Bidders line up for Invest Bank and LG Petro
By : Wioletta Buczek
Foreign banks look set to move further into Poland's banking sector as Invest-Bank and LG Petro Bank draw closer to wrapping up negotiations with potential strategic investors.
Invest-Bank, one of the few Polish banks without foreign capital, is slated to be sold to a strategic investor within the next three to six months. The retail operation expects to close the first phase of its negotiations and shortlist two bidders for up to 75.4% of the bank in two weeks.
"We have carried out negotiations with the interested parties for some time and now we are ready to select two consortia for the second round of talks," said Invest-Bank's president, Stefan Ciesla.
Although Ciesla declined to name the parties interested in the bank, he said the list of investors includes both Polish and foreign institutions. Ciesla would not say if Invest-Bank's majority shareholder, TV tycoon Zygmunt Solorz, the owner of private TV broadcaster Polsat, was planning to part with his stake in the bank. "It has not been decided if Solorz will sell the whole stake that entitles him to exercise some 75.4% voting rights or just a part of it," Ciesla said. "What is certain is that the bidders want him to remain engaged in the bank."
Invest-Bank, which is valued at zl. 290 million ($72.5 million), has 123 branches nationwide and some 80,000 retail customers.
Meanwhile, medium-cap LG Petro Bank, majority owned by South Korea's LG Investment Holdings, announced recently that it is looking for a strategic investor.
"We are having our memorandum prepared now and we expect that by the end of June we may have a shortlist of preliminary investors," said LG Petro Bank President Dong Chang Park. "We hope to clinch a sale by year's end."
He added that the bank had recently completed an overhaul of its employment structure. That, and the bank's strong credit portfolio, makes it an attractive buy, Park said.
The bank's current investor, LG Investment, whose core businesses include electronics and steel, is likely to reduce its stake in the bank or withdraw completely, complying with the wishes of South Korean politicians who want Korean firms to concentrate on their core industries. "Although it has not been decided yet if LG Petro will withdraw from the bank altogether, the strategy to focus on core businesses has not changed," Park said. LG Petro controls 54.3% of the bank. Other major shareholders are refiner Polski Koncern Naftowy Orlen (PKN Orlen) with 20% and mining company Kopalnia Wegla Brunatnego Belchatow, which has a 12.2% stake in the bank.
LG Petro Bank, which has 27 branches across Poland, has an estimated value of zl. 302 million ($75.5 million).
Analysts said that a majority stake in either Invest-Bank or LG Petro Bank may be an attractive target for any foreign bank planning to enter the Polish market. Frequently mentioned among the potential bidders are financial institutions from France, Germany and Spain, especially France's Societe Generale and Germany's Dresdner Bank.
"The market sees France's Societe Generale as a potential bidder for one of these banks," said Marcin Materna, an analyst with BIG Bank Gdanski. "This is highly possible since the French bank has been present on the Polish market for some time. It has taken part in several tenders for Polish banks but with no success. If it still thinks seriously about retail expansion here, it is one of the last opportunities to expand on the Polish market. On the other hand, we also have Dresdner Bank, the last major German bank that has not purchased a stake in any Polish bank."
The list of potential bidders may also include Banco Santander Centrol Hispano, the only Spanish bank that has shown an interest in Central Europe. "Spanish banks are generally focused on the regions of South and Latin America, and I do not expect them to flock to Poland to buy LG Petro or Invest-Bank," said Andrzej Powierza of Wood&Co. brokerage.
Most analysts said they did not believe many local players would be interested in either of the banks.
"Invest-Bank and LG Petro Bank hold strong positions on the domestic market and therefore their sale price will not be a bargain and that may discourage Polish bidders," Powierza said.
Materna estimated the minimum value of LG Petro Bank to be zl. 600 million ($150 million), twice its book value, which is estimated at some zl. 300 million ($75 million). He gauged the value of Invest-Bank to be less than zl. 600 million ($150 million), even though the bank's book value is zl. 290 million ($72.5 million), slightly lower than LG Petro's. "LG Petro Bank is a well-designed bank with strong fundamentals and that is why it will be really attractive for potential investors," Powierza said.
