Banking on mergers

   Consolidation became the name of the game in banking as 10 mergers and acquisitions took place this year.

   Among the top deals were: Bank Przemyslowo Handlowy (BPH)/

   Powszechny Bank Kredytowy (PBK), which after the merger of respective parent companies Bank Austria and HypoVereinsbank will become the nation's third-largest financial institution with zl. 36.1 billion ($8 billion) in assets; Citibank (Poland), which will have zl. 29 billion ($6.4 billion) in assets after finalizing its purchase of an 88.99% stake in Bank Handlowy; and Bank Zachodni WBK (Wielkopolski Bank Kredytowy), which together with majority shareholder Allied Irish Bank will become the country's fifth-largest bank with holdings of zl. 21.2 billion ($4.7 billion).

   Another hot topic this year was security as Bank Staropolski (BS) announced its insolvency in January and Bank Czestochowa also became insolvent recently. Fundusz Poreczen Bankowych, a universal fund created to insure the deposits of Polish banks, repaid zl. 484 million ($107.5 million) of BS' liabilities. "(BS' bankruptcy) adversely affected the sector's performance and raised the question about safeguards in the system," said Tomasz Dumala, a banking analyst with BGz Securities.

   Also in 2000, Poland launched its first virtual bank, BRE Bank's "mBank." To date, WBK, Bank Pekao, Kredyt Bank, Handlobank and Fortis Bank all offer e-banking services. By October, WBK had 29,000 online clients and Fortis, 60,000.

   Those figures are only the beginning, industry insiders said. "The major banks see Internet banking as a tool to attract high-income clients with higher financial demands," Dumala said. Of the 2 million-3 million Internet users in Poland, 500,000 are potential e-banking users, according to estimates by Powszechna Kasa Oszednosci Bank Polski (PKO BP), which has 40,000 online customers.