Global banking superpower HSBC mulls uphill battle on local market

By Timothy Sifert

HSBC Bank Polska, the local subsidiary of the world's second-largest banking company, faces a number of tough hurdles in the country's competitive, almost saturated banking market, as it sets out to launch consumer finance products later this year, and corporate-geared services next year.

Banking analysts, who have been anticipating HSBC's decision to increase its Polish operations for more than a year, say that the company is a little late in getting to the market. Other global banks carved out substantial footprints in the market years ago.

Chris Ignatowicz, chief executive designate for HSBC Bank Polska and HSBC country manager, agrees with sector analysts in some ways: "That's correct: this is a highly competitive market," Ignatowicz confirms. "We are under no illusions that we have an automatic right to make money."

Because of these factors, market watchers dismiss any talk that HSBC's new presence here is a major event. They add that the recognition of HSBC's eminent name abroad does not necessarily translate to Poland. However, the bank remains undeterred.

Last week, local authorities gave HSBC the green light to buy Polski Kredyt Bank (PKB) for zł.31 million. Given the dearth of existing operations at PKB - most had been transferred to its parent bank Kredyt Bank - the deal basically amounts to HSBC paying for a Polish banking license.

It has been tough for analysts to figure what direction the banking giant is taking here. "I don't know its strategies," admits Marcin Materna, analyst at Bank Millennium. "I think they will remain a rather small player. I don't think they will have much success."

He offered a comparison to other globally important banks that have had little success tapping into the local market: "They will be similar to a Société Générale or a Crédit Lyonnais at the moment," Materna adds. "There's no point in creating a large bank." He did note that at some point, HSBC should probably acquire another mid-size bank in order to maintain an adequate market share. But HSBC, at least for now, has no such plans.

Nevertheless, HSBC is pleased with its decision to increase its operations on the local market. It had already offered corporate finance and stock-broking services. Like many international companies, HSBC chose Poland because of its impending European Union membership and the country's size, as compared to others in Europe.

"It's because Poland is joining the European Union," Ignatowicz says. "HSBC realizes that Poland is the most important and largest among (the new members)."

Ignatowicz explained that HSBC would pursue consumer finance first, providing mortgages, credit cards and other loans. In March of this year, HSBC acquired consumer finance company Household International. It plans to bring Household's resources to bear in Poland. On the corporate services side, he said HSBC would target both international customers that desire a Polish presence, but also local players that want to expand following the country's EU entry next year. HSBC would have liked to have had the new banking license earlier, but complications related to its acquisition of Household International, which was also bidding for (PKB), put the deal on hold.

"The deal had to go into limbo for awhile," Ignatowicz explains.

Analysts are not the only ones taking the news of HSBC coming to Poland calmly: HSBC's competitors are not sweating just yet. "HSBC is Citibank's most feared global competitor," says an individual close to Citibank Handlowy. "But they are nowhere in Central Europe."