A not-so-obvious choice
Disproportionate voting rights make BGŻ unattractive to investors, but EBRD still wants in
A WBJ news round-up
The European Bank for Reconstruction and Development (EBRD) has announced its continued interest in investing in state-owned Bank Gospodarki Żywnośćiowej (BGŻ) after being rebuffed by the ailing bank's shareholders following their recent meeting. The Treasury Ministry owns 69.5 percent of BGŻ, with regional banks across the country holding some 28 percent of shares.
The shareholders' move met with disapproval on several levels by those concerned about BGŻ's financial state. The EBRD's motives also received a boost of support from Leszek Balcerowicz, the president of the National Bank of Poland, who suggested that BGŻ agree to the overtures because the bank was in need of a capital injection. BGŻ ended 2002 with a zł. 340-million (€76.5-million) net loss. In a press statement, the bank described last year as "one of the most difficult since the beginning of economic reforms in Poland."
What in particular makes shareholder refusal important is the absence of any other party interested in investing in BGŻ. For some time, the EBRD has been the only bank with its hat in the ring.
Chief among the reasons for the shareholders' refusal is a clause in BGŻ's charter that gives the Treasury 95 percent of shareholder voting rights regardless of how large a portion of the bank is acquired by other investors.
The EBRD's deputy president, Hanna Gronkiewicz-Waltz, says that the principles on which the the bank was built do not allow the bank to accept such an arrangement. "Shareholders must be represented in the management of a company proportionally to the amount of capital they invested in the company," she said. The EBRD's offer to invest in the company is conditional on shareholders' acceptance of proportional voting rights.
The EBRD has been expressing its interest in BGŻ for years, and Gronkiewicz-Waltz renewed that pledge recently. "We do not feel offended by the stand of the minority shareholders," she said. "The EBRD's mission is to help companies transform. Therefore, we are willing to invest in the bank and we are waiting for the shareholders to accept our offer."
BGŻ president Jacek Bartkiewicz was unavailable for comment at press time, and the company spokeswoman declined to comment on the deal without his presence.
The EBRD's chief mandate in the country is to aid the country's institutions - financial and otherwise - in the transition from a post-communist country to a full participant in the free market economy. It clearly sees an investment in BGŻ as vital to this strategy. The EBRD has so far invested close to €3 billion (zł. 13.3 billion) in Poland.
