PKO BP privatization talks start up again
As is often the case with state companies being put on the market, the date of Powszechna Kasa Oszczednosci Bank Polski's (PKO BP) eventual privatization will likely change with the seasons, but the Treasury Ministry recently reiterated that 2001 was probable.
Not only that, but the treasury voiced its desire to have the privatization take place via a merger with another already privatized domestic bank. Those statements from Deputy Treasury Minister Alicja Kornasiewicz who was ousted from her post on Friday by the minority government open the doors to such potential bidders as Bank Pekao, Bank Handlowy, and Bank Przemyslowo-Handlowy (BPH), said Hanna Kedziora, an analyst with Dom Inwestycyjny BRE Banku.
Though many on both sides of the government have demanded that Poland's second-largest savings bank be owned by Polish capital, Kedziora said it was not going to happen.
"The banks that are capable of taking over PKO BP have foreign investors (holding decisive shares)," she said. "Foreign capital will be needed here."
As for the three banks mentioned above, Bank Pekao is controlled by Italy's Unicredito, Bank Handlowy is owned by Citigroup, and BPH is controlled by Germany's HypoVereinsbank. More than 60% of Poland's banking sector is already owned by foreign investors.
A stock free float could also be an option for the treasury, Kedziora said. Or, "the government could sell PKO BP to Polish investors such as pension funds, but they will still need more capital and more time."
For those reasons and considering the 2001 target, Kedziora said it was improbable that PKO would be privatized through Polish investors.
Believing PKO could be a prime target for foreign banks looking for access to Poland's market, Martin van Tol, a banking sector analyst with RZB Austria (London), said Deutsche Bank would be a likely candidate.
"They haven't gotten in on a significant Polish bank yet," van Tol said, referring to Deutsche's bungled attempts to take over Big Bank Gdanski (Big BG) earlier this year.
Van Tol stressed, however, that it was too early to speculate about who's actually interested. This being an election year, he said, could also mean that even the initial tender could be a year away.
For those who eventually end up vying for PKO, however, it could be a tough acquisition. "Restructuring a bank of that size would not be a terribly easy job," van Tol said. "I think it would be a difficult merger."
PKO, also Poland's largest in terms of assets zl. 60 billion ($15.3 billion) in 1999 has made recent progress in updating its IT systems, but in IT development, modernization, strategy effectiveness and range of services, it's still two to three years behind the rest of the modern retail banks in Poland, van Tol said. Bank Slaski, BPH, and Powszechny Bank Kredytowy (PBK), as examples, are all way ahead of an overstaffed PKO, he said.
Also putting PKO at a disadvantage, he said, is the amount of time the government has waited to begin privatization. Its socialist-era retail monopolist equivalent in Hungary, OTP, was free floated several years ago with a stipulation barring foreign strategic investors from gaining control. Like PKO, which has a negative credit portfolio of about zl. 5 billion ($1.16 billion) from pre-1989 mandated housing loans gone bad, it had a similar situation.
The difference is in the timing, however. "(OTP) had a crucial few years to restructure itself before the market got significantly more competitive," van Tol said. "(PKO) probably missed that window."
PKO and Bank Pekao both hold around 15-16% of the overall banking market. PKO had 3.7 million current accounts at the end of 1999 while Pekao had 1.8 million.
