GE Capital moves quietly to acquire Gdansk Bank
But Stefan Twardak, head of GE Capital Poland, said that banking is not why they're coming to Poland. "There's room for a lot of things here," Twardak said. "Buying this bank is buying a platform to bring in [financial] services." He added that buying a bank or financial institution is GE Capital's preferred method for entering new markets. Other recent acquisitions include an Australian bank ($700 million) and a Japanese bank ($1.6 billion).
GE Capital Services, the diversified financial services company wholly-owned by General Electric and with net earnings expected to reach $2.3 billion this year, is a world leader in equipment leasing to businesses and consumers, including the Avis Rental Car fleet and $6 billion in aircraft that it leases to airlines.
"What we basically do is try to identify financial niches where others haven't gone," Twardak explained, pointing out the lack of consumer financing in Poland. He noted that two-thirds of all credit cards in the United Kingdom are owned now by GE Capital Services and worldwide consumer lending activities generated $350 million in profits last year.
Twardak also sees an opportunity in CEF (Commercial Equipment Financing) - buying more expensive assets like cranes, construction equipment and machinery worth more than $1 million or more each and leasing them to businesses - and vendor financial services, which includes smaller equipment like copy machines and printers.
GE Capital Services will purchase a 90% stake in the Solidarnosc Chase from Hartford, Connecticut-based Chase Enterprises, a private company with interests in banking, insurance, broadcasting - including a controlling interest in Polska Telewizja Kablowa, their largest Polish investment - and real estate. The acquisition will depend on obtaining approvals from the Finance Ministry and the National Bank of Poland, both of which are expected by the end of the month. Both GE Capital Services and Chase Enterprises declined comment on the financial terms of the acquisition, except to say that GE will increase the bank's equity "from day one." The minimum requirement to obtain a foreign exchange license from the NBP is ECU 6 million ($7.5 million), which Twardak said will be added to the bank's capital.
"We had been searching for a capital partner to help us expand banking services," said Robert Fowler of Chase Enterprises. "GE has agreed to provide this." He added that because Solidarnosc Chase is a small, relatively young bank, GE Capital will have good latitude in shaping the bank's future development.
Solidarnosc Chase Bank, which will be renamed GE Capital Bank SA following closure, was established in 1991 as a joint venture between the Solidarity Trade Union (51%) and Chase Enterprises (49%). The bank's current assets are $21 million. Chase bought out the shares from Solidarity before agreeing to sell them to GE Capital Services.
Twardak said the fact that the bank was founded after market reforms were implemented made the bank more attractive in comparison to other banks. "That's why it was interesting - this was not an old, ailing bank - it was developed by Americans. Many of these people were trained in the States," Twardak said, adding that David Chase, the Polish-born founder of Chase Enterprises who emigrated to the United States following World War II, played "an instrumental role in helping to sell the name of Poland to Gary Wendt," GE Capital's president and CEO. He went on to say that his role will be to continue selling Poland as the company develops financial products tailored to the Polish market.
Twardak admited, however, that the bank still has some problems with losses in its loan portfolio, with almost 10% taken up by lost receivables. The bank's return on assets, according to Gazeta Bankowa, was 0.2% in 1994, return on equity of 1.3% - in comparison with 56.2% average for Poland's top 10 banks.
Concerning Poland as the country of entry into Central Europe, Twardak said that Poland's banks are in better condition than Hungary's, and it's population is four times that of the Czech and Slovak Republics.
"Poland was sort of a logical choice for Central Europe, although in the long run it could be overshadowed by Russia and the Ukraine," he said. "But right now there's still a fear of going any farther East."
GE Capital Services, the diversified financial services company wholly-owned by General Electric and with net earnings expected to reach $2.3 billion this year, is a world leader in equipment leasing to businesses and consumers, including the Avis Rental Car fleet and $6 billion in aircraft that it leases to airlines.
"What we basically do is try to identify financial niches where others haven't gone," Twardak explained, pointing out the lack of consumer financing in Poland. He noted that two-thirds of all credit cards in the United Kingdom are owned now by GE Capital Services and worldwide consumer lending activities generated $350 million in profits last year.
Twardak also sees an opportunity in CEF (Commercial Equipment Financing) - buying more expensive assets like cranes, construction equipment and machinery worth more than $1 million or more each and leasing them to businesses - and vendor financial services, which includes smaller equipment like copy machines and printers.
GE Capital Services will purchase a 90% stake in the Solidarnosc Chase from Hartford, Connecticut-based Chase Enterprises, a private company with interests in banking, insurance, broadcasting - including a controlling interest in Polska Telewizja Kablowa, their largest Polish investment - and real estate. The acquisition will depend on obtaining approvals from the Finance Ministry and the National Bank of Poland, both of which are expected by the end of the month. Both GE Capital Services and Chase Enterprises declined comment on the financial terms of the acquisition, except to say that GE will increase the bank's equity "from day one." The minimum requirement to obtain a foreign exchange license from the NBP is ECU 6 million ($7.5 million), which Twardak said will be added to the bank's capital.
"We had been searching for a capital partner to help us expand banking services," said Robert Fowler of Chase Enterprises. "GE has agreed to provide this." He added that because Solidarnosc Chase is a small, relatively young bank, GE Capital will have good latitude in shaping the bank's future development.
Solidarnosc Chase Bank, which will be renamed GE Capital Bank SA following closure, was established in 1991 as a joint venture between the Solidarity Trade Union (51%) and Chase Enterprises (49%). The bank's current assets are $21 million. Chase bought out the shares from Solidarity before agreeing to sell them to GE Capital Services.
Twardak said the fact that the bank was founded after market reforms were implemented made the bank more attractive in comparison to other banks. "That's why it was interesting - this was not an old, ailing bank - it was developed by Americans. Many of these people were trained in the States," Twardak said, adding that David Chase, the Polish-born founder of Chase Enterprises who emigrated to the United States following World War II, played "an instrumental role in helping to sell the name of Poland to Gary Wendt," GE Capital's president and CEO. He went on to say that his role will be to continue selling Poland as the company develops financial products tailored to the Polish market.
Twardak admited, however, that the bank still has some problems with losses in its loan portfolio, with almost 10% taken up by lost receivables. The bank's return on assets, according to Gazeta Bankowa, was 0.2% in 1994, return on equity of 1.3% - in comparison with 56.2% average for Poland's top 10 banks.
Concerning Poland as the country of entry into Central Europe, Twardak said that Poland's banks are in better condition than Hungary's, and it's population is four times that of the Czech and Slovak Republics.
"Poland was sort of a logical choice for Central Europe, although in the long run it could be overshadowed by Russia and the Ukraine," he said. "But right now there's still a fear of going any farther East."
