial services industry. Additionally conversion to IFRS reporting will help to introduce a level of transparency that has not historically existed. Consequently it is safe to suggest that central and eastern European financial services companies will continue to be affected by the growth in consolidation, driven by cross border mergers, in the sector. Between 1996 and 2004 the share of financial assets in central and eastern Europe owned by foreign banks tripled to 66%.
In Russia there is considerable un met demand for retail banking services. Until 2003, for example, there was no legal framework governing the securing of loans against property. There is now considerable scope for large and rapid growth in the provision of mortgage lending. There are endemic problems in operating in the Russian market but overseas institutions may have one advantage by virtue of their foreignness, there is a saying in Moscow that ''only foreigners will trust a Russian, other Russians don't.''
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