BPH PBK outlines merger costs

Significant redundancies at Bank Przemysłowo-Handlowy PBK (BPH PBK) are likely to cost Poland's third-largest bank up to zł. 51.5 million ($12.6 million) in severance payments, Marcin Chanke, the bank's investor relations officer, told the WBJ last week. "We've started restructuring," Chanke said. "We're going over the overlaps (in operations)." BPH PBK was formed when Bank Przemysłowo-Handlowy and Powszechny Bank Kredytowy merged last year, following the path of parent companies Bank Austria and Bayerische Hypo- und Vereinsbank of Germany. The consolidation of the banks' operations means as many as 2,300 employees will be laid off by the end of 2003, Chanke said.

Analysts said the severance amounts were reasonable given a merger plan that calls for saving €70 million a year once a new IT system is fully installed and redundant divisions are eliminated. Artur Szeski, a banking analyst at CDM Pekao, said that one of the most important factors in accessing the merger's success would be how much layoffs cost. Chanke said the bank does not publish severance payout figures, but noted that BPH PBK's policy is to pay redundant workers seven months' salary. The bank's employees earn an average of zł. 3,200 a month. The bank is planning to cut mostly IT staff. "Mainly (they will be) in the back office," he said. "Back office staff work close to the IT systems."