Citibank has plans for Bank Handlowy
Citibank is shortly to announce its retail plans for Bank Handlowy in a move that will give the U.S. bank its first Polish retail outlet.
"We are almost there, but not ready for a public announcement yet," Raymond Lim, Citibank's country manager for consumer banking, told the Business Journal last week.
But Lim went on the record as saying that discussions were underway between Citibank and Handlobank, a retail outlet owned by Bank Handlowy.
Citibank, a subsidiary of Citigroup, owns 85% of Bank Handlowy, and merger formalities should be completed by the end of the year.
Lim said the two domestic banks would either offer Citibank retail services and products through Handlobank's existing branch network or retain separate operations and brand names. Meanwhile, more affluent customers would fit into Citibank's existing structure.
Andrzej Powierza, an analyst at Wood & Co., said another option would be to sell off Handlobank, although this would be unlikely. Lim said Citibank had no plans for any selloffs.
"All of the options except the third one have been actively discussed, thought through, bounced around and each one has got certain merits," he said.
Artur Szeski, a banking analyst with CDM Pekao Securities, said the most sensible course for Citibank would be to sell Citibank products through Handlobank.
"Citibank has a very good track record in retail operations all over the world," Szeski said, whereas Handlobank has a huge presence throughout the country. While Citibank has four branches and seven service centers and has marketed its products in Poland mostly through direct sales, Handlobank has more than 65 branches.
"It (Handlobank) managed to build a strong brand name in less than two years," Wood & Co.'s Powierza said, through aggressive advertising to younger, more lucrative clients. Handlobank is also known for its high-level customer service, especially through its call centers, he said.
Szeski agreed: "People who use Handlobank are more mobile than the average banking clients." He said that as a result, the bank's potential client base would be prepared to pay more for services in the long term.
Powierza said the bank's one weakness is in retail lending, particularly when it comes to car and house loans. Retail competitors such as BPH, PKO Bank Polski and Bank Pekao are already considering offering loans to small and medium-sized enterprises through retail branches, he said.
Though Citibank already offers loans to customers, additional products like the Citicard debit card allow global access to personal accounts and might eventually be available at Handlobank outlets, analysts said.
Handlobank's second-quarter 2000 performance results, though showing losses of zl. 13 million ($3 million), had also provided zl. 230 million ($53 million) for restructuring, Powierza said. He said this was a sign of major changes planned.
Citigroup initially began its takeover of Bank Handlowy in February when it purchased a 10% direct stake and 22% through convertible bonds from insurer Powszechny Zaklad Ubezpieczen, ending merger talks between Bank Handlowy and BRE Bank. It continued buying out other shareholders and in June and July upped its stake to the current 66% level through two public tenders.
