BA-CA on WSE: Trend-setter?

by Aleksander Nowacki

This Tuesday, Bank Creditanstalt Austria (BA-CA) will become the first foreign company listed on the Warsaw Stock Exchange (WSE). The listing does not involve an extra issuing of stocks after the company's initial public offering (IPO) on the Vienna bourse in July. The same stock will be traded at both the bourses.

The opportunities for arbitrage are, however, thought to be fairly limited, says Friedrich Kardnoska, deputy CEO of the bank. The stock is likely to trade at a similar price on both the exchanges and it will take a whole day to transfer the stock from Warsaw to Vienna and back. Krzysztof Ołdak of the National Depository for Securities (KDPW), which is a part of the BA-CA group, says that some institutional investors will be accommodated and will be able to make transfers on the same trading day.

The total value of the 22.5 percent shares that are listed stands at around €1.06 billion (zł.4.8 billion). Germany's HypoVereinsbank Startseite (HVB), which owns the remaining 77.5 percent stake in the bank, does not plan to issue any more stocks within the next six months, Kardnoska says. HVB has committed itself to keeping at least 75 percent of the stock, so the theoretical option of listing a further 2.5 percent stake in BA-CA exists, but there are currently no plans for such a move.

BA-CA stocks will be treated as a domestic investment, says Jacek Socha, KPWiG president, which is a significant factor for pension funds, facing a five percent ceiling on investment in foreign equities. Another consequence of the decision is that the bank is likely to become a part of the WIG20 index of the largest listed companies. As the WSE board announced last Wednesday, the decision to include BA-CA in the index may come as soon as December 19 at the nearest review of the index.

The investors who purchase the stock on WSE will be entitled to dividends for 2003, which will be no lower than last year's €1.02 per share, Kardnoska says.

The reason for the Warsaw listing is that the BPH-PBK group is the largest of BA-CA's 11 franchises in the Central and Eastern European (CEE) region, Kardnoska explains. The bank is the country's third-largest in terms of assets with a 9.7 percent market share. It accounts for nearly a third of the group's revenue outside Austria. BA-CA derives 30 percent of its revenue from the CEE region and plans to increase that to 38 percent by 2005.

Kardnoska stresses the importance of organic growth as an avenue to reaching that target, but Karl Samstag said last week that the bank has €500 million available for acquisitions in the region, over the next two years. Samstag singled out Romania as a particularly promising market for acquisitions, but added that the bank will be looking at opportunities on the Polish market as they arise.

A number of companies, such as Croatia's drug maker Podravka, have in the past considered a WSE listing. Kardnoska says he would "greatly appreciate it," if other companies "followed in our footsteps."

"When we became the first foreign bank in Poland in 1991, others weren't far behind," he adds.