HSBC still targeting PKO tender
This is despite the fact that its newly launched consumer finance operations could run afoul of the Ministry of Treasury's tender guidelines, according to an individual close to HSBC.
The invitation to tender to advise on the sale of PKO, the country's largest bank, specifies that candidates must not be in competition with PKO. That stricture alone has sidelined a long list of otherwise interested national and international financial institutions. As HSBC Bank Polska recently commenced operations, aiming to gradually become a substantial player on the consumer finance market, it is possible that it will be seeking the same customer base as PKO. And should the HSBC Investment Services succeed in winning the tender it would be advising the treasury on how best to sell 30 percent of PKO. Such a situation could create a conflict of interest.
The ministry is obviously keen to eliminate any conflicts of interest, but in advising a sale of a bank, this becomes a more difficult task.
"The situation is quite delicate," says an individual close to HSBC. HSBC is being careful in what information it presents because, "This is a pitch," she says.
Nevertheless, as market speculations surfaced that HSBC would not be able to pursue its consumer and investment banking advisory goals at the same time, our source sought to put an end to the rumors. "This is not at all the case," she says, and went on to say that the PKO tender would not hamstring HSBC development.
HSBC still plans to increase its consumer finance business this year and develop other enterprise services next year. She adds that HSBC Bank Polska, regardless of its parent company's designs on the local investment banking market, would only have 13 people in the country. That small number of staff would hardly put a dent in PKO's market share.
"HSBC has said that it's going to be a small operation at first," she says. "It's consumer credit." She compares its operations with that of Lukas Bank, and in that vein, the bank recognizes that it will be a challenge to become a major player in the market. Thus, it would hardly be in violation of the Treasury's rules.
Chris Ignatowicz, chief executive designate for HSBC Bank Polska and HSBC country manager, acknowledged the bank's challenges early on. "We are under no illusions that we have an automatic right to make money," he told the Business Journal earlier this year. "This is a highly competitive market." He was unavailable for comment at press time.
"The operations are quite small," our source close to the HSBC says. She notes that HSBC typically starts off with small operations in new markets, before deciding whether full-on deployment is warranted, and adds: "It's in a very early stage."
As some in the banking market were spotlighting HSBC Bank Polska, questions also arose about the status of Citibank. Citigroup Global Markets Polska, along with DM Banku Handlowego, is pitching for the PKO advisory tender, as well. And Citibank Handlowy is a direct competitor for PKO.
"In the tender the real problem is Citibank," the individual says. "Citibank bought Handlowy and it is a full competitor. So I can't explain why everyone is looking at HSBC. No one is looking at Citibank."
Citibank Handlowy referred questions to the London Citigroup office. A Citigroup spokeswoman did not return calls by press time.
It is precisely such finger pointing that makes the treasury's tender process, especially with banks, "unrealistic," according to Artur Szeski, a banking analyst at CDM Pekao. He notes that it's almost impossible to follow the tender guidelines to the letter.
"The reality if that you basically rule out everyone who's domestic," he says. He adds that in order to ensure the success of the deal, which could include a foreign and domestic stock offering, the advisor should have a Poland-based element to it.
The ministry recognizes that competition issues could pose a problem, says Urszula Pałaszek, director of the department of financial institutions at the Ministry of Treasury. She declined to comment further, instead directing all questions to the head of the tender commission, who was unavailable at press time.
The invitation to tender to advise on the sale of PKO, the country's largest bank, specifies that candidates must not be in competition with PKO. That stricture alone has sidelined a long list of otherwise interested national and international financial institutions. As HSBC Bank Polska recently commenced operations, aiming to gradually become a substantial player on the consumer finance market, it is possible that it will be seeking the same customer base as PKO. And should the HSBC Investment Services succeed in winning the tender it would be advising the treasury on how best to sell 30 percent of PKO. Such a situation could create a conflict of interest.
The ministry is obviously keen to eliminate any conflicts of interest, but in advising a sale of a bank, this becomes a more difficult task.
"The situation is quite delicate," says an individual close to HSBC. HSBC is being careful in what information it presents because, "This is a pitch," she says.
Nevertheless, as market speculations surfaced that HSBC would not be able to pursue its consumer and investment banking advisory goals at the same time, our source sought to put an end to the rumors. "This is not at all the case," she says, and went on to say that the PKO tender would not hamstring HSBC development.
HSBC still plans to increase its consumer finance business this year and develop other enterprise services next year. She adds that HSBC Bank Polska, regardless of its parent company's designs on the local investment banking market, would only have 13 people in the country. That small number of staff would hardly put a dent in PKO's market share.
"HSBC has said that it's going to be a small operation at first," she says. "It's consumer credit." She compares its operations with that of Lukas Bank, and in that vein, the bank recognizes that it will be a challenge to become a major player in the market. Thus, it would hardly be in violation of the Treasury's rules.
Chris Ignatowicz, chief executive designate for HSBC Bank Polska and HSBC country manager, acknowledged the bank's challenges early on. "We are under no illusions that we have an automatic right to make money," he told the Business Journal earlier this year. "This is a highly competitive market." He was unavailable for comment at press time.
"The operations are quite small," our source close to the HSBC says. She notes that HSBC typically starts off with small operations in new markets, before deciding whether full-on deployment is warranted, and adds: "It's in a very early stage."
As some in the banking market were spotlighting HSBC Bank Polska, questions also arose about the status of Citibank. Citigroup Global Markets Polska, along with DM Banku Handlowego, is pitching for the PKO advisory tender, as well. And Citibank Handlowy is a direct competitor for PKO.
"In the tender the real problem is Citibank," the individual says. "Citibank bought Handlowy and it is a full competitor. So I can't explain why everyone is looking at HSBC. No one is looking at Citibank."
Citibank Handlowy referred questions to the London Citigroup office. A Citigroup spokeswoman did not return calls by press time.
It is precisely such finger pointing that makes the treasury's tender process, especially with banks, "unrealistic," according to Artur Szeski, a banking analyst at CDM Pekao. He notes that it's almost impossible to follow the tender guidelines to the letter.
"The reality if that you basically rule out everyone who's domestic," he says. He adds that in order to ensure the success of the deal, which could include a foreign and domestic stock offering, the advisor should have a Poland-based element to it.
The ministry recognizes that competition issues could pose a problem, says Urszula Pałaszek, director of the department of financial institutions at the Ministry of Treasury. She declined to comment further, instead directing all questions to the head of the tender commission, who was unavailable at press time.
