Long road ahead
Last week the nation's largest bank, Powszechna Kasa Oszczednosci Bank Panstwowy (PKO BP), officially announced its name change. From now on, it's Powszechna Kasa Oszczednosci Bank Polski SA (to be replaced by PKO Bank Polski in the future), meaning that right now it's a joint-stock though state treasury-owned company, ready to be privatized.
But while the first step toward privatization has been made, the road will be long and bumpy.
The new president, Henryka Pieronkiewicz, already has experience with Krakow-based Bank Przemyslowo-Handlowy (BPH), which she successfully restructured and led into a strategic investor's arms. But PKO is a different ball game, due to its size as well as the scope of its problems.
True, a lot has been done over recent years to change the bank from an old-fashioned institution into a real one, with modern products, automated teller machines (ATMs) and even expansion into areas such as corporate banking.
But more has to be done before privatization can occur. For one thing, an old housing-loan portfolio of about zl. 5 billion ($1.22 billion) that the bank inherited after the hyperinflation of the late 1980s is still on the books. And since the portfolio was the result not of the bank's mismanagement but of the total collapse of the communist economic system, the solution has to be found elsewhere, on a governmental and parliamentary level, possibly in the form of state guarantees. But until the problem is solved, a true valuation of the institution cannot be made, and PKO's privatization will remain impossible.
Another thing PKO desperately needs is a new, centralized IT system in full operation, a must if it seriously wants to develop new distribution channels such as phone and internet banking. These kinds of services are already offered by a number of banks, and PKO has to catch up really quickly if it intends to maintain its already diminishing market share.
Another issue PKO has to figure out is how to use its 40,000-strong staff more efficiently.
It's understandable that the bank would like to keep its present employment level and use "internal relocations" rather than extensive layoffs. But it's not that easy to turn clerks into "financial advisers," since different skills are needed to be a successful salesperson.
Pieronkiewicz is right in saying that she wants a "good privatization" rather than a fast one, but a good privatization can take place only after PKO is transformed into a modern, well-managed institution. Otherwise there will be little interest in the bank, because in this case large may not necessarily mean attractive to investors. They often prefer smaller, efficient institutions.
