EBRD makes a move on Warsaw Stock Exchange
The European Bank for Reconstruction and Development (EBRD) (http://www.ebrd.com) is negotiating with the government to buy a stake in the Warsaw Stock Exchange (WSE) (http://www.wse.com.pl), according to Kurt Geiger, codirector of the bank's financial institutions department.
The Treasury Ministry, which owns nearly 100% of the WSE, last week said it is too early to talk about specifics of a privatization deal. The treasury plans to select an adviser for the privatization process, but no time frame or strategy has been established to change the state's role, a press officer said.
"This is something new for the EBRD to do and something we are very interested in developing," Geiger said. "Now most stock exchanges in the region are either state owned or run by local banks, and that shows a potential conflict of interests. They are not the ideal investors."
If the bank's involvement in Poland works out, the EBRD would like to expand on the model into other regional stock exchanges in EU-accession countries.
"This is very delicate and I think that it's at a very early stage," said Raffaele Cicala, managing director of the Boston Consulting Group, which has been advising the WSE on its privatization strategy. "We also learned about this (proposal from the EBRD), but not knowing all the elements of it, it is difficult to say. It is one of the elements to be considered."
The EBRD wants to add value to the WSE in the form of capital which could be used to upgrade the IT systems increase transparency and trading volumes, and improve reporting requirements. The bank officials, who came up with the idea during a brainstorming session, said they have already been negotiating with the government on the issue.
Privatization is already a hot topic for the WSE. In an interview last month, WSE President Wieslaw Rozlucki said privatization is a priority but the treasury would make the final decision.
"This is the current issue and the decision will be taken by the Treasury Ministry," he said, adding that the process should start now. The WSE's management is considering a strategic partnership with Euronext, created by a merger between exchanges from Amsterdam, Brussels, and Paris.
Geiger said the EBRD picked the WSE as it is the most developed exchange in the region; Its trading volumes exceed those of Vienna. Market capitalization reached zl. 134.6 billion ($32.6 billion) in 2001 on the WSE, just a shade over the Vienna Bourse and well more than in Budapest or Prague. Trade volumes in Poland exceed other stock exchanges. While Poland trades some $50 million-$70 million a day, the Budapest Stock Exchange shows a daily trading volume of $20 million-$30 million, with even less in Prague at $10 million-$20 million.
