The demand for banking services in rural and small urban areas has surged recently, although it is still lagging behind the potential of larger urban areas.

"The market is witnessing solid growth and we expect demand to rise in rural and small urban areas (. ..)," says Cristian Tudorancea, vice-president at CEC (Romanian Savings Bank), in charge of the retail business.

CEC, which is still held by the state after its failed attempt at privatisation in 2005-2006, operates the biggest network of territorial branches in the banking system (around 1,390).

Despite rapidly expanding their networks, major retail banks have generally located their new branches in the same large urban areas.

Even though it operates the biggest network, CEC must refit many of its branches, which have not been modernised since the '90s.

Besides rising demand, Tudorancea says he is also anticipating customers' requirements becoming more sophisticated, with individuals wanting access to other products besides consumer loans. "Customers are paying more attention to the speed and quality of services," says Tudorancea.

Despite the market's demand for savings products, he believes real estate-mortgage lending will be the main growth factor in 2008.

At present, CEC has over 500,000 customers with loans, from a total portfolio of almost 3 million individuals.

Tudorancea says that after the introduction of its own lending norms in the summer, traffic in the bank's branches rose by 20-30%, although not all clients contracted loans.

Since the beginning of this year, the volume of loans released on the retail segment has surged by 50%, from 3.2bn RON (950m euros) in December 2006.

On the savings segment, CEC raised 25% more funds from individual clients in the first nine months of 2007, reaching 6.5bn RON (1.9bn euros).

Tudorancea says the