Here to profit
Foreign banks are set to continue their dominance of Poland's banking sector, buying up bigger stakes in already privatized institutions and setting up greenfield operations in response to the dwindling number of state-owned assets for sale.
"The Polish banking market is still seen by most foreign banks as a developing market, and that keeps interest high," said Artur Szeski, head of research at brokerage house DM Grupa Pekao in Warsaw. "But more banks may start looking to greenfield operations as most of the big Polish banks have already been sold. Of the big boys, only Powszechna Kasa Oszczędności Bank Polski (PKO BP) is left. Greenfield operations are cheaper and easier to set up and control."
In the first half of this year, foreign banks controlled 54% of all banking capital in Poland, but the Union of Polish Banks (ZBP) said foreign banks had not greatly increased their level of overall ownership throughout 2001. The biggest move in recent months saw Dutch bank ING merge its Polish units into Bank Śląski, creating ING Bank Śląski in September. Belgium's KBC is set to take a larger stake in Kredyt Bank (KB) by the end of the year via a new share issue. KB has already applied to the Banking Supervisory Commission for KBC to take 75% of votes at the bank's shareholders meeting and increase its shareholding by 50%. Portugal's Banco Comercial Portugues (BCP) said it plans to up its stake in Big Bank Gdański (Big BG) to more than 50%. Analysts said they would be surprised, however, if the largest state-owned bank, PKO BP, would be sold in 2002 as the previous government had planned. The new government has yet to outline what its plans are for PKO BP.
But many Polish banks still lack foreign banks' know-how, despite their involvement in Poland, analysts said. They pointed to Bank Ochrony Środowiska (BOŚ) as an example. Sweden's Skandinavska Emskilda Banken (SEB) wants to take a majority stake in BOŚ, in which it holds 45%. This, it said, would allow it to pump in the capital and know-how necessary to modernize the bank. But its moves have been thwarted in recent months by state-owned ecological investment fund Narodowy Fundusz Ochrony Środowiska i Gospodarki Wodnej (NFOŚiGW), which owns 44% of BOŚ. Analysts said looming government budget cuts that could see the fund abolished along with other state agencies has pushed NFOŚiGW to defend its position in BOŚ. It is unclear what other motives the fund may have in opposing SEB's moves to take control of the bank, though analysts said NFOŚiGW was not in a position to finance the bank's development.
Starting fresh
Other foreign banks are looking to greenfield projects as a way of entering the Polish market. Sweden's second-largest bank, Handelsbanken, has been perhaps the biggest greenfield investor of the year. A turnaround from 2000 when the bank looked set to pull out of the market after selling its 5% stake in Bank Handlowy (BH) to BH's new owner, the U.S.' Citibank.
In October, Handelsbanken set up Bank Svenska Handelsbanken (Polska) in Warsaw. "Our plans are to reach operational profitability as soon as possible, hopefully within two years," said Raimo Valo, the bank's general manager. The bank intends to transfer its Nordic clients who are based in Poland to its new unit. Valo also said that Bank Svenska Handelsbanken (Polska), which launched with zł. 200 million ($48 million), would not rule out buying into a Polish bank, particularly PKO BP.
"No big banks are coming onto the market and Handelsbanken seems to have left its entrance a little late," said Dariusz Górski, an equities analyst at ING Barings in Warsaw.
Another Swedish bank, Grupa Nordea, said this month it wanted to take 91% of LG Petro Bank through its subsidiary, Nordea Bank Polska. The move would be in line with the bank's strategy to find a national operation that is focused on the retail market and small- and medium-sized companies.
In recent months, Japanese banks have also started to enter the Polish market. The first, Bank of Tokyo-Mitsubishi, received an operating license from the Banking Supervisory Commission (KNB) in October and said it planned to start operations as soon as possible.
The Germans are also looking to boost their presence in the sector. Dresdner Bank, which agreed to buy 75% of bankrupt Bank Powierniczo-Gwarancyjny in November, plans to increase the bank's capital to zł. 120 million ($29.2 million) from zł. 15 million ($3.65 million). It also will change the bank's name to Dresdner Bank Polska.
Upping the ante
At the same time, foreign banks have also made moves to up stakes in their Polish units. KBC said in November it plans to take a majority stake in KB via a share issue expected before the end of the year. Analysts see KB as one of the most promising banks on the Warsaw Stock Exchange (WSE). It has well-developed retail and investment banking and is set to develop Internet banking services, they said. However, reports suggest two other major KB shareholders, Spain's Banco Espirito Santo (19.86% of KB shares) and Cardine Bianka (with less than 5%), may also want to take part in the issue.
Austria's Raiffeisen Bank Polska (RBP) said last month it planned to increase its presence on the Polish market, opening 10 new offices (to 45 and to 100 by 2003) across the country. It also said it would set up Internet banking services at the beginning of next year.
RBP Polska failed in September to take a 25.7% stake in Polish Bank Pocztowy (BP) when the bank's main shareholder, domestic postal service Poczta Polska, turned down its offer of zł. 102.8 million ($25 million). Poczta Polska holds 66.6% of BP, giving it 74.2% of voting rights, with Prokom Investment holding 33%, giving it 25.8% of voting rights on the supervisory council. Reports suggest the new investor could be Polish firm Kulczyk Holding, although there have also been reports of a merger of BP with PKO BP, while the previously interested French bank BNP Paribas may also want back in. The sale of BP has been long delayed largely due to political questions surrounding the privatization and the long-term strategy for PP, which said it wants to develop BP itself.
At the same time, some banks are leaving Poland. Stanisław Popow, president of Bank of America's (BoA) Polish office, announced in November that the bank was pulling out and would consolidate its operations in London. BoA plans to keep an office in Warsaw for corporate clients, the bank said.
Also, France's Banque Populaire (BP) pulled out of a planned takeover of Bank Inicjatyw Społeczno-Ekonomicznych (BISE) last month, citing delays in regulatory agreements. BP had planned to raise BISE's capital by zł. 38 million ($9.26 million) in a share issue.
Joe Harper
