Banks dream of fertile east
Last week, PKO, the country's largest bank, bought 66.65 percent of Kredyt Bank Ukraina's shares from Kredyt Bank as it sets out to increase its market share in Ukraine. Pekao SA is also planning to boost its Ukrainian market share via its two existing offices and appoint a new Pekao Ukraina chief executive office in the near future.
"I think we will probably be seeing more of this," says Grzegorz Zawada, analyst at Erste Securities Polska. Zawada explains that competition, especially in retail banking, is getting fiercer by the day as most sizable Polish banks look to adding revenue streams by tapping into the growing body of banking-savvy locals. In that light, firms such as PKO, Pekao and BRE Bank, among others, have been stacking their retail banking teams and offering a wider suite of products.
But, he says, even though the banking market is fast expanding, the sheer number of banks in Poland makes snapping up a greater market share that much more difficult. And companies, such as state-owned PKO, have proved they are more than capable of making money at home. So, moving to the expectedly fertile Eastern arena is the next step in a relatively untapped market.
"PKO's expansion plans include foreign markets in Central and Eastern Europe," says Marek Kłuciński, a PKO spokesperson.
For the bank, which is slated to be finally privatized this year, Ukraine is the first major stop on its Eastern tour.
Pondering the move east, Erste's Zawada says, "PKO has proved that it can make money in Poland, let's see about Ukraine."
Pekao, for its part, has been in Ukraine since 1992 and has only recently decided to bulk up its operations there. It has added some zł.10-20 million in capital to its operations there and appointed Janusz Dedo, vice president at Pekao, to the chief executive post.
"There weren't many operations there before," says Robert Moren, Pekao spokesman. "Now what we are doing is increasing our potential in the country. We've added some good people. Dedo is leaving for Ukraine to do some reconnaisance work."
Moren points out that he is unsure what exactly the operations will look like in the near future but feels they will seek to take advantage of what the banks consider a growing market. Further, he says that he expects Ukraine to benefit from Poland's EU membership. He believes trade will increase between the contiguous countries, making Ukrainians richer and more in need of banking services.
"We do see better and better propositions for developments in Ukraine," he says.
And looking to the increasing Polish competition in Ukraine, he adds: "We were there earlier."
Zawada agrees that Ukraine and the other former Soviet republics not entering the EU will benefit from next month's accession. He says that not only will their prosperity increase, but their legal and financial institutions will improve - much like Poland's are today - thus making them much safer havens for banks and foreign capital.
He says this is a good opportunity because in the future there will simply be "no space" on the Polish market.
As PKO and Pekao take several serious steps, there are other banks interested in going East, but without the capital commitment. Take BRE Bank, for instance.
Aleksander Oleś, deputy director of the financial institutions department at BRE, says the bank is certainly interested in increasing its business with the East. But, he says, BRE will do this through the relationships it has with mainly Russian-, Byelorussian- and Kazakhstani-based banks. In the past, the bank has transacted trade financing with these areas and will continue to look for similar business in the future.
Oleś acknowledges the physical eastward movements of BRE's peer banks, but shakes off any suggestion that BRE will follow suit. "There will be very high costs," he says. "We think that that's not necessary. It's better for us to cooperate with someone."
By the same token, he says the BRE strategy is to source Eastern business via Poland.
Moren says Pekao's strategy is to have people on the ground in the East. That is why they are sending Dedo to reconnoiter the area to devise the best Ukraine strategy.
"I think we will probably be seeing more of this," says Grzegorz Zawada, analyst at Erste Securities Polska. Zawada explains that competition, especially in retail banking, is getting fiercer by the day as most sizable Polish banks look to adding revenue streams by tapping into the growing body of banking-savvy locals. In that light, firms such as PKO, Pekao and BRE Bank, among others, have been stacking their retail banking teams and offering a wider suite of products.
But, he says, even though the banking market is fast expanding, the sheer number of banks in Poland makes snapping up a greater market share that much more difficult. And companies, such as state-owned PKO, have proved they are more than capable of making money at home. So, moving to the expectedly fertile Eastern arena is the next step in a relatively untapped market.
"PKO's expansion plans include foreign markets in Central and Eastern Europe," says Marek Kłuciński, a PKO spokesperson.
For the bank, which is slated to be finally privatized this year, Ukraine is the first major stop on its Eastern tour.
Pondering the move east, Erste's Zawada says, "PKO has proved that it can make money in Poland, let's see about Ukraine."
Pekao, for its part, has been in Ukraine since 1992 and has only recently decided to bulk up its operations there. It has added some zł.10-20 million in capital to its operations there and appointed Janusz Dedo, vice president at Pekao, to the chief executive post.
"There weren't many operations there before," says Robert Moren, Pekao spokesman. "Now what we are doing is increasing our potential in the country. We've added some good people. Dedo is leaving for Ukraine to do some reconnaisance work."
Moren points out that he is unsure what exactly the operations will look like in the near future but feels they will seek to take advantage of what the banks consider a growing market. Further, he says that he expects Ukraine to benefit from Poland's EU membership. He believes trade will increase between the contiguous countries, making Ukrainians richer and more in need of banking services.
"We do see better and better propositions for developments in Ukraine," he says.
And looking to the increasing Polish competition in Ukraine, he adds: "We were there earlier."
Zawada agrees that Ukraine and the other former Soviet republics not entering the EU will benefit from next month's accession. He says that not only will their prosperity increase, but their legal and financial institutions will improve - much like Poland's are today - thus making them much safer havens for banks and foreign capital.
He says this is a good opportunity because in the future there will simply be "no space" on the Polish market.
As PKO and Pekao take several serious steps, there are other banks interested in going East, but without the capital commitment. Take BRE Bank, for instance.
Aleksander Oleś, deputy director of the financial institutions department at BRE, says the bank is certainly interested in increasing its business with the East. But, he says, BRE will do this through the relationships it has with mainly Russian-, Byelorussian- and Kazakhstani-based banks. In the past, the bank has transacted trade financing with these areas and will continue to look for similar business in the future.
Oleś acknowledges the physical eastward movements of BRE's peer banks, but shakes off any suggestion that BRE will follow suit. "There will be very high costs," he says. "We think that that's not necessary. It's better for us to cooperate with someone."
By the same token, he says the BRE strategy is to source Eastern business via Poland.
Moren says Pekao's strategy is to have people on the ground in the East. That is why they are sending Dedo to reconnoiter the area to devise the best Ukraine strategy.
