$6 million privatization aid released to BPH
The aid was withheld while contributors to the $450 million fund waited to see if the already-privatized BPH would be consolidated with two fully state-owned banks. Although Parliament has not approved a new consolidation plan, BPH could begin drawing on the $6 million immediately, a U.S. government source said.
The current privatization plan calls for consolidating BPH and Pomorski Bank Kredytowy SA (PBK) with Bank Handlowy w Warszawie SA, and Polski Bank Rozwoju SA (Polish Development Bank), Powszechny Bank Gospodarczy and Bank Depozytowo-Kredytowy SA with Bank Polska Kasa Opieki SA (Pekao SA). Bank Handlowy and Pekao SA would then be privatized.
The Finance Ministry came under attack from international investors and governments for including BPH - in which the State Treasury has a 46% stake - in the plan.
The U.S. Treasury said last month that aid to BPH had been deferred while it waited to see if the bank was included in the consolidation plan. Now, the Polish government is considering a new proposal for bank consolidation. Three parliamentary commissions - legislative, privatization and budget - could decide Tuesday whether to approve a bank consolidation plan that would restrict the plan to fully state-owned banks.
That would exclude BPH and the Polish Development Bank - which the Polish government has a 63% stake in - from the consolidation plan.
BPH will use the aid to repurchase restructuring bonds that it received from the government in September 1993, said Katarzyna Kondera, who works in the director of the board's office. The restructuring bonds were used mostly to shore up the bank's bad loan portfolio, she said.
BPH was "very pleased" with the possibility that it would be excluded from the consolidation plan, Kondera said.
PBK, now being considered for consolidation under Bank Handlowy's umbrella, may not find the arrangement to its liking.
In January, PBK officials said the bank didn't mind being included in the consolidation plan, but wanted to keep its identity. Bank Handlowy has different ideas.
"Banks merged with us would cease to exist as a separate entity," said Artur Nieradko, deputy director of Bank Handlowy. Under any consolidation plan, he said, the bank would want a free hand in the speed and details of the plan.
Privatization of Bank Handlowy should not compromise its financial standing in order to satisfy a governmental need, such as strengthening the pension funds, Nieradko said. The original plan called for 51% of the privatized banks to go to a pension fund, which has yet to be created.
In the meantime, Bank Handlowy is remaining cool to all the different consolidation scenarios that have been mentioned in the past month, Nieradko said. "We already stopped jumping up and down at every new leak."
A recent scenario called for the merger of Bank Handlowy and Pekao SA. Nieradko said the two institutions together would be strong enough to compete with any foreign banks coming to, or already in, Poland.
Waldemar Markiewicz, president of ProCapital Investment in Warsaw, said consolidating an already-privatized bank - BPH - would have pointed the government in the opposite direction.
"If a state-owned bank takes over a private bank, something is wrong," Markiewicz said.
Krzysztof Krowacki, senior adviser in Poland for Merrill Lynch, said his company is very interested in the final outcome of bank privatization. Merrill Lynch sees merits in both privatizing banks individually and in consolidating several smaller banks with two large ones, as long as it creates a strong banking system.
"A strong Polish banking system is one of the preconditions for the inflow of foreign investment," Krowacki said.
In the meantime, bank privatization is delayed, which hurts the banking sector, Bank Handlowy's Nieradko said. "Bankers don't like this uncertainty."
The current privatization plan calls for consolidating BPH and Pomorski Bank Kredytowy SA (PBK) with Bank Handlowy w Warszawie SA, and Polski Bank Rozwoju SA (Polish Development Bank), Powszechny Bank Gospodarczy and Bank Depozytowo-Kredytowy SA with Bank Polska Kasa Opieki SA (Pekao SA). Bank Handlowy and Pekao SA would then be privatized.
The Finance Ministry came under attack from international investors and governments for including BPH - in which the State Treasury has a 46% stake - in the plan.
The U.S. Treasury said last month that aid to BPH had been deferred while it waited to see if the bank was included in the consolidation plan. Now, the Polish government is considering a new proposal for bank consolidation. Three parliamentary commissions - legislative, privatization and budget - could decide Tuesday whether to approve a bank consolidation plan that would restrict the plan to fully state-owned banks.
That would exclude BPH and the Polish Development Bank - which the Polish government has a 63% stake in - from the consolidation plan.
BPH will use the aid to repurchase restructuring bonds that it received from the government in September 1993, said Katarzyna Kondera, who works in the director of the board's office. The restructuring bonds were used mostly to shore up the bank's bad loan portfolio, she said.
BPH was "very pleased" with the possibility that it would be excluded from the consolidation plan, Kondera said.
PBK, now being considered for consolidation under Bank Handlowy's umbrella, may not find the arrangement to its liking.
In January, PBK officials said the bank didn't mind being included in the consolidation plan, but wanted to keep its identity. Bank Handlowy has different ideas.
"Banks merged with us would cease to exist as a separate entity," said Artur Nieradko, deputy director of Bank Handlowy. Under any consolidation plan, he said, the bank would want a free hand in the speed and details of the plan.
Privatization of Bank Handlowy should not compromise its financial standing in order to satisfy a governmental need, such as strengthening the pension funds, Nieradko said. The original plan called for 51% of the privatized banks to go to a pension fund, which has yet to be created.
In the meantime, Bank Handlowy is remaining cool to all the different consolidation scenarios that have been mentioned in the past month, Nieradko said. "We already stopped jumping up and down at every new leak."
A recent scenario called for the merger of Bank Handlowy and Pekao SA. Nieradko said the two institutions together would be strong enough to compete with any foreign banks coming to, or already in, Poland.
Waldemar Markiewicz, president of ProCapital Investment in Warsaw, said consolidating an already-privatized bank - BPH - would have pointed the government in the opposite direction.
"If a state-owned bank takes over a private bank, something is wrong," Markiewicz said.
Krzysztof Krowacki, senior adviser in Poland for Merrill Lynch, said his company is very interested in the final outcome of bank privatization. Merrill Lynch sees merits in both privatizing banks individually and in consolidating several smaller banks with two large ones, as long as it creates a strong banking system.
"A strong Polish banking system is one of the preconditions for the inflow of foreign investment," Krowacki said.
In the meantime, bank privatization is delayed, which hurts the banking sector, Bank Handlowy's Nieradko said. "Bankers don't like this uncertainty."
